Want an ethical company? Hire ethical people

September 30, 2013

Megan DeYoung says that people are what make companies responsible – and that executives must lead by example.

In 2010, the United States Supreme Court upheld the rights of corporations to make unlimited political expenditures under the First Amendment.  This created an outcry, with people protesting that recognizing companies as people would leave politicians at the mercy of Big Business.

I agree that companies are not individuals and should not be given a say in politics.  But I do recognize that companies are made up of individuals, and at the end of the day it is these individuals who set the corporate culture.  If you want an ethical company, hire ethical people.  If you want a company that treats all employees equally, hire people who believe they are not superior or inferior to anyone else.

It’s not politically correct to say you think you are better than someone or that you think you deserve more money or benefits than another person.  But people think this all the time, and so we have to explore the problem more.  Two recent articles brought this to light – one about gender bias at Harvard Business School (HBS) and one about the Securities Exchange Commission (SEC) again examining the issue of disclosure on executive pay.

Two years ago, Harvard Business School made a very concerted effort to address gender inequality.  HBS noticed that women were equally qualified as men when they entered school, but once at HBS did not perform as well – grades were lower, there was less class participation – and female teachers were performing poorly in reviews.  The school’s first female president set out to understand the root causes and reverse this trend, aiming to change students’ attitudes and improve HBS’s hiring of female professors.

And indeed the trend did begin to change.  But what also came to light was the difference that students’ personal and professional backgrounds made to their attitudes towards each other.  Some male students, many with finance backgrounds, brazenly ‘rated’ women, threw crazy parties, and went on outrageous trips.  Other students, both women and men, felt they couldn’t compete, and that they had to choose between social or academic success.  So some hung back in the classroom, while others created a party persona they felt was necessary to develop and maintain a strong network.

It is these HBS graduates – and graduates from any school with a similar problem – whom are now back in the business world, bringing their personal beliefs into the workplace.  Companies will be negatively affected by both those graduates who think they have the right to treat other people poorly, and by those who were made to feel inferior, whether because of their gender or otherwise.  How can we expect a company full of people who believe in inequality in the workplace to take action that addresses inequality in the wider world?

If someone feels superior, it’s not hard to imagine that  the person feels they are entitled to more than the average person and especially more than those who are poor.  I am increasingly convinced that the resistance to disclosing executive pay, especially in relation to the median employee pay, is out of greed.  Once the numbers that we all know are incredibly high are given more exposure, the next logical step is to regulate compensation caps.  And who wants to be told they can’t make more money?

It’s a rare person who will say I make enough money, and know that if  I don’t take a raise or go one step further and take a pay cut, I will help another person who works hard and for whom the money means more.  Ben Cohen and Jerry Greenfield are those rare individuals.  Before selling Ben & Jerry’s to Unilever, Ben and Jerry had a policy that they could not make more than a certain proportion of the lowest paid employee’s wage.  So if they gave themselves a raise, the janitor got one too.

It’s easy for an executive to give a speech on the importance of supporting the community – using corporate funds.  But if we move to a world where executive compensation is regulated, those same executives will have to give up a few million dollars of their own money so that someone who works for them can afford to put their kids through college.

Only until graduates, executives, and everyone in between start seeing themselves as equals will they exude this sentiment at the workplace and help foster an environment where people really are treated with respect and dignity.  Where the success of the company isn’t about the quarterly earnings and the annual bonus pool, but is about the way products and services are sold and address social, economic, and environmental issues simultaneously.  At the end of the day it’s up to the people to be responsible.

Megan DeYoung is a Director with Corporate Citizenship in New York.

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