SOME PERSONAL THOUGHTS ON THE ROLE OF BUSINESS ON SOCIAL AND MORAL ISSUES

April 6, 2015

THE FOLLOWING PRESENTS SOME PERSONAL THOUGHTS ON THE ROLE BUSINESS LEADERS AND CORPORATIONS SHOULD PLAY ON MORAL AND SOCIAL ISSUES

We were presented with a real drama in the States of Indiana and Arkansas, as legislation was adopted and then quickly modified which threatened to give license to business organizations to refuse service based on their religious principles to gays and lesbians.  A broad array of business and business leaders objected to this, including the nine leading businesses in Indiana, WalMart, Apple, and many others.  New legislation was quickly introduced (or that in Arkansas modified) to explicitly indicate that this “religious freedom” legislation could not be used to discriminate against marriage preference. 

During the same week, Starbuck’s CEO, Howard Schultz, passionately expressed  his and Starbuck’s recognition of same-sex marriage. He based his position primarily based on its being the right and fair action to take for his very diverse group of employees. His statement drew broad support but also criticism, with the latter usually  being couched in terms that said Starbucks should stick to serving coffee.  

This set of events raises some important questions.  To what extent do businesses have the right and indeed the obligation to voice their position on moral or ethical grounds to sway public policy?  How does business strike the right balance between its values and abiding with an existing social policy, imbedded in law and perhaps embraced by a large percentage of the population, including its employees or customers?

Getting down to cases, as CEO in 1995, I reached the position that Procter & Gamble should provide equal benefits to individuals who are in a codified same-sex partnership.  We did this at a time when the majority of Ohioans opposed same-sex marriage.  We were not taking a position that these individuals were wrong in their belief.  We were taking the position that the same-sex partnership as it was codified made it right in the name of fairness to accord our employees in such a partnership the same benefits as a married couple.  This decision proved fairly controversial, but I was confident that it was right to do.  We were not making a moral pronouncement on same-sex marriage at this time.  We were saying that in the name of fairness there was no reason to deny individuals in this relationship same-sex benefits.

A related issue being discussed at the moment relates to the “personhood” of a corporation.  Is a corporation a “person” or not?  Or, the question goes even further:  does a corporation have a “soul?”

Many, perhaps most, would say, no, a corporation is not a “person.”  As one columnist said cryptically, a corporation won’t be a “person” until it is capable of being executed in the State of Texas. 

Where do I stand on this issue?  It depends on what you mean by “person.”

I would say that business has a “responsibility” as part of society to advance and act on positions that are consistent with what as a corporate body (leaders, board of directors) represent correct moral values?  I say this because corporations play a major role in forming the cultural and value-based character of a society.

I do believe that corporations need to be humble and circumspect in taking on moral and social issues.  They have to recognize the need to balance the interests of those it serves -- its consumers, employees, shareholders and the community. 

To take an extreme example, consider a corporation's having to contemplate making a value-based decision that might severely weaken, maybe even destroy its current business. Would there ever be occasions where it would have to go this far, to almost literally have to go out of business?  I’d say yes, if its being in business meant threatening the life of consumers or anyone else. In a real sense, this consideration led to P&G’s withdrawing Rely tampons from the market decades ago.

When I say a corporation must be circumspect and humble, I mean that it must avoid becoming sanctimonious or in any way believing that it has a role of being a priest or prophet in its times.  It must speak judicially, and sometimes bravely, and it must avoid failing to do the good it can do at a given point in time because it cannot achieve perfection. 

Take the situation of Procter & Gamble in Saudi Arabia many years ago.  There was a social and perhaps even legal mandate that men and women could not work together in the same office.  P&G might have, given its commitment to gender equality, said that it would not do business in Saudi Arabia at all.  Or, I guess it could have taken the position it would violate the laws, though that would not have lasted long.  What did we do?  We set up separate office locations where women would work and where men would work and they would communicate by phone or other means between the two offices.  We did this on market research and brand work.  At the same time we advocated to change the social norms and the laws.  We believed that was right to do, not only morally (women deserved equal opportunity) but because we were certain it would be better for the business to have women and men working together in that way.  We felt advancing gender equality was right for the business and right morally.  We kept advancing this goal.

This raises another question:  is the test for a company taking a position on a moral or social issue whether it is relevant to the success of the business itself in the long-term?  Put differently, should businesses only weigh in on social and moral issues when they bear directly on having the right (and by “right” I include being morally correct) business and working environment long-term?  My answer is yes, though I’d underscore the importance of taking a long-term view.  For example, I believe the commitment to achieve a sustainable environment is one that businesses should advocate, even beyond the immediate benefit of that for the business itself.   Why?  Because I believe businesses should understand that having a world in which they or any other business could operate successfully long-term requires a sustainable environment.

Said differently, I believe that a business has social and moral obligations that go beyond simply making money in the short- or medium-term. 


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