Business Ethics Part 2: 5 Ethics Failures
Last week, I wrote a post on the responsibilities of a business owner. After writing that, I thought it may be appropriate to highlight some of the recent failures in judgment of some of the most well-known businesses and industries.
1. All large national and major regional banks. You may think I am stating the obvious, what with the recent housing market debacle and the banking bail-outs. While those are in and of themselves epic failures, I want to get at something a little deeper- their business models. A large portion of the banks’ revenues come from penalties to its customers. Bank of America, Chase, US Bank, and Key. They all do it. Roughly 30% of their revenues come from penalties in the form of higher interest rates to customers who miss a payment, overdraft fees on checking accounts, late fees on credit cards, and so on. Add in the ATM fees and fees for having an account, and you are looking at billions. The only customers that have to pay any of these fees are customers that either make mistakes, are in financial trouble, or aren’t paying close enough attention to know what fees the bank is charging. One can conclude that without the fee income, the banks would fail to be profitable and subsequently fail to exist. It can be determined then, that the banks’ business models rely on customer penalties. Am I the only one that thinks this is unethical?
2. Wal-mart. Where do I begin? Yes, I know its the company we all love to hate. Personally, I don’t hate Wal-mart, but they have certainly shredded a few ethics papers to get to where they are. The one I want to highlight is their treatment of employees. They have become notorious for stamping “manager” on employees and skirting overtime regulations. They are also notorious for underpaying, under benefiting, and creating hostile work environments. Tremendous pressure is placed on store managers and regional managers to boost the profitability of each store. While not every store is guilty of these violations, corporate Walmart is. They have failed to set a precedent that the employees are to be treated fairly, above store profitability. Some would say that if it is so bad, then employees should work somewhere else. Agreed. However, just because someone is willing to be taken advantage of, does that make it right?
3. AIG I wanted to stay away from the big-news ethics failures, but AIG is in a class all its own. Begging for bail-out money, spending wastefully (using investor and taxpayer money), treating lower level employees unfairly, cheating customers. You name it, they did it. It seems to me that it is some sort of case of group think. When they all get together, management seems to think that really, really poor decisions are actually in the best interests of the company.
4. Apple. Yeah, I’m going there. Apple paints itself as the company for the progressive- sort of the antithesis of big corporations. Apple has a lot going for it, but being friendly to the environment is not on the list. In May 2007, they rejected two shareholder proposals to improve environmental friendliness. The old iPhone contained polyvinyl chlorides and brominated flame retardants, something its competitors removed a while before. While Apple has certainly removed those chemicals for the 3G S iPhone, and they are making laptops greener, it seems they have only done so to be en vogue with the green movement. Since they had been painting themselves in a certain light, you would have thought they would have been the leader in “green” all along. Also, Apples computer recycling program is behind Dell in convenience for the customer.
5. Purdue Pharma LP. They make OxyContin. To me, this fits best in community responsibility, seeing as they have destroyed entire communities with their highly addictive drug. While the drug met all the legal requirements, and was brought to market legally, it seems no different to me than white-collar heroine dealing. Even after it was apparent that the drug was super-addictive and causing people to do some crazy things, Purdue Pharma didn’t make any effort to help the situation. They kept right on producing the same drug, and making millions in the process (to help pay for the lawsuits). When it came time to take the blame for convincing the public that this was LESS addictive, they put the felony on another company called Purdue Fredrick- presumably so Purdue Pharma could still do business with Medicare. In addition, they never REALLY admitted wrong doing- only that some employees told other employees to make false statements.
There you have it. As a small business owner, make efforts to stay on track with your decisions. In the long run, its better for business.
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