Vogel Wakefield blog

Vogel Wakefield blog

September
05
2012

Two questions and a good answer: a simple proposal for an ethical renewal of business

Thinking about why as well as how.

You’d think that the more protracted the after-effects of the 2008 financial crisis become the more willing we would be to ask searching questions about its root causes. Sadly, this seems not to be so. In much public discourse, there is an often unspoken assumption that if only we could sort out the banks, fix the Euro and correct global trading imbalances we could all happily return to the days of uninterrupted growth.

It’s therefore welcome to find – in the shape of Will Morris, current chairman of the CBI’s taxation policy committee and Global Director of Tax Policy at GE – one senior business figure who acknowledges that things have gone wrong at a pretty fundamental level. And it’s even more welcome that he’s come up with a solution that is both simple and elegant. Sadly, his paper Not Just How but Why – which was published by Reform earlier this summer – has received precious little attention, which rather underlines my point.

Will Morris understands, in a way that many in business people seem not to, that there is a crisis of trust in 21st Century capitalism that is deeply threatening to it. In his view, the root cause is that there has been not so much a collapse in business ethics as a complete absence of a coherent ethical system in the first place. He attributes this to two factors. Firstly, the subtle but extraordinarily significant switch in emphasis from Adam Smith’s focus on “utility” in business dealings (which allowed a broad set of questions to be asked about the relative benefits to not only the parties directly involved in a business transaction but to society as a whole as well) to one of profit maximisation above all. Secondly, he cites the impact of globalisation which, although greatly beneficial in many respects, nonetheless dissolved the often local bonds of trust between individuals – for whom “my word is my bond” meant something real and personal.

Morris’ solution is to require, by law, all companies to publish their own code of ethics. Furthermore they would be required – again, by law – to report against this code annually and to provide training for employees to support compliance. The key point about his proposal is that he rightly draws the line at high levels of prescription and detailed legal requirements. So, beyond some broad headings he does not envisage the law prescribing precisely what should be in a code of ethics, nor what the contents of an annual report should be. This is a critical point because, as he says, the more burdensome and detailed the requirement to comply the less room there is for personal judgment. Without this we risk precisely the moral blinding that has wreaked such havoc and that has been explored so comprehensively by Margaret Heffernan in her book Wilful Blindness. As Will Morris puts it, we need men and women at all levels of organisations who feel emboldened to ask “why?” at least as much as “how?”

Of course, if these proposals were to be put into practice, there would doubtless be organisations cynical enough to comply by way of little more than window-dressing. However, the rise of social media would surely make such an approach highly risky. As David Jones has shown in Who Cares Wins, companies that behave like this are already receiving a reputational drubbing at the hands of an increasingly vocal public. What’s more, the publication of ethical codes would provide a moment at which the watchful public could play a very useful role in drawing attention to any shortcomings and so begin a process of helping to make companies more responsive and accountable to their customers and users.

There is much else of interest in this paper including a thoughtful reflection on how the author balances the requirement to ask the difficult “why?” questions with that of serving his company’s interests in the highly contested field of corporate tax policy. Will Morris is also an Anglican priest and he has much of interest to say about how Christian ethics can usefully inform secular approaches to a more socially responsible business culture. However, the real value of the paper lies in his proposed legal requirement for companies to publish and report on their ethical codes. It’s a good idea and deserves much more attention than it has enjoyed thus far. I‘m not holding my breath.

 

Not just “how” but “why”: A personal reflection on business ethics and the crisis by Will Morris.

 

Image courtesy Innoxiuss.

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