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Business Ethics in the News

A discussion on the week's top business ethics stories by Professor Kirk O. Hanson, Executive Director of the Markkula Center for Applied Ethics, and Patrick Coutermarsh, Fellow in Applied Ethics and recent graduate of Santa Clara University.

  •  THE GOOD NEWS: McDonald's Announces 2020 CSR Plans

    Thursday, May. 1, 2014
    Source: CA Maylasia (Flickr)

    Wednesday, McDonald's released its first ever "Corporate Social Responsibility and Sustainability Framework" to guide the company through 2020. The Framework was developed through collaboration with suppliers, franchisees, customers, and sustainability experts. 

    Aspirational Goals:

    • Supporting sustainable beef production by collaborating to develop global principles and criteria, and committing to begin purchasing a portion of beef from verified sustainable sources in 2016
    • Sourcing 100 percent of coffee, palm oil and fish that is verified to support sustainable production
    • Procuring 100 percent of fiber-based packaging from certified or recycled sources
    • Serving 100 percent more fruit, vegetables, low-fat dairy or whole grains in nine of its top markets
    • Increasing in-restaurant recycling to 50 percent and minimizing waste in nine of its top markets
    • Increasing energy efficiency in company-owned restaurants by 20 percent in seven of its top markets

    "We're on our way to mainstream sustainability ... making it part of our everyday business life and the lives of our customers," Bob Langert, VP of CSR and Sustainability.

    2020 Corporate Social Responsibility and Sustainability Plans (McDonald's)

    A Framework for Ethical Thinking (Markkula Center)

     

    NEXT STORY: Kirk Hanson on Donald Sterling and LA Clippers

  •  NBC Bay Area: Kirk Hanson on Donald Sterling and L.A. Clippers

    Wednesday, Apr. 30, 2014

    This week, Markkula Center Executive Director Kirk Hanson, spoke with NBC Bay Area about the Donald Sterling and L.A. Clippers controversy.

    Click here for the story and video on our Facebook page

     

    NEXT STORY: Racism in the Corner Office

  •  CLIPPERS: Racism in the Corner Office

    Tuesday, Apr. 29, 2014
    Source: Wikipedia

    Los Angeles Clippers owner Donald Sterling is under heavy fire this week, after an audio recording was released of Mr. Sterling making a series of racist remarks. The NBA responded with a swift investigation, and announced today that Mr. Sterling is to be fined $2.5 million and banned from all NBA events for life. This is not the first time Mr. Sterling has been accused of discrimination. In 2009, Mr. Sterling was sued for housing discrimination, resulting in a settlement of over $2.7 million. He was also sued for racial discrimination by the former general manager of the Clippers, Elgin Baylor. The release of the recording, along with the public outcry, raises the question: can a person who holds racist views own and operate a company in the United States today?

      Kirk: A generation ago we may have looked the other way on the attitudes, beliefs, and behavior of CEOs and owners, but today we are more concerned with the private behavior and beliefs of the CEO. We recognize that these things are models for behavior for all employees in the organization and directly impact the culture of the company. From a purely business standpoint, these comments will cause the organization to lose a great deal in sponsors, fan base, and even players, if corrective action isn’t taken. The only surprise here is that this hasn’t come to a head sooner.

      Patrick: To answer the question, a racist can own a company—Mr. Sterling proved this to be the case for the past 33 years—but it doesn’t mean they should. Based on Mr. Sterling’s past, as well as the comments he made about the team’s players, it was inevitable that his views would result in discrimination. The line I fear we are in danger of crossing is that of becoming the “thought police;” that is, punishing discriminatory thoughts instead of discriminatory actions.

    N.B.A. Investigation Racial Remarks Tied to Clippers Owner (NY Times)

    A Framework for Thinking Ethically (Markkula Center)

     

    NEXT STORY: Kids in the Workplace

  •  WORK ENVIRONMENT: Kids in the Workplace

    Saturday, Apr. 26, 2014
    Source: Pixabay

    As American women continue to exit the workforce at an increasing rate, talk is turning to ways of making working and having children more compatible. The proposed solution? Allowing employees to bring kids to the workplace. In a recent survey asking whether employers should let workers bring kids to work, 61% responded yes, with limits; 26% responded no; and 13% yes. Proponents argue that the added flexibility for parents would quell the exit rates and increase productivity through relieving stress. While just about anyone could agree that a group of loud kids running the office isn’t preferable, others point to another concern: fairness to workers without kids. Many feel that parents should not receive special privileges, so to level the playing field, nonparents should be permitted to adapt the workday to their lifestyles as well. Should kids be allowed in the workplace? Are employees with kids entitled to more flexibility than those without children?

      Kirk: Maybe it’s my age, but this trend leaves me cold. I don’t see how a worker with children to care for could at the same time concentrate and be productive. I applaud firms that offer daycare, particularly onsite daycare; but please, not in the office. Then again, I do think parents are should receive extra help from the company; child rearing is a common good that benefits the whole community.

      Patrick: I think the answer to this question comes down to the particular company and their culture, not to mention their facilities (cubicles and kids don’t go well together). The key here should be to get everyone at the company on the same page and coming to a clear understanding of where the line is. Management should take into account the lifestyle and wellbeing of their employees, along with the demands of the job, and look for measures that are mutually beneficial: whether that be offering onsite yoga or daycare.

    Kids should be welcome in offices, with limits (Al Jazeera America)

    A Framework for Thinking Ethically (Markkula Center)

     

    NEXT STORY: Paying Employees to Quit

  •  AMAZON: Paying Employees to Quit

    Tuesday, Apr. 22, 2014
    Source: Softpedia

    Amazon has made headlines recently for a surprising policy: it pays its workers to quit, but not in order to reduce the size of its workforce. Amazon believes that an employee who takes the offer should not be at the company in the first place. CEO Jeff Bezos explained the program by stating, “In the long-run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company.” The cost of poorly motivated workers is well documented, with Gallup estimating that $450 to $550 billion a year is lost in the United States alone — Amazon’s “Offer” starts at $2,000 and tops off at $5,000. A few have suggested this policy may reduce the likelihood that employees will press for that are really needed, and will instead take the money and run. Is “paying employees to quit” a practice that should be accepted and widely adopted?

      Kirk: I think this gimmick is a terrible idea. I believe a company has an obligation to create a healthy environment that motivates its workers. This approach would seem to reject that responsibility, preferring to shed anyone who does not like the existing conditions. Companies need the ideas and suggestions of workers who see troublesome cultural practices and policy problems. By driving them away, the company signals that it does not want employees' input. This will not create a culture of constant improvement and mutual respect.

      Patrick: I share Kirk’s concerns, but I also think that Amazon might be on to something here. For one, paying dissatisfied employees to leave signals to other workers that Amazon is serious about protecting its culture and success. On the financial side, the policy will likely save Amazon money in recaptured productivity as well as avoiding more expensive severance packages. The fear is that companies will completely outsource culture management with these “pay to quit” deals — and at that point, workers will quit for free.

    Why is Amazon paying workers up to 5K to quit? (USA Today)

    A Framework for Thinking Ethically (Markkula Center)

     

    NEXT STORY: Unilever announces sustainable living program

  •  THE GOOD NEWS: Unilever's Sustainable Living Plan

    Friday, Apr. 11, 2014
    Source: Wikipedia

    Unilever announced this week that all its factories across Europe are now sending zero non-hazardous waste to landfills. Now on par with its North America factories, the effort in Europe is part of the larger “Unilever Sustainable Living Plan.” The Plan aims to substantially decrease waste by the year 2020, despite large increases in production.

    Already, Unilever has reduced total waste sent for disposal by 66% per ton of production since 2008. Management credits the cultivation of the “zero mindset” that included empowering employees to create projects to solve sustainability related problems. Not to mention, their efforts have saved Unilever factories over $23 million in disposal costs!

    Over 75% of Unilever's factories achieve zero non-hazardous waste to landfill

    A Framework for Thinking Ethically

     

    NEXT STORY: Clawback Policies and Executive Accountability

  •  G.M.: Clawback Policies and Executive Accountability

    Tuesday, Apr. 8, 2014
    Source: Wikipedia

    As details continue to emerge on G.M.’s faulty ignition switches in the Chevrolet Cobalt, linked to 13 deaths, one substantial question is left unanswered: Who decided that the 90 cents it would have taken to fix each switch was too much? Shareholders will inevitably get stuck with the bill for the cost of litigation and fines, but many fear that the executives involved will get a free pass. Returning past pay is an outcome some are pushing for, but it is highly unlikely in this case. G.M.’s compensation policies, particularly for recovery of bonuses, are generally limited to only accounting fraud—not unethical behavior. Similar to the majority of U.S. corporations, these clauses only require returning pay when the misconduct is intentional, and even then, only the highest ranking executives are subject. Advocates are pushing to increase the scope and severity of these "clawback policies" to cover siutations like G.M.'s faulty ignition switch. Are expanding these “clawback policies” a step in the right direction?

      Patrick: If one thing is clear, it’s that we don’t know the full story behind the G.M. faulty ignition switch mishap. Regardless of the particulars, I think expanding the jurisdiction of these clawback policies is a surefire way for Boards to send the message that they are proactively hedging against this type of behavior. At the same time, I think there is a danger of over expanding the policy, as I can see it leading to an increase in scapegoating individuals for behavior that permeates an organization. Then again, that’s part of the job for top executives.

    The Wallet as Ethics Enforcer (NY Times)

    A Framework for Thinking Ethically (Markkula Center)

     

    NEXT STORY: Mozilla CEO Under Fire for Prop 8 Contributions

  •  MOZILLA: Mozilla CEO Under Fire for Prop 8 Contributions

    Monday, Mar. 31, 2014
    Source: Wikipedia

    Mozilla, the makers of the popular web browser Firefox, is facing a media firestorm in protest of their recent promotion of Brendan Eich to CEO. Eich was an internal promotion for the company, having been CTO since 2005, but it’s Eich’s $1000 contribution to the 2008 anti-gay marriage “Proposition 8” that sparked the controversy. Mozilla, a nonprofit organization, is heavily committed to “keeping the web open” as well as values such as equality and inclusivity. In response to Eich’s promotion a number of key employees and developer groups called for his resignation on Twitter and other social media sites. Eich responded in a personal blog post that he would continue Mozilla’s effort of “commitment to equality in everything we do.” Critics are largely unsatisfied by the response, demanding either a retraction and apology from Eich or his resignation. Complicating matters, three of Mozilla’s six board members resigned this week, citing their desire to hire an outsider with expertise in mobile computing. Can a CEO have personal values that conflict with the values promoted by the organization?

      Kirk: If Eich were anything but the CEO (or perhaps a C-level executive), this would be a nonissue. Employees are clearly entitled to have their own views on matters, regardless of whether they conflict with those of the company. The question is, when does one’s personal values become inextricably linked to the identity of the company? It’s safe to say that CEO is on the other side of that threshold. Eich’s blog post reiterating his commitment to equality and inclusivity at Mozilla is a step in the right direction, but the critics’ demands for a full explanation are not unwarranted.

      Patrick: This is a tough one. In my book, Eich is entitled to his personal beliefs, but employees are well within their right to question the new CEO’s ability to reflect the company’s values. Like mixing Diet Coke and Mentos, some things just don’t go together. It leaves me wondering what the CEO hiring committee expected to happen here, particularly given the desire to hire a mobile oriented CEO by half the board. This case also leaves us with an interesting question: does Mozilla’s commitment to inclusiveness and openness demand that they embrace Eich and his views, despite disagreeing with them?

    Objecting to new CEO, resignations sweep Mozilla board (CNET)

    Inclusiveness at Mozilla (Eich)

    A Framework for Thinking Ethically (Markkula Center)

     

    NEXT STORY: Is Oculus Leaving Early Backers Out to Dry?

  •  OCULUS VR: Leaving Early Backers Out to Dry?

    Friday, Mar. 28, 2014
    Source: llh3

    In the wake of Facebook’s $2 billion buyout of virtual reality startup Oculus VR, a number of Oculus’ 9,522 early backers are up in arms. In an ongoing trend, Oculus took to crowd funding site Kickstarter to raise seed money for their company, and it was an outright success raising over $2.4 million. While the backers “invest” knowing they receive no ownership in the company (instead receiving early access to products or memorabilia), many of the backers feel that the Oculus pulled a “bait and switch” by taking the Facebook deal: “I might as well have handed my money right to Facebook and I feel a little sick.” Adding insult to injury, as recent as last month, Oculus’ founder assured backers that he had no intention of selling the company. Backers flocked to Oculus believing that the company was their best hope for an independent platform for virtual reality gaming, but now “it’s Facebook’s platform.” Did Oculus wrong their Kickstarter cofunders? Do companies owe anything to their early internet “backers?”

      Patrick: I sympathize with the disgruntled backers, but Oculus is in the clear here. For one, Oculus raised an additional $16 million from traditional sources. Second, consulting or “even keeping in the loop” 9,522 backers is the equivalent of opening up the company’s boardroom to the general public. The only thing Oculus owes its early backers is the items offered in exchange for the contribution: t-shirts, posters, and development kits. Beyond that, Oculus ought to treat the early backers as loyal enthusiasts. No more, no less.

    Cofunders of the Maker of Oculus Rift Denounce a Facebook Buyout (NY Times)

    Oculus Rift (Kickstarter)

    A Framework for Thinking Ethically (Markkula Center)

     

    NEXT STORY: Keurig Backs Clean Water Initiatives