When is it not “thumbs up” to give a customer what they want Facebook? When the algorithms aren’t altruistic perhaps?

Facebook has made it clear that their main objective, and indeed the success of their social media site, is customer engagement, including providing the customer with well-matched advertisements and news stories tailored to their specific interests.  It is in fact an amazing business success story and a marketer’s dream so is there really anything not to like? Well possibly, as there are questions about the undue influence it might have had in the political arena and who knows where else?

In the 2016 election, many of the stories on the internet were misleading, poorly reported and sometimes made up for example Facebook users falsely learned that the pope endorsed Donald Trump when he didn’t. These kinds of stories are contributing to the so called “post-truth” world where friends and emotional responses are being believed, are indeed more engaging, than facts, logic and truth itself which represent a more difficult and challenging side of life. Google has tried to address the problem by no longer giving fake news sites access to its advertising network thereby depriving them of a key revenue source and Facebook has followed suit. 

These internet companies have grown rapidly and are now a terrifyingly powerful force within our social fabric and culture.  Surely with their size and power must also come true accountability and responsibility? It is disingenuous or naïve of CEO Mark Zuckerberg to make money out of data manipulation (masquerading as customer engagement) without full recognition of his company’s power and potentially dangerous capability. Surely the obsessive drive for more accurate algorithms must now be tempered with a clear corporate responsibility strategy and a heavy dose of altruism and ethical purpose. That would help to give Facebook the real thumbs up by engaging all its stakeholders.

What's P.Green, thinks it's black and white, and is really grey?

The current case of P.Green and the demise of BHS provides an example of the whole purpose/ point of business ethics.  Green says he has done nothing unlawful so it’s a pretty black and white case from his perspective.  Unfortunately his past decisions and behaviours have placed him in the murky-grey and uncomfortable area, just outside what’s legal, where the spirit, rather than the letter, of the law begs the question “and is it ethical?” 

The Milton Friedman view of business that Green clearly propounds, that its only purpose is profit, has been losing favour over recent years as shareholders, customers, politicians and the public demand a wider view and consideration of all stakeholders, including pensioners.  But perhaps what should be really questioned is at what stage of cognitive moral development the British business leaders like Green are at (see Kohlberg’s CMD theory)?  It seems apparent that many are at level one where decisions are made essentially for personal reward.  It is probably unrealistic to hope that future leaders develop to stage three, where they do “what’s right” both personally and for society but it would be good to know that they were at least getting some training in ethical decision making.  But possibly the much more challenging issue is that first they need to accept that they fall short in this area - undoubtedly a much bigger task.,

Workers in directors' shoes: it should be the other way round.

There's been a lot in the media about the new Prime Minister's kitten shoes. But what about putting workers in directors' shoes as part of her suggested shake-up of corporate governance -will the shoes fit?

On the face of it, it can be taken as a commendable suggestion.  However it will take more than brilliantly trained, supremely confident, assertive and powerful "worker" representatives (which they will have to be) to challenge the Executive and Non Executives (NEDs) on today's boards without a major change in the UK board structure. (The UK operates a unitary board system which includes both executive and non-executive directors and they tend to make decisions as a unified group. Two-tier boards, which we may seen in other parts of Europe, have two separate boards, a management board and a supervisory board. The dual board system provides a much greater opportunity for wider stakeholder involvement, such as employees, on the supervisory board).

Instead of putting workers in the shoes of directors, it needs to be the other way round - directors in the shoes of their stakeholders, especially employees, consumers and customers. They need to understand first and foremost what the issues are in regaining trust and confidence in business starting with how they reward themselves. See September's Harvard Business Review's "Is your CEO's high salary scaring away customers?" This impact has not gone unnoticed as this year's "shareholder spring" demonstrates with more shareholders voting against executive remuneration proposals as they try to protect their investment.
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So, rather than changing the board structure, probably the best and most powerful starting point in bringing back some sense of perspective in addressing growing inequalities in business, is to give the shareholders more power as the PM has suggested, starting with executive remuneration. Some of the major institutional investors could make rapid progress in addressing structural  inequalities in business. Acting as the catalyst for change, the shareholders then need to be backed by a new breed of NEDs. (who are not on similar high levels of pay in roles in other companies as their board Executive counterparts) and a new breed of remuneration consultants (who are also not being paid at similar levels) thus breaking the self-perpetuating situation and the lip service paid to addressing the issue.

Let's hope kitten shoes are sufficient to kick-start the transformation.

Proof that a good reputation improves the bottom line

  A study, reported in the European Management Journal recently, examined the economic benefits of a company’s corporate reputation among a sample of UK listed firms.  It revealed a significant positive relationship between the company’s media reputation and the level of its trade accounts payable and the number of days of trade credit received.  This indicates that a favourable media reputation influences a supplier’s credit risk perception of a firm and helps the firm to use trade credit as a source of finance.  This means that a good corporate reputation (presumably through ethical business behaviours, fair treatment and transparency) is regarded as a valuable intangible asset which can lead to competitive advantage and a stronger performance.

Social purpose is business critical

The “Social Business” journal has recently reported on the rise of social purpose driven business models.  This is where business institutions recognise their shared humanity and a role in wider society.  It reports that in designing and creating solutions that address education, sustainability, poverty etc, businesses have found that they can also reap rewards in terms of profits, knowledge or talent.  Social value and economic value can go hand in hand. 

This is backed up by the rise in “social intrapreneurship”where a person in a large organisations takes the direct initiative for innovation which addresses social and environmental issues.  The Doughty Centre at Cranfield University has summarised the necessary internal environment or “ecosytstem” to foster social innovation using the acronym DARE which stands for:

• Dialogue
• Autonomy
• Risk taking
• Experimentation 

These elements are seen as being key to attracting top talent and to sustainability in business.  Basically business needs to understand that social and environmental impacts are business critical.