Wednesday, April 23, 2008

The Dignity and Morality of Business

My colleague and mentor Ron Baker at Verasage Institute recently recommended the book Thou Shall Prosper: Ten Commandments for Making Money by Rabbi Daniel Lapin. Being the dutiful disciple, I promptly ordered it (and one of Ron's books) from Amazon.

I'm almost through Chapter 3, and overall am very impressed with the book. Rabbi Lapin is an Orthodox Rabbi (I'm more of an observant Conservative Jew which is a bit more to the center) and his politics are definitely to the right of mine, but he makes some very good points.

Chapter 1 is called The Dignity and Morality of Business. At the end of the chapter, he suggests writing an article on the subject for the local newspaper. I'm going to do it as a blog entry instead.

We constantly see business portrayed as evil. Think of the 1987 movie Wall Street and Michael Douglas' character saying "Greed is good." Think of all of the different TV shows where the business owner is portrayed as being evil. I still remember an episode of The Six Million Dollar Man where a defense contractor made a product at the exact bottom end of the specifications, so as to maximize profit, and of course the product didn't work and Steve Austin had to save the world. There are countless examples of this.

Then there are the headlines: GM lays off 10,000, Delta lays off 8,000 (I made those up). The TV news show all of the employees on TV and they don't know what they are going to do and so on.

But what isn't always reported is while GM may be laying off 10,000 there might have been a greater number of new jobs created elsewhere. Furthermore, does it make more sense for GM to keep these people and risk destroying its own business. Seems to me that would be even worse.

In 2007, Pfizer closed a major facility in nearby Ann Arbor, Michigan (home of my alma mater the University of Michigan). I think over 2,400 people lost their jobs. But you know what is happening? Ann Arbor has become much more entrepreneurial. New businesses are appearing. Ann Arbor Spark, a business incubator, is booming.

People also bemoan the death of the Main Street merchant. "We don't Wal Mart in our town." But what has Wal Mart done wrong? They are offering good products at good prices - they are providing something people need and want and are willing to pay for. Is it unfortunate the old line Main Street merchant loses his business? Absolutely. But those are the risks you take going into business.

I have learned that my job as a CPA and consultant is to help my customers make more money. Sometimes kind of hard to see how performing an audit of a financial statement can do that. But it can. I have one customer who bought out a minority partner and having the history of audited statements helped make the transaction occur. The bank often will require an audit, so the business may think they are buying an audit with a gun to their head. But what would the loan cost without the audit? Probably more than the cost of the audit.

I am very much looking forward to seeing what else I pick up out of this book.

1 comment:

Michael L. Gooch said...

Organizations such as XXX, have negative results because the people on board cannot tell the difference between right and wrong. Due to scope, these consequences usually take longer to materialize, but is the result the same? You can find a ton of articles and books about business ethics about businesses “losing their way,” e.g., WorldCom, Tyco, Enron. You can also sign up for seminars where they preach to “do the right thing.” They paint the world in stark black and white. These resources ask one-dimensional ethical questions, such as, “Should you take kickbacks from suppliers?” For me, ethics in the workplace is varying shades of gray. You have to rely on moral law, that is, does it ‘feel’ wrong? It’s easy to say, “There is right, and there is wrong.” In my management book, Wingtips with Spurs, I address these issue in detail. All major corporations have their written code of conduct. Each one is pretty much just a copy of the others and is a major dust bunny. The next time you walk into someone’s office, ask to see the company code of conduct. Good luck on finding someone who will produce it within five minutes. The moral law is much easier to find and digest. It resides in each of us. Michael L. Gooch, SPHR