Breaking news: Wealthy business owners say the pursuit of profit is no longer enough. Okay, that’s not exactly what the headline read. Here it is: Why Arianna Huffington says there's more to business than profit. The subheading: Pursuit of short-term profit not working anymore, Huff Post chief says. The article goes on: "It's not working for businesses long-term sustainability, and it's not working for employees' well-being. And at a time when so many governments are gridlocked and paralyzed and unable or unwilling to pursue big, bold, far-sighted goals, the private sector has a responsibility and a unique opportunity to become a catalyst for fundamental change.” Ms. Huffington went further to say, “Businesses have responsibilities beyond the bottom line, and need to be a driving force for social and environmental benefit in addition to financial gain.”
I’ll be the first to admit that I wear rose-coloured glasses. Friend and foe alike have accused me of this many times, not with the typical taunt, ‘hey four-eyes’, but rather with, ‘take those things off, you can’t see what’s really going on’. I wear my rosy specs proudly. They guide my actions.
Now Arianna (I feel comfortable calling her by her first name, one Greek to another) tells me businesses have been all about money. Okay, I know businesses have long been concerned with their bottom line. I actually believe that if they showed as much concern for their customers and staff, they’d make more money, but I digress.
We all lose when businesses are only concerned with their bottom line. Quality, service and adherence to good business practices are a few things we lose when profit is the only motivation. There have been lots of examples of businesses outsourcing everything from product development to customer support. And not just outsourcing to anyone, but rather to countries with questionable business, construction and legal practices. I can’t remember the last time I saw a label that said, Made in Canada or spoke to someone to ask a question about my account who was actually in Toronto or up the street rather in a country miles away? Can you?
Actually I did buy my last yoga pants and shirt from Fruv Freedomware in Whistler. Their displays scream out in glee: Made in Canuck Land. And I get teary-eyed. In case in doesn’t show I’m very patriotic and what with Canada Day and all coming up, who wouldn’t be. But, again, I’m rambling. It’s a habit.
So yes, I do see, even with my tinted bifocals that business people do what they do to make money. Sure. But, I’ve also always believed these individuals had loftier goals in mind too, things like: providing a service where none exists, offering employment to others, giving something back to their communities.
And despite evidence to the contrary, I guess I still believe this of most honourable businesses. In 2013, the Ethisphere Group listed 138 companies for their ethical practices. “Ethisphere’s proprietary rating system, which the company calls the Ethics Quotient, includes reviewing codes of ethics and litigation and regulatory infraction histories; evaluating investment in innovation and sustainable business practices; looking at activities designed to improve corporate citizenship; and studying nominations from senior executives, industry peers, suppliers and customers.” For the complete list of companies nominated, check out the Forbes Article.
So some companies are focused on the right things. I knew it all along. In the same Forbes article, Alex Brigham, executive director of the Ethisphere Institute noted, “companies find that ethical business practices increase their competitiveness in their respective industries, helping to further substantiate the notion that a culture of ethics is crucial to sustainable excellence.” Of course it does. I knew that. Didn’t I just say that a paragraph or two ago?
So I was surprised to read in the Arianna article that some economists feel this new move to focus on things other than profit (entitled Plan B) is wrong headed. NYU professor, Daniel Altman told CBC News, "I think the profit motive works just fine for protecting society, the environment and doing business in a sustainable way, as long as we do take that long time horizon." If that’s true, why did we have the see-through yoga pants debacle with Lulu Lemon earlier this year? Isn’t this an example of quality being sacrificed for profit?
And worse yet, how could situations like the collapse of the garment factory in Bangladesh have happened if it wasn’t profit trumping good business practices? This wasn’t the first time hazardous work place situations have resulted in death. In an article on June 28, 2013, the BBC listed the following deaths in Bangladesh in their growing garment industry. There have been other similar accidents in other countries that practice questionable business methods in order to keep costs low enough to make a profit:
- April 2005 - 64 garment workers killed in building collapse in Savar.
- More than 400 garment workers killed in at least 213 factory fires between 2006 and 2009, according to Bangladesh fire department.
- November 2012 - at least 117 workers killed in fire at Tazreen Fashions in Ashulia, near Dhaka.
See through yoga pants seem to pale in comparison to all this loss. And if you think Lulu Lemon’s troubles are over, take a look at the Globe and Mail article of June 23, 2013. It sounds like their troubles (some caused by their aggressive growth objectives and further need for profits) are just beginning. Here’s the article Globe and Mail article.
In the Arianna article, Aneel Karnani, an associate professor of strategy at the University of Michigan's Stephen M. Ross School of Business is quoted as saying, "In my view, companies should make profits, and people should do good things." His views were captured in a controversial article, The Case Against Corporate Social Responsibility published in the Wall Street Journal. He feels that, the responsibility for large-scale social initiatives should fall on the government's shoulders, not companies.
Shouldn’t it be our collective responsibility? You can probably read my mind and guess my answer to this question.
You can read the full Arianna article here and make up your own mind.
I read many of these articles with a bit of dismay. And yet, my specks guide my actions. Well, and my pocket book. When I can I buy from those who have ethical business practices, I do. I don’t give a penny, as my aunt would say, to those other people. You know the ones. You can see them a mile away. They’re the ones who want to make a buck on the backs of others at any cost, and feel they’ve hit the jackpot with North America’s need for cheap food, clothes, electronics, whatever.
I don’t need or want cheap. And this isn’t because I have lots of money. I don’t. But I’m committed (or committable, take your pick). If I can’t afford to buy what I want from those who share my values and beliefs, then I don’t need it. I know where my power lies, even as I’m teased about my naiveté. My power is in those lovely pink coloured glasses.
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