Does Being Small Mean Never Having to Say You're Sorry?
An ethics expert says entrepreneurs deserve some slack
Have you ever stiffed or delayed
a creditor to keep your company afloat? Did you ever pressure an
employee to work when he had a family obligation? Or perhaps you've
done something outright illegal in an attempt to get more business?
If so, you're apparently not the first. Ethics is a growth market for consultants, and it's the everyday beat of Marjorie H. Kelly, co-founder and publisher of Business Ethics magazine. Kelly, whose office is in Minneapolis, sees two seemingly opposite trends at work. Larger companies are hiring more ethics officers and becoming
more socially responsible and environmentally conscious. At the same
time, they're under growing pressure to keep earnings up at any cost, to
send jobs overseas, and to lay people off. What should we expect from smaller
businesses? Surprisingly, in a recent interview Kelly tells BW's Rick Green that they deserve
a little more slack than their bigger brethren. Here are some edited excerpts of their conversation:
Q: Is it harder or easier for a private company to be ethical than a public
A: I would say it is easier, because you don't have that relentless
pressure to get earnings up every quarter. You can manage for the long
term. You can manage for deeper values. An example is Levi Strauss, which
is a leader in many areas of social responsibility. They've made
it a core guiding value. They set the terms of how they're going to manage. The stock market doesn't set the terms.
Q: Is there any difference between a big company and a small company? Do
you think it's harder for a small company to be ethical, given its resources?
A: In some ways, it's
easier for large companies, because they have more resources. If they're
going to spend a tenth of 1% of their resources on philanthropy
or environmental management, that can be a substantial amount of money.
That can be an office with several employees and a budget ... who focus on nothing else. They can say, "We're going to cut air pollution from our company 50% in five years," and they have the sophistication and the tools to measure it and to put incentives in place and reward it.
It's very difficult for a small company to do something like that when you're struggling to just meet payroll, when you're struggling to get product out the door. You don't have the luxury of sitting back and saying, "We're going to cut pollution
50%." In that sense, it's easier for a large company.
On the other hand ... a lot of companies say they
still have their founders involved, and so there's still a very human voice
who's setting goals for the company. It's not just numbers on a piece of
paper. For those companies, that's where we're seeing the most innovative,
the most sincere, the deepest social responsibility programs.
Q: Let's go to the lower end of the scale, where a company might be struggling
to make payroll every day and the pressure on them to do something unethical
is stronger. Do we give them a free pass? Should they be held to the same standard as a larger company?
A: I don't think you give small companies a free pass. It's
never right to break the law or to cheat people. But I don't think we [should] hold
small companies to the same tough standards. And we don't, legally. For
example, the Family Medical Leave Act exempts employers with a small number
of employees. That's true for a lot of those kinds of regulations. It's
a nice idea to give somebody who's just had a child two months off. But
if you have five employees, that means 20% of your staff is gone for two
months. No company can withstand having 20% of its staff gone for two months.
So I think there are certain niceties that we only have
the right to expect of companies when they're larger and more successful.
Q: What are some other common areas of ethical conflict at small
A: The biggest ones at small businesses is not paying on time. Often,
the people who get shortchanged are little guys who don't have the collection
agency. Let's say that you have some contract workers or a small
firm that you contract out to. You might pay them a little more slowly
than you pay some bigger vendors, simply because the bigger vendors will
cut you off.
In family businesses, there can be an emotionally
abusive environment. Often family businesses are run with the same kind
of dysfunctional environment that the family itself is run. When that creeps
into the workplace, that can be unhealthy.
Q: Which ethics programs are the easiest for small and medium-size
companies to implement?
A: Employee involvement is particularly productive for small and medium-size companies, because, again, they're still close to their founders,
they're usually close to their founding mission. Employees can be
excited to work for that kind of company. They feel like they're part of
Environmental issues are also worth their weight in gold right now because more than 90% of the public considers themselves environmentalists, and yet it's still a very new and exciting area. Employees feel proud to work for a company that focuses on environmental issues and will often pick up the ball and run with it.
Q: What can the average small-business person do to be more ethical? What
should he be watching?
A: The most important thing is to be proactive. It's a mistake
to think of ethics as, "When you find yourself in a tough position, you
reason it out and come to the right decision." That's simplistic. More important is to focus on the broader social issues and say, "Here's
what our company stands for. We stand for integrity. We stand for employee
involvement. We care about the environment." When you set that kind
of tone in the company, day to day, you send a message about what this
company is about. If every day all you ever talk about is the numbers,
and you're pressuring people to get their numbers, you're pressuring them
to work harder, you are creating an environment where they will cut corners.
They're not hearing any message that says, "We care about values."
Q: So it comes from the top?
A: I think it does. The mood is set from the top.
Q: And if people are watching you, you'd better be careful how you act?
A: That's true. But it's more that they're looking to you to be inspired.
They're asking you, "Why should I care about what I'm doing? Why are we
doing this? Is it just to put money in your pocket? Or are we about something
that matters here?"
TABLE: The Entrepreneurial Ethic