Despite our outrage at poor corporate behaviour, few of us vote with our feet and back the company that puts values first. So what does that make us, asks Peter Williams
This article was first published in the November/December 2017 UK edition of Accounting and Business magazine.
Consumers use unpleasant companies all the time. We continue to swell their turnover and contribute to their bottom line by buying their coffees and airline seats, downloading films via their technology and using their irresistible social media platforms.
All these commercial transactions take place despite the fact we have been told of their shortcomings, such as they practise aggressive tax planning, they use child labour in their supply chains or they employ medieval HR policies.
We continue to patronise these businesses because either we think that stepping further down the high street to the next coffee chain really won’t make the CEO based on another continent sit up and think ‘wow, I must lead change’; or because we think that the personal convenience of using the service outweighs our moral indignation over the coach and horses they ride through accepted and acceptable business behaviour.
Most of the time as we proffer our contactless bank cards we are too preoccupied to care how they treat their workers or their suppliers. We can’t afford to relate what we buy with poor behaviour. For most of us, switching to ‘better’ products only occurs if there is something in it for us. In a competitive market economy, we expect big corporates to, well, compete, and we’re not going to feign shock, surprise or moral outrage when corner-cutting practices and behaviours are set out in the media.
Corporates are beyond shame or holding to account. A few unlucky individuals may end up in a law court, but while the scapegoat may or may not be found guilty as charged, the corporate will sail on, provided they can continue to supply the market with what it wants.
Only when the behaviour directly damages the buyer will corporate value be destroyed. Take the recent travails of Bell Pottinger over its work for South Africa’s Gupta brothers. Clients didn’t leave the PR outfit because of unease at its work for certain clients; rather that it had poisoned its own brand and therefore clients risked contamination by association. This wasn’t the altruistic gene at work, it was the selfish one.
Yes, occasionally corporates do implode. Arthur Andersen disappearing over Enron is the prime example in the professional sector (but even then, it was the cover-up not the alleged crime that got them).
It is increasingly common to assert that there is a link between ethical behaviour and profit over the long-term. But companies are much more likely to suffer because they are bad at business, not bad businesses. They may call the market wrong; they may fail to keep pace with technology change. Whole sectors may fail as businesses, or rather jobs, migrate to cheaper territories. Consumers may even get bored with the products. But if businesses continue to offer us the goods and services we desire at a price that appeals, then the consumer – them, you and me – will continue to buy. So what does that make us?
Peter Williams is an accountant and journalist
"Most of the time as we proffer our contactless bank cards we are too preoccupied to care how the businesses treat their workers or their suppliers"