Saturday, October 5, 2019
Goodwill Dismisses a Solid Societal Norm: A Mentality beyond Unethical Conduct
Thursday, March 7, 2019
“No Loans” on Gun Sales: G.E. as Socially Responsible or Financially Savvy?
First, though, can the policy be said to fall under the rubric of corporate social responsibility? What if marketing the policy was simply good business? The societal benefit in making it more difficult for people to buy guns may simply have been intended as a byproduct. Surely the societal good of a byproduct has worth even without having been motivated when the policy was chosen. Even so, the primacy of self-interest--the profit motive--irrationally taints the resulting societal good. Such a company's societal reputation would be enhanced by the good of the byproduct and decreased by the primary motivation of self-interest.
How salient was the profit-motive in GE's decision to stop lending on gun sales, and how great was the impact in terms of the benefit to society, beyond the company? GE Capital Finance had already stopped providing consumer financing for new gun-shop customers in 2008. The policy change in 2013 merely extended the ban to existing customers. So it is not as though potentially new customers would be discouraged from buying a gun on impulse for nefarious purposes. The impact on the bottom line from lost sales could not have been assumed to be great; even if new and existing gun customers had been eligible for financing before the policy change in 2013, we would still be talking about a small fraction of GE’s revenue. Additionally, according to USA Today in 2013, GE’s “decision affects fewer than 75 retailers, which GE says is about 0.001% of all gun retailers.” This is because the policy “affects only retailers that sell firearms exclusively.” General merchandise stores, such as Walmart, were excluded from the company’s lending ban.
However, Wells Fargo had stopped financing gun purchases in 2004 “for business reasons,” according to company spokeswoman Lisa Westermann. Perhaps it was good business at GE too, but not directly.
Indeed, the "corporate social responsibility" policy as promotion could have been expected to boost sales companywide without much cost in foregone gun sales on credit to new customers in gun stores only. In fact, the policy as promoted could even be misleading, as in the article's title in USA Today, “GE Won’t Make Loans to Buy Guns” even though GE would still be financing guns—just not through stores that sell only guns. The gap itself between the publicized and actual policy could mean that the managers' intent had been to use “marketed CSR” to boost the company's reputational capital with as little cost as possible. In other words, the profit-motive was likely the motive. If most of GE’s lending on gun purchases was through multi-merchandise retail stores, GE could capitalize financially on sympathy from the school shooting without having to give up much financially. Interestingly, the shooter’s father, Peter Lanza, was a GE executive at the time—the company being based in Fairfield, Connecticut. Had other GE executives felt obligated, also being at such close range to the tragedy, to protect the kids, we would not have seen the sort of motivation that led to the exceptions and allowing the misleading storyline to go uncorrected. Were the primary intent that of protecting kids at schools from getting shot, the loopholes would not have been allowed to exist even if GE had to wait for contract renewals with general-purpose retailers such as Walmart.
Often corporate social responsibility and business ethics are conflated. The distinction in this case is clear. The fitness of a policy to societal norms is a descriptive matter of whether organizational values are in sync with societal ones, whereas the misleading claim to have have ended loans on gun sales is a normative matter. Whether the norm in GE is consistent with the societal norm on the role of guns in the tragedies does not require justification by ethical reasoning and principles or theories. In contrast, whether a company should be misleading or even fail to stop it in the press necessarily includes resort to ethical principles, for only they can justify the claim that the motive or consequence is unethical.
Still another lesson to take from this case involves the choice to wade into a controversial societal issue. As in the case of gun control, which is really about access to guns, entering a controversial debate puts a company at risk for being negatively viewed by the “other side.” This could significantly reduce the good to the company obtained from the use of corporate social responsibility.
A USA Today poll taken at the time of the policy change in 2013 found public support for new gun-control legislation “slipping below” 50 percent. GE risked many people agreeing with John Meek, the owner of a gun store in Illinois, who called GE’s policy “an injustice” because the instrument rather than the user is being blamed. Howard Schultz of Starbucks, in contrast, correctly judged the changing American attitude toward gay marriage in using the company to promote the cause, even if a CEO using a company for a personal political agenda is unethical. A dramatically changing shift in societal mores, norms, or attitudes is like a wave that managers strategizing corporate social responsibility programs and policies can ride, whether the motive is financial gain only or includes improving the social good. What might seem like an easy way to enhance a company's societal reputation can easily backfire if not done with attention to a changing business environment.
Wednesday, November 14, 2018
Thanksgiving Elipsed by Christmas: Will the Offending Businesses Go Extinct?
The New York Times reported in mid-November 2011, “Major chains like Target, Macy’s, Best Buy and Kohl’s say they will open for the first time at midnight on Thanksgiving, and Wal-Mart will go even further, with a 10 p.m. Thanksgiving start for deals on some merchandise. . . . To be at or near the front of the line, shoppers say they will now have to leave home hours earlier — in the middle of the turkey dinner for some.”[1] Of course, Wal-Mart stores would be open all day, as usual; the significance of midnight lies only in terms of the sales; the stores would still need to be staffed all day. In 2012, 10 p.m. became the new normal. Two years later, 8 p.m. (20:00h) earned the distinction. Four hours into Thanksgiving was apparently enough for Kmart to “go all the way,” opening at 6 a.m. on Thanksgiving. Old Navy extended back to 9 a.m. It is amazing how fast a trickle from a few cracks can turn into a deluge, especially when profit is the force beckoning the water down-stream.
Resisting the smooth flow in 2011, an apparent anti-entropic energy-attractor was on track to blaze a new path. Bill Gentner, senior vice president for marketing for J.C. Penney, refused to go along with herd down the easiest path of energy transduction, which can paradoxically render the person, species, or human organization less fit to adapt via natural selection. “We wanted to give our associates Thanksgiving Day to spend with their families,” Gentner said just before Thanksgiving in 2011.[2] In standing on this principle, the management group at J.C. Penney voluntarily resisted the “quick buck” (i.e., pulling in money as soon as possible) and perhaps even held business calculation at bay in the face of a normative societal “constraint.”
Lest I am “gilding the lily” (i.e., painting a halo around Bill Gentner’s head), J.C. Penny’s management may also have been seeking to amass reputational capital with the intent to “spend” it to increase sales revenue beyond 2011. The company could then be fitter in adapting to a nonlinear (i.e., chaotic) business environment, and thus more likely to survive through the cumulative cascades of natural selection. Linking evolutionary theory to thermodynamics and applying the fused thrust to business, I contend that capturing and concentrating energy in the battery, or storage cell, of reputational capital enables a company to survive under the pressures of natural selection by functioning as a transductor of energy along a high energy gradient.
Unlike floating down-stream with the other fish, adding to the swirling force of an eddy enables an enterprise act as a conduit on a much steeper energy-gradient. Concentrating acquired energy rather than merely passing it through as though a digestive track is requisite to taking the road less travelled down steeper energy-gradients than those in the status quo. Similar to the time value of money, the delayed gratification enabling an enterprise to ski on a steeper slope renders the organization more fit or adapted to its environment and thus profitable beyond tomorrow. In other words, functioning as an energy-conduit along a steeper gradient profits a business in terms of natural selection, and thus a more secure continued viability.[3]
Alternatively, taking the alternative route, the more convenient one, ultimately leads to extinction. Typically, convenience knows itself as a lie. For example, Holly Thomas, one of Macy’s spokespersons, wrote in an email in 2011 regarding employees working on Thanksgiving, “There are many associates who would prefer to work this time as they appreciate the flexibility it affords their schedules for the holiday weekend.”[4] As if referring to a summer baseball team rather than employees, Molly Snyder, a spokesperson at Target, said that her company does its “best to work around the schedules of [its] team members.” Nevertheless, a Target employee told me that the store managers do not in any sense do their best to accommodate exogenous schedules of the underlings. In going with a bland subterfuge rather than adapting to societal norms, Target's management put the company at odds with the principle of natural selection.
The lure of instant gratification in lieu of reputational capital and fitness to survive the accretions of natural selection over time can easily short-circuit efforts to charge the battery at the expense of increased sales revenue in the short term. Sadly, the management at J.C. Penny succumbed in 2012 to opening stores at 10 p.m. on Thanksgiving. The following year, the company joined many others in opening at 8 p.m. (20:00h). Nothing punctures a pressurizing balloon quite like that the piercing edge of hypocrisy. Put another way, having stores open on Thanksgiving evening not only cuts into or even eliminates Thanksgiving dinner (i.e., in the evening) for many store managers and non-supervisory employees, but also sends the passive-aggressive message that they don’t count after all. Actions speak louder than words.
So J.C. Penny’s management wimped out, or lapsed back to the bottle yet without hitting bottom. Being less fit than otherwise to navigate the turgid currents in natural selection over the long term, the retail giant risked being caught unaware should a careening stone hit a sweet spot from a smaller foe releasing a burst of (stored) potential energy to take advantage of a steep energy gradient. From this tale, we can now recognize the tyranny of the road most traveled as a well-worn, deep-rutted path of self-destructive (i.e., dysfunctional) business strategy. In other words, business as usual is woefully far indeed from good business management. Nevertheless, the vast majority of management groups in companies are under the false impression that scientific management has optimized modern management. While technical coordination aimed at the perfection of efficiency is important to a business functioning as an energy-attractor and transductor along a steep slope, the size and depth of the shared blind-spot bewilders me and beguiles the pro-business American society at large. If I am correct, business could be done much, much better.
2. Ibid.
Friday, April 11, 2014
The Mega-sized Shopping Mall: A 20th-Century Artifact?
New Birds of Prey in Modern Retail
Thursday, July 15, 2010
Best Buy: A Retail Company Using Apology to Sell Still More
As I was entering a “Bestbuy” store one summer day wearing shorts and a tee shirt and carrying my ubiquitous book bag (as you might expect), the security person, whom the manager later told me also works at a prison, walked after me as though stalking me, practially yelling “Sir! Sir!” Reaching me as I was talking to a salesperson who was treating me as though I were a customer, the lineback demanded to look in my book bag immediately. I stated matter of factly that I had had no opportunity to stash anything from the store in my bag while walking in the front door (after which he saw my every move). Nevertheless, I opened my pouch for him and he was satisifed. After I left the salesperson, I reported the incident to a manager, whose “company apologizes” was belied by his curtness and fake politieness. Can a company even apologize?



