Doing Good

In today’s business world, it is necessary to do good and to do well. Customers, shareholders, investors, activists, policymakers and the media have merged the two, expecting business to do good things in society and to be profitable at the same time. They see no inherent contradiction. In fact, the prevailing expectation is that a leading company does not subordinate morality, ethics or righteous behavior to the pursuit of profit. Any company that does so is pursuing a flawed and outdated model that is no longer sustainable. People today are quick to point out that business—especially big business—should always seek to do the right thing. But in the context of business, what does that mean? In business, “doing the right thing” is often used as a moral counterbalance to doing the profitable thing, signaling that what is right may not always be what is profitable, or conversely, what is profitable may not always be morally correct. But that juxtaposition is wrong. This little book—and I acknowledge that it is little compared to the lengthy academic volumes on the subject—is designed to remind corporate leaders and other interested observers of the basic principles of corporate citizenship, ethics and responsibility, as I see them. Today, corporate responsibility involves a more comprehensive and complex mandate for today’s companies. It extends well beyond financial disclosure and accountability to shareholders. In the new order, corporate responsibility requires companies to treat their employees fairly, to support and contribute to the communities in which they operate, and to act in a way that meets or exceeds the ethical, social and legal expectations that society has of business. Ideally, it involves a comprehensive set of policies, practices and programs that are as central to a company’s mission as the need to return profit to shareholders. Our global economy has generated a new set of corporate responsibility expectations. Companies operating internationally should be acutely aware that the totality of their corporate activities are viewed through a new prism—a prism containing such facets as human rights, environmental protection, fair labor, diversity, inclusion, and sustainability, among others. As the power of corporations has expanded globally, so too has the risk of negative publicity and legal liability. Lawsuits against corporations for one form or another of corporate misbehavior have proliferated over the last decade, and there is no end in sight. Consider the following real-world scenarios: • A corporation’s failure to use Western-based environmental standards in developing countries, for example, can become the basis for an international boycott by environmental activists. • A company’s policy of paying indigenous workers in developing countries lower wages than it pays its U.S. employees—even though generous by Third World standards—can lead to charges of slave labor in addition to greater government scrutiny. • Well-intentioned gift giving by a zealous salesman in pursuit of a lucrative international contract could lead to foreign corrupt practices or ethics charges. • Inattention to the ethnic balance and composition of its executive ranks could land a firm upside down in The Wall Street Journal. • The brutish or racist remarks of an unschooled executive, however light-hearted, could lead to an embarrassing 60 Minutes or Nightline expose, in addition to class-action litigation. These real-world developments have contributed to the rise of corporate responsibility as an essential focus area for any and all corporations. Today, most major corporations have established separate divisions devoted solely to monitoring and managing corporate ethics, citizenship, and social policy issues. Some have sought to integrate corporate responsibility into departmental or divisional functions and operations. Many have directly linked executive compensation to performance and progress on diversity and social policy matters. And there are others that have relegated the attention to corporate responsibility to obtuse divisions or perfunctory personnel—far away from profit centers or the centers of power in the company. Whatever method it selects, the way a company handles the panoply of policy issues generally has a direct and quantifiable impact on its bottom line—for better or worse. Shareholders and consumers consistently have demonstrated that they value companies with responsible, ethical policies and practices. Study after study show that customers want to spend their money with companies that are seen as responsible--even if it means spending a little bit more in the process. If a company and its leaders are aware of the new rules by which they are being judged, they stand a far better chance of not only succeeding, but doing good. And that is what this book is all about.