Turning Up the Lights on Positive Business Ethics

”The Hill Center for Ethical Business Leadership helps organizations prosper through a strategic commitment to ethics and social responsibility.” 

 

I can only apologize if you are tired of reading the sentence above, the Mission Statement for the Hill Center. I can type it almost as quickly as I can type my own name.  The degree of repetition arises not merely from my unfortunate lack of imagination, but also from the repeated realization that the Hill Center is doing something distinctive under the rubric of “Business Ethics.” We’re helping business leaders find ways to do right, to do good, and to achieve measurable business results by so doing. Instead of constraining bad behavior, we’re promoting good actions on the part of organizations. 

 

The success of our approach hinges on the power of stakeholder relationships.  Here, too, we approach these relationships in ways that differ somewhat from conventional stakeholder theory. There is tremendous power in changing our perspective.

 

Stakeholder theory is highly influential in business ethics and management schools. It begins with the (fairly obvious) position that shareholders are not the only parties to whom management is ethically accountable. Stakeholder theorists articulate ethical claims held by others who participate in (or are touched by) an enterprise, such as employees, customers, vendors, and the communities in which the enterprise does business. Stakeholder management arguments are powerful from an ethical perspective, but they also tend to be divisive and problematic among managers and shareholders. Thankfully, we need not embrace a full, conventional view of stakeholder management to significantly improve an organization, both commercially and socially.

 

There is enormous power in a more positive notion of stakeholders: these critical relationships often present opportunities for managers to do good and to benefit in the process. Rather than argue about ethical obligations, we can often meet those obligations – or exceed them - by focusing on opportunities to invest in stakeholder relationships for mutual benefit.  Applying analytical rigor to this process can, in turn, change the way that we look at our businesses and offer rich insights into how we can do better, commercially as well as socially.

 

If we step back from the debate about who owes what to whom, the power of stakeholder relationships is unmistakable. In order to succeed, a business must produce something of value to someone. To achieve that basic end, the business needs customers who value those goods or services; employees who are willing and able to produce it; typically some vendors of needed components, materials, supplies or services; the list goes on. It seems perfectly rational, then, that an astute, creative manager can find abundant opportunities to invest in those relationships in ways that benefit stakeholders, strengthen the business, and thereby produce measurable business results.

 

If I’m right, this positive approach to stakeholder relationships underscores the general value of astute and creative management. Indeed, by looking at stakeholder relationships as levers for improving organizational performance, we open our eyes to all kinds of opportunities to reduce costs, improve products or services through innovation, streamline sales processes, open up new markets, or pursue any number of avenues for improved performance. These opportunities might not be visible through the lens of day-to-day operational management. Focusing on who owes what to which stakeholder will almost certainly keep them obscured. By considering stakeholders in positive terms we shed new light on our organizations in general. It is by that light that great managers can make remarkable changes for the better.

 

Next time, I’ll talk about some of the problems associated with this very point of view, and the solutions I propose.