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Sunday, October 29, 2020

People and Principles

David Maister has written an interesting post that tries to deal with the clash that can occur between personal principles and the belief that, in business, you should accept—even seek out—business wherever it comes from. His post is called: "Guns for Hire." He says:
"It’s all about trust. If I knew that all my colleagues, bosses, partners, owners, etc., shared a common set of standards, then I would have the courage to make selective decisions based on those standards. However, if I think they do not share my values, ideologies, principles and preferences, then I will not take the risk and expose myself to criticism by turning away cash under any circumstances. And the organization’s decision-making gets driven to the lowest common denominator. We’ll shoot at anything that moves, serve anyone with anything, as long as they pay.
He suggests that many CEOs and other top executives feel as compromised in their personal integrity as the most idealistic junior in the organization. Yet they still persist in seeing themselves as "guns for hire," who cannot afford—maybe because of their interpretation of fiduciary duty to the shareholders—to turn away business, even if they feel it is tainted.

I'm not a lawyer, so I cannot comment on that interpretation of the law, but there are plenty of examples every day of other businesses turning away potential customers whom they don't want to serve. I think David has it right about trust—but I would go further. I suspect that there is a feeling that sharing your own values openly with your colleagues is inappropriate, because the business world is supposed to be "hard headed."

I think that is wrong. The trouble with making an ethical compromise, whatever the reasoning behind it, is that one easily leads into another. We have seen plenty of recent examples of executives and organizations getting into big trouble because of a naive belief that making money, by whatever means, is all that matters. Many business decisions are ethical by their very nature. You cannot change that by oversimplifying them into decisions about whether or not you will make money on the outcome.

We should be having an open discussion about business ethics and the limits of a director's fiduciary duty to shareholders, especially when there appears to be a clash between doing what will make money and doing what is right. David's post is a useful start.

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3 Comments:

Charles H. Green said...

There are several different kinds of events referred to in your post and in David's original post. Actions that are legal or ethical (or not), actions that are driven by fear or economic loss, or--as you suggest--actions driven by a sense that one isn't being "hard" or macho enough.

I see a lot of clients in my practice who suffer more from what I might call a sense of impotence. They profess "values" of client focus and collaboration, for example, but don't necessarily practice it. And the most common reason they give is not fear of economic loss, and not fear of looking "soft," but very simply a belief that they have no power in the situation--that customers will walk and get the business if they don't give in. So they agree to offer discounts, agree to focus on the next deal rather than the relationship, agree to be secretive and short-term driven.
It's not shame about admitting to certain beliefs or principles; it's a feeling that no one else holds these principles, and therefore they will be taken advantage of if they are the only ones espousing them.

Ultimately this is a case of weak principles, more like what David was talking about; senior execs who at heart believe the world is a rather bad place, populated by rather powerful people, and that to get along, one has to abandon principles from time to time.

It is, of course, a self-fulfilling prophecy.

5:53 AM  
Charles H. Green said...

There are several different kinds of events referred to in your post and in David's original post. Actions that are legal or ethical (or not), actions that are driven by fear or economic loss, or--as you suggest--actions driven by a sense that one isn't being "hard" or macho enough.

I see a lot of clients in my practice who suffer more from what I might call a sense of impotence. They profess "values" of client focus and collaboration, for example, but don't necessarily practice it. And the most common reason they give is not fear of economic loss, and not fear of looking "soft," but very simply a belief that they have no power in the situation--that customers will walk and get the business if they don't give in. So they agree to offer discounts, agree to focus on the next deal rather than the relationship, agree to be secretive and short-term driven.
It's not shame about admitting to certain beliefs or principles; it's a feeling that no one else holds these principles, and therefore they will be taken advantage of if they are the only ones espousing them.

Ultimately this is a case of weak principles, more like what David was talking about; senior execs who at heart believe the world is a rather bad place, populated by rather powerful people, and that to get along, one has to abandon principles from time to time.

It is, of course, a self-fulfilling prophecy.

5:55 AM  
Carmine Coyote said...

Thanks you very much for your comment, Charles. The point you make is an important and insightful one.

It feels as if a good part of the problem is that everyone has some sense of values and principles—even if weak ones—but assumes either that nobody else has any at all, or that acting on their values will be seen as weak.

The only answer is to start talking openly about our values. That way, we will discover that we are not alone and that acting on our values is what most of us feel best doing. There is always greater confidence to be felt when you can see others are like you.

Keep reading, my friend.

7:40 AM  

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