It’s values that matter in business, not morals

I’ve been tying myself in knots lately trying to get people to understand what I see as a basic concept: that morality has no place in business. Yes, that’s what I said. So you can see why I’m struggling to win support!

The trouble is that I introduce the subject in exactly those terms – “morality has no place in business” – which is asking for trouble. I’ve immediately lost pretty-much all of my audience because they assume I’m condoning questionable business ethics, such as the recent scandals involving corporation tax avoidance or the manipulation of Libor.

No doubt if I’d introduced the subject with the statement “immorality has no place in business” I’d have won more support. Yet the statements are saying the same thing. It’s the role that moral judgement plays in purely business decisions that’s at play here: this isn’t a defence of immoral business practice despite the fact that’s how most people hear it.

I guess you can see why I’ve got myself in such an intellectual muddle, although it still seems obvious to me. Morality is a judgement that doesn’t figure as a business calculation. By its very nature business is amoral – meaning it lacks the necessary equipment or structure to make moral judgements: good or bad. Indeed, one dictionary definition of business states “the purchase and sale of goods in an attempt to make a profit”. And, if this is the definition we mean by “business” (which I believe it is) then – at a primary level – morality is not part of the equation.

Of course, morality does get injected into business – ever more so. But that’s a secondary – non-business – evaluation: not least because it could well weaken the business proposition. Sure, the moral injection may be the right thing to do. But it’s not a business consideration. It’s a moral one.

The Libor scandal is a case in point. Individual traders were following their own instincts and needs regarding the rate-setting process, seemingly unconcerned about the wider implications of their actions (that, as a benchmark rate, the manipulation would alter repayment costs on billions of dollars/pounds of financial instruments). Indeed, if they’d shown such a concern, the profitability of their own cause would have been harmed – a potentially-fatal weakness in a competitive City-trading environment.

So, on the basis of morality (rather than legality, note: at the time, such manipulation was not criminal), the manipulators were right to be unconcerned, by which I mean the consequences were not their concern (in the strictest business sense). Sure, it should have been the concern of the regulators: indeed, Libor’s weak regulatory oversight was a central cause of the scandal – not least because, like others, I’d always marvelled at the rate’s rudimentary constitution. But it was not a primary concern of those traders found to be manipulating the rate by persuading the rate setters to make adjustments (although, staying within the law was indeed their concern, I re-emphasise).

By now, of course, I’ve lost 90 percent of my audience.

“So it’s all down to the regulators is it?” they retort, assuming I’m in the “just don’t get caught” school of capitalism.

Yet that’s not what I’m advocating. Morality and legality may deal with overlapping concerns, but they’re very different concepts – even for business. All businesses (and traders) have to operate within a law that, yes, others may have judged to be morally based. Yet morality above what’s required legally is something they choose to adopt, which isn’t a primary business concern.

Still with me? Thought not, because – of course – modern business no longer operates at a primary level. New products can appear overnight, sophisticated marketing techniques can whip up mass desire in a nanosecond, and the industrialisation of the manufacturing process (even for food) generates such complexity that consumers can be harmed in myriad different ways (including being morally offended). So, even if our first thoughts were about the need for “profit”, morality quickly interjects.

Does this, then, make morality our second thought? Possibly, though even here I think it could get confused with “risk”. A classic example of this occurred on The Apprentice this week when Lord Sugar’s hesitation in backing Leah’s non-surgical beauty clinic was not the moral questions raised by such practices as Botox injections, but whether those moral questions could damage his reputation (a strictly business consideration).

Harming customers – including customers’ moral sensibilities – is bad for business. If, in the digital age, desire can be quickly whipped up, then so can rage. And moral reactions to events only indirectly relevant to a company’s operations can rapidly fuel primary business concerns regarding profit and even viability.

Primark learnt this lesson in April, when a suppliers’ factory collapsed in Bangladesh – killing 1,200 poorly-paid workers and forcing the company to become directly involved (at least from a regulatory standpoint) in a manufacturing process it had previously held at arms’ length. Consumers felt angry (or guilty perhaps) and this impacted the company’s primary business interests (to make a profit), despite the manufacturing of garments being a fully-outsourced part of their process.

Of course, in the modern world of self-actualised (i.e. post material) consumers, morality has become a consumer product in itself. Companies now sell morality: whether it’s ethical investments, free-range meat, fair-trade coffee or – as in the John Lewis Partnership – wholesome employee incentives. This is great news, although my infallibly-capitalist mind views this as an appeal to a particular market segment: a consumer willing to pay a premium for an added feelgood factor while assuaging any residual guilt brought about through the act of consumption.

And as the world gets richer – and the number of post-material consumers increases – morality as a primary-business proposition will surely rise: hence the increasing number of consumer brands that go out of their way to propagate their moral credentials.

Does this square the circle – defeating my own argument about morality and business? If it wasn’t for the fact I think those companies are packaging and selling morality – for profit – I’d agree that it does. But, for me, selling morality as a commoditised product has the whiff of animal capitalism – especially given the margins available on products that come with a moral backstory.

I’m not being cynical here: just honest. In fact, I support such endeavours because they’ve done something more important than propagate morality – they’ve followed their values when building a business. Indeed, it’s their values that have made such a business work, which potentially undermines the whole concept of morality and business being incomparable concepts.

In both What’s Stopping You? and What’s Stopping You Being More Confident? I spend time talking about the need for values in goal-setting. They’re important, I stress, because goals that contradict your values will ultimately fail. For instance, if your goal is to create the biggest real-estate agency in London, while your values detest the greed that property speculation encourages, either the goal or the value will lose out – in fact, most likely both.

But values don’t have to be moral. As I state in both books, this isn’t a plea for piety. The values of those Libor manipulators would most-likely match their acquisitive goals, which – for them at least – works (though outraging moral opinion to the point the regulators stepped in proved an ineffective long-term strategy). But if your values are morally-based – and for many people they are – setting goals that contradict these values will almost certainly lead to failure, or unhappiness: and probably both. And I’d say that was even the case with amorality because, for the person with moral values, the moral result matters: in fact, it’s a primary concern – potentially trumping business considerations such as profit.

All of which leads us to the ultimate answer to the conundrum: does morality belong in business? If you’re driven by moral values then, yes, it does. But that doesn’t make the Libor manipulators immoral. It makes them rational business people whose amoral values brought them into conflict with morality’s encroachment into business.

Have I untangled those knots yet?

Comments 3

  1. I have just enjoyed the second edition of your book “What’s Stopping You” and the clarity of reasoning and the lucid conclusions you make have, at last, enabled me to come to terms with a lifetime of fighting my Monkey. I am eternally grateful to you. I was born a sensitive High AM and in consequence of serious physical and emotional damage became a High FF. Not understanding this caused me to fight for my survival through many crises of despair and depression but the thought that I would eventually be successful has never deserted me. I saw your book at Heathrow Departure. Arriving in Thailand I became depressed again because everything was perfect and happy. I started reading your book as a distraction to my negative thoughts. The miracle of delivery from the pain is almost beyond explanation. I offer you the most sincere thanks. Peter Hatcher

  2. I concur that there can be no morality in business. It does not mean that we cannot be caring for our customers and associates. A business is run and organised within certain criterion or rules without which it will not be efficient and theses rules are vital for good business

  3. Pingback: That’s right, I said humility matters in business?

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