Decisions in companies, brands, and businesses are never based either on a single argument, or the consequence of a single person’s ‘way’.
Rather, companies have, to an extent, their own personality. And it is for this very reason that companies are considered ‘legal persons’, i.e. a legal entity with its own right, duties, obligations, and responsibilities.
A key question, one that is discussed both in academia, business schools but also the public at large is: a decision taken by this organisation – is it largely independent from, or a necessary consequence of, the decision(s) that the individuals within the organisation have taken?
Let’s take an example to illustrate the question: the WV emission scandal.
The question then would concretely be:
- Who is (was) ethically, morally and factually responsible for it?
- The organisation as a whole, or individuals within? Or both?
- And who should as a consequence be held accountable?
Translating the above to consumer goods industries, the scenario is different but the questions, fundamentally, are not:
- Who is responsible for sourcing from specific countries, and factories, overseas?
- Who is responsible for the specifications and the quality of the products we sell?
- Who is responsible for the business models we adhere to?
- Who drives the costing model? The innovation strategy?
Just like with the WV scandal, none of these aspects are due to a single individuals’ decision. Yet individuals play a critical role in the mechanisms of how to get to decisions, and how they are being implemented.
The values of the business – can they be entirely independent and separate of the values, ethics accountabilities of the individuals within?
And if an organisation (i.e. a ‘legal person’) practices wrong doings – is it only due to the decision of this impersonal legal construction called ‘organisation’? What about the individuals within the organisation who constitute the ‘organisation’?
The answer is by far not simple or straightforward as we are often made to believe.
For one – we of course know that it is in reality people, individuals, who take the decisions within organisations. At every step of the way.
But, on the other hand, it is also widely acknowledged by research, that individuals adapt to an organisation and the group that they are part of.
As a consequence, decisions in organisations are the result of a rather complex net of interactions, rationalisations, evaluations, and negotiations of individuals, groups of individuals and social rules. And while the basic ‘unit’ of this is the individual, the result is an amalgam where the individual contributions are difficult – if at all – to identify or track.
The WV scandal has become a scandal only because WV was found publicly out to play unfair, to misbehave.
The Rana Plaza disaster has only become such a reference point in the textile industry, because of the many known brands that had (knowingly or unknowingly) products made there – and because the brand names were found out under public scrutiny.
A similar statement could be made for wastewater discharge in production countries such as China that became headline thanks to a range of very vocal and media-savvy Civil Society organisations.
Scandals and disasters are just the pinnacle: the sad result when procedures, processes and decisions of different players aggregate and drive towards extremes. The chain has to break sometime.
The lead up to such a pivotal event though, is paved and characterised by the interaction between organisational values, ethics and accountabilities, on the one hand; and individuals’ values, ethics, and accountabilities on the other.
Decisions within organisations cannot, must not, exist in a vacuum, but rather draw from the skills and knowledge of groups of individuals. The same applies to consequences of misbehaviour and the resulting accountability.
Equally, an individual cannot, and must not, leave their values and ethics at the door when arriving at work. It is their role to stand up for what is good and right in this context: Whether it relates to sourcing decisions, pricing decisions, or product decisions.
Of course there are mechanisms that try to formalise ‘the right’ behaviour within organisations: Codes of Conducts, Codes of Ethics, Value Statements an so on.
But ultimately these do have little effect if
‘The fish rots from the head down’.
The role of the CEO, of the board of directors, is to live ethics, morals, values, and accountabilities publicly. And walking the talk ahead of the employees is essentials. All while giving them the license to operate value-driven, ethically sound and accountable to what they deliver.
This applies to every aspect of the business: how we source, how we design products, how we treat employees, how we view and define our approach to value creation and the bottom line.
Because, the famous bottom-line thereby is but one value.
Attributes such as ‘impact’, pride’, ‘satisfaction’, ‘personal growth’, ‘innovation’ in reality form a dimension of values that is perpendicular to the purely – and indeed incomplete – rational and financially driven discussion.
Just to be entirely transparent: I do certainly not want to pretend that I know the solution to the challenges outlined above. For one, because it is not possible – the questions are and remain the focus of research, and like most topics that are neither black nor white, there is no one single, easy answer.
The Role of Individuals’ Ethics
However, it is without a shade of doubt that an individual’s values, ethics and accountabilities play a key, indeed a critical role, when it comes to the how reality looks like for our businesses’ and industry’s actions, processes and decisions.
And when it comes to the global discussion on sustainable development, the paradox between organisational and personal values and ethics, is surprisingly strongly dominated by the values and needs of organisations only. The individuals in charge – not just at the top, but across whole organisations – hide in plain sight.
To truly create change, responsibility and accountability for a future fit development across all types of industries, the developements cannot, must not, stop (or start) with the organisation. It is individuals that own the handle to the lever.
This article hence, is a call to action for leaders in our industry. As heads to the businesses they lead, is their responsibility to take the critical first step: lead by example.
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This article was originally written in 2017, and updated and republished in 2020
