In search of business integrity
The View From Taft, BusinessWorld
A huge amount of oil (20 million gallons to date, by some estimates) has been spilling out of a British Petroleum (BP) rig into the Gulf of Mexico for more than a month now. The explosion that damaged the rig has killed a number of workers, while Americans in the coastal southeastern United States have suffered tremendous loss of livelihood.
BP's Web site assures the public that responsibility is one of its core values: "We are committed to the safety and development of our people and the communities and societies in which we operate. We aim for no accidents, no harm to people and no damage to the environment."
Despite this public stance, allegations about negligence on the part of BP have surfaced. Survivors of the explosion have claimed during a CNN interview that a BP official ordered its subcontractor to implement an unsafe procedure on the day of the explosion.
Survivor Doug Brown, the rig's chief mechanic, explained that BP "was cutting corners for time and money." When asked if he believed BP CEO Tony Hayward's assurance that safety was the company's top priority, he replied, "They're not being safe ... They're jeopardizing us all out there."
Does the public have the right to expect integrity from businesses and their leaders? Should business leaders mean what they say and say what they mean? Albert Carr, writing in Harvard Business Review in 1968, argued that saying misleading things in business, as in poker, was sometimes called for as a business strategy and was not morally objectionable. Bluffing, he says, is part of the game of business, which operates by its own rules, quite apart from society in general.
I suspect that today, 40 years later, many business leaders still believe Carr's basic argument. But can business really be like poker when workers' lives and the livelihood of millions may be jeopardized? Can bluffing be used when buyers depend on good information to make sound decisions?
In a legitimate market, the answer is "No." A fair market is based on the premise that a buyer and a seller freely agree to transact based on good faith and truthful information. Good faith rules out deception, truthful but misleading claims, and psychological manipulation. Buyers who are victims of deceptive tactics cannot be said to have been truly free and knowing when they entered into the transaction.
Of course, fantastic claims have been the hallmark of business for a long time. The snake-oil salesman pushing his product on the gullible with a fake admiring audience is much maligned in traditional literature. But have we come far from the time of the snake-oil salesman?
Maybe not. Mass advertising today is commonly mass deception, not mass information. In a pleasantly surprising move, the Department of Health (DOH) recently warned celebrities against endorsing food and herbal supplements promoted as "replacements" for medicines, saying that these products cannot really cure diseases.
Health Secretary Esperanza Cabral explained that "many are being misled into thinking that these supplements can cure diseases when in tact they can't. The DOH has gone a step farther. It has ordered that promotions for supplements include the notice that "the product is not medicine and is not to be used for treating diseases."
While the intervention of the DOH is long overdue, I would have preferred that supplement manufacturers exercised self-restraint in their claims. Health is a critical public concern, and to take advantage of people's relative lack of health knowledge to induce them to buy supplements is not trustworthy business behavior.
It's bad enough to mislead the uninformed for profit; it's worse to put people's health at risk in the process. McDonald's in the US displayed impressive integrity recently. Fortune magazine reports that the fast-food retailer voluntarily recalled its Shrek drinking glasses after trace amounts of a toxic metal were detected in them. The Consumer Product Safety Commission (CPSC) declared that "the product is not toxic and does not pose an acute risk to children." Nevertheless, McDonald's explained that it implemented the $15-million recall "as a precautionary measure" and due to "an abundance of caution."
An abundance of caution. That is definitely something I would like to see from BP, herbal supplement manufacturers, and all businesses. The whole point of building a brand reputation is to become trustworthy. There can he no trust without integrity.