Goodwill Dismisses a Solid Societal Norm: A Mentality beyond Unethical Conduct

When managers of a business or non-profit interact with a societal norm by openly rejecting any obligation to act in accord with the norm, the reaction from stakeholders can be utter disbelief. The refusal to act in accordance with the norm as it impacts the organization can be beyond bad management and even unethical conduct. The refusal to acknowledge a societal norm even as its impact on the business and stakeholders has been arranged by the business is beyond, though it can include, unethical conduct. Norms are not in themselves ethical, for as David Hume wrote, you can’t get an ought from an is; rational justification by ethical principles must be added before we can get to, “You ought to do X” from “X is the practice.” Yet ethical principles can be in norms, in which case we can say, “You ought to act in accordance with the norm because it is ethical.” In some cases, the norm-business relationship (i.e., Business and Society) can be more salient than an ethical principle in the norm itself. A managerial practice at Goodwill, a non-profit retailer based on donations for the poor, serves as a case in point.

The full essay is at "Goodwill Dismisses a Solid Societal Norm."

It’s Only Fair

Astonishingly, organizations can violate their own mission statement without any manager or non-supervisory employee being aware of the violation. This can happen even when the people in an organization really do take their mission seriously. At Goodwill, the mission is to end poverty, a laudable goal. It follows explicitly (i.e., according to a sign in the stores) that “every customer has an equal opportunity to purchase any item for sale.” Although the sign bases this point on the fact that the goods “come from public donation,” I submit that ending poverty by giving the poor access to relatively low-priced merchandise is hampered if some customers are permitted to fill their carts with on-sale (i.e., color of week) items when the doors open. Certainly allowing those resale-minded customers to deprive other customers of a selection of items on sale (especially clothing, which even homeless people need) is not fair.

The full essay is at "Unfairness at Goodwill."

“No Loans” on Gun Sales: G.E. as Socially Responsible or Financially Savvy?

In the wake of the Sandy Hook school shooting in Newton, Connecticut in late 2012, General Electric announced that the company would no longer finance consumers’ gun purchases. Russell Wilkerson, a G.E. spokesman, wrote in an email that the new policy was being adopted “in light of industry changes, new legislation and tragic events that have caused widespread re-examination of policies on fire-arms.” In other words, the policy shift was not simply a reaction to Sandy Hook. Rather, the company’s executives were adapting to changes in the organization’s environment, including the industry itself. This opens up the question of whether the new policy can be classified under the rubric of corporate social responsibility (CSR). Perhaps the adaptation was simply good business, with the appearance of “CSR” adding some reputational capital through a good public-relations campaign.

Do business principles mandate treating this product like any other?  Source: NBC News

The full essay is at "Corporate Social Responsibility at G.E."

Johnson’s “Reinvention” of JC Penney: Too Much and Too Little

In April 2013, JC Penney’s board wished the CEO, Ron Johnson, “the best in his future endeavors.” His effort to “reinvent” the company had been “very close to a disaster,” according to the largest shareholder, William Ackman. During Johnson’s time at the company as its CEO, shares fell more than fifty percent. In February 2013, Johnson admitted to having made “big mistakes” in the turnaround. For one thing, he did not test-market the changes in product-line and pricing-points. The latter in particular drove away enough customers for the company’s sales to decline by 25 percent. Why did Johnson fail so miserably?

The full essay is at "JC Penny Reinvented?"

Ron Johnson's short tenure as CEO of JC Penney was disastrous, according to Altman.   Source: Reuters

Decadent Management: Burger King Dethroned

When a major company like Borders or Pan American declares it is going out of business—bankruptcy being all too often just a way to force creditors and unions to renegotiate—the public is often stunned. Indeed even a week before such an announcement, managers can assure customers under the veneer of an expressionless face or even a comforting smile—that the company is focused on “driving strong expansion in its many markets around the world” and will “strongly position” its brand. Driving expansion? Strongly positioning? An astute person will instinctively detect the scripted, vacuous jargon as the patina of a rather strange, if conformist, mentality that presumes to invent or misuse words with impunity, as if from a superior position in society. The quoted expressions are from Miguel Piedra, a spokesperson of Burger King, reported in a Wall Street Journal piece on Wendy’s being “positioned” to replace “the King” as number two in sales. If Piedra’s bureaucratic response is not enough of a red-flag, a visit to a Burger King restaurant might give the impression of a company that—absent the cushions of name recognition and capital—is on the verge of going out of business.

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available at Amazon.com.

Thanksgiving Elipsed by Christmas: Will the Offending Businesses Go Extinct?

Even as the business-sourced encroachment of Christmas had all but eclipsed the American holiday of Thanksgiving in 2013 on account of the day falling so late in November (as if four weeks were somehow not a long enough time for gift-buying), the on-going trend (or stampede) of stores opening earlier and earlier on Thanksgiving puts the holiday itself in the cross-hairs of the retail rifles. Thanksgiving may one day be essentially extinct, and, ironically, so too might be the usual suspects--the enterprises themselves.

The full essay is at "Thanksgiving Eclipsed."

On the History of Thanksgiving: Challenging Assumptions

We humans are so used to living in our subjectivity that we hardly notice it or the effect it has on us. In particular, we are hardly able to detect or observe the delimiting consequences of the assumptions we hold on an ongoing basis. That is to say, we have no idea (keine Anung) of the extent to which we take as unalterable matters that are actually quite subject to our whims individually or as a society (i.e., shared assumptions). In this essay, I use the American holiday of Thanksgiving, specifically its set date on the last Thursday of November, to illustrate the following points.

The full essay is at "On the History of Thanksgiving."

Target’s Senior Managers in Damage Control Mode: A Forensic Appraisal

The number of transactions at Target, a major American retailer, during the weekend before Christmas in 2013 came in at between 3 to 4 percent lower than for the same weekend in 2012.[1] That the number of shopping days between Thanksgiving and Christmas in 2013 are five less than in the previous year and number of transactions at other retailers during the weekend in 2013 is slightly higher than for the previous year suggests that Target did indeed take a financial hit due to the massive breach in electronic security. The debit and credit-card numbers of up to 40 million customers (between November 27^th and December 15^th) could have been compromised by hackers who immediately began selling the “secured” information from abroad.[2] Lest this lesson in the downsides of electronic commerce and globalization be enough bitter medicine to swallow, Target’s damage control gives us a rare opportunity to glimpse the mentality of the company’s corporate-level managers by inference.

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available at Amazon.

Institutional Conflicts of Interest: Business and Public Policy

Typically people react emotionally much more severely to an exploited conflict of interest when a person gains a personal benefit such as through a bribe. If company, or even an office or department thereof, stands to benefit inordinately, American society typically looks the other way on the institutional conflict of interest rather than taking it apart. This may just be human nature. However, the troubling institutional arrangements within an organization or between them may be tolerated because of the erroneous assumption that conflicts of interest are unethical only when they are exploited. Accordingly, the book provides a solid grasp of the structure and essence of the conflict of interest in order to make the case that it is inherently unethical. Examples of institutional conflicts of interest readily come from business, with particular attention to corporate governance and the financial sector, as well as from how business and government relate, such as through regulation The reader should come away with a sense of just how pervasive and ethically problematic institutional conflict of interests are. 

The book, Institutional Conflicts of Interest: Business and Public Policy, is available in print and as an ebook at Amazon.com

Cases of Unethical Business: A Malignant Mentality of Mendacity

The book, Cases of Unethical Business: A Malignant Mentality of Mendacity, presents a number of cases of unethical conduct at American companies in several industries, along with some cases from other regions of the world for comparative perspective. A variety of industries are represented so to evince a common denominator lurking beneath specific instances of unethical conduct in business. The emphasis here is not on ethical decision-making, for it does not go deep enough. Rather, the underlying mentality out of which the decisions come is to be unearthed to be examined in the light of day. The mentality can be characterized as a mendacious narcissism having little or no regard for other people or institutions; yet even this characterization is incomplete, for a certain presumptuousness or even arrogance is can also be discerned in the cases. The mentality can be deemed to be inherently unethical in itself, regardless of whether any ensuing sordid conduct ensues.
 

The book, Cases of Unethical Business, can be obtained in print or as an ebook at Amazon.com.

Target Intimidating Customers by Impersonating Police: Nietzsche on Weakness Seeking to Dominate

In the PBS series Downton Abbey, the Victorian countess, magnificently played by Maggie Smith, delivers a reverberating line as fit for my hometown in the second decade of the twenty-first century as for a village in Britain a century earlier. Referring to the local physician, who had just been raised to the position of military manager of convalescent centers during World War I, the countess remarks in frustration after a rejected request, “We give these little people power and it goes to their heads like strong drink.” This poignant quote fits like a glove in the case of the typical store manager and assistant managers, especially in my decaying hometown in the U.S. a century after World War I. In this essay, I apply Nietzsche's philosophy to a rather distinct pattern that I discovered there decades after I had left for college.

The full essay has been incorporated into (or swallowed up by) On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, available in print and as an ebook at Amazon.

The Mammoth Indoor Mall: A Dinosaur or a Reusable Shell?

One of the pitfalls in maintaining a general gaze at the long-term trend toward e-commerce at the expense of "brick-and-mortar" stores lies in missing or overlooking other changes in the business environment. The weight of such changes can fall largely within the "brick-and-mortar" world, impacting some of its neighborhoods more than others. Not all change impacting commerce in 2013 stemmed from the internet. The fate of the indoor mall is a case in point. Taking into account the obvious impact of online purchases does not explain why stand-alone stores and outlets were doing so much better than the noisy, sterile malls. 

Anticipating further detrimental impact on in-person transactions from increasing online purchases, Michael burden, a principal with Excess Space Retail Services, predicted after the Christmas season of 2013 that the retail sector would likely see an average decrease in overall retail square footage of between one-third and one-half within the next five to ten years. He cited fewer mall visits and less inventory needing to be stocked in the stores.[1] Less retail space not only includes smaller stores, but fewer as well. As regards store closings, the question of whether the indoor mall is to stand only as an artifact of an earlier society or a structure that can adapt to ever-changing societal mores begs for a definitive answer. 

One big shift in store closings underway already by 2014 stemmed from retailers shying away from indoor malls, favoring instead outlet centers, outdoor malls, and stand-alone stores. "There's no question that mall stores are closing quicker than the open air [variety],” David Birnbrey of The Shopping Center Group said.[2] Although new retail construction completions were at the time at an all-time low, the supply of new outlet centers had picked up in recent quarters according to Richard Ellis of CD.[3] Meanwhile, no new indoor malls were being constructed. Rick Caruso, founder and CEO of Caruso Affiliated, was unaware of any indoor mall being built in the U.S. since 2006. "Any time you stop building a product, that's usually the best indication that the customer doesn't want it anymore," he said.[4] Sometimes what is not done (or said) is more important than what the attention-getters are doing (or saying).

What exactly lies behind the impending demise of the shopping mall? E-commerce cannot be the whole story, for otherwise the outlets, outdoor malls, and stand-alone stores would face an equally dismal prospect. Rick Caruso declared at the 2014 National Retail Federation convention that at one point, the indoor mall “may have met the developer's needs—and even for [a while], the consumer's needs—but it has outlived its usefulness."[5] Without a major reinvention, traditional malls would soon go extinct as though a species unwilling or unable to adapt to rapidly accelerating climate change. 

Unlike the sort of experience that coffee shops off, the amusements here at Mall of America in 2005 are only indirectly linked to the products. (Image Source: Jeremy Noble)

Specifically, mall retailers must figure out how to get back in sync with people’s daily-life rhythms by creating a satisfying atmosphere for customers to experience. Many coffee shops had already achieved as much by offering wifi, good smells, particular styles of music (or none), and comfort (e.g., nice chairs, no fear of getting kicked out for hanging out too long, etc).[6] The comfort factor is subtle though significant nonetheless. Just weeks into 2014, news broke of yet another “mall shooting.” Malls and schools were already becoming associated with guns and death in the psyche of the general public. The managers of malls themselves and the particular stores therein faced the daunting task of finding and implementing novel experiences in line with a “modern-modern” society while facing a stiff headwind manifesting as an increasingly bad reputation in the broader society.

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1. Krystina Gustafson, “A ‘Tsunami’ of Store Closings Expected to Hit Retail,” CNBC.com, 22 January 2014.

2. Ibid.

3. Ibid.

4.  Ibid.

5. Krystina Gustafson, “Without Rebirth, Malls Face Extinction: Developer,” CNBC.com, 13 January 2014.

6. Interestingly, a Starbucks store manager approached me on one occasion as I was setting up my laptop just after sitting down to demand that I buy something or I’d have to leave. I pointed out that I had just arrived and was waiting for the line to shorten, and that Starbucks’ policy permits people in the stores without making a purchase, but he dismissed both points and continued to bark his order as though I were an alien insect. I left rather than made the purchase I had intended, and called Starbucks’ customer service to complain of the manager who could not be wrong. After a bit of fake sympathy and affirmation of the policy as I had understood it, the “customer service” employee impotently said, “Unfortunately I cannot call that store manager to correct him on the policy.” I mention this because I have not since felt as comfortable surfing the net while enjoying a coffee in a Starbucks store. In fact, I stopped going to Starbucks stores and not soon thereafter gave up coffee as a regular drink because of its negative effects on the body (such as hard stools, headaches, and a general sense of nervousness while on the drug). 

Online Sales: Breaking the Egg

Was the 2013 holiday season really a turning point in terms of online purchases? Can a business environment change so drastically from one Christmas to the next? If not, what can we say about a commercial system that buckles, at least at its weakest link, under the pressure of a moderate change in buying habits? Put another way, does such buckling necessarily indicate or point to the existence of a threshold point that has suddenly and unexpectedly been crossed? Alternatively, the system itself may be weak.

During the November-December holiday season of 2004, online sales revenue in the U.S. increased 25 percent from the year before.[1] CNN Money reported the increase as 29.5 percent—almost a third of total holiday sales.[2] This healthy numbers can be deceiving, however, if the base is low relative to the total. That is, if the online holiday sales figure as a percentage of total holiday sales is around 2 percent, an increase of 25 percent from the prior year’s online sales is immaterial in terms of the change in the percent of online sales to total from the prior to the current year. As shown below, fourth quarter percentages-of-total (rather than of increase) increased from roughly 1.7 in 2003 to 2 percent in 2004. This change is hardly earth-shattering.

Estimated Quarterly U.S. Retail E-commerce Sales as a Percent of Total Quarterly Retail Sales

4th Quarter 1999 to 4th Quarter 2004[3]

So let’s look at percentage-of-total figures specifically for the combined (November and December) season of Thanksgiving and Christmas, two of the major national holidays in the United States. In 2012, the season’s online sales revenue accounted for 19.3 percent of the total retail sales.[4] Keeping in mind the magnitude of the changes shown in the graph above (0.6% to 2.2% over five years), the change from roughly 20 to 25 percent in 2013—from just one Christmas to the next—seems relatively dramatic. Yet a shift from 20 to 25 does not in itself seem very significant. Even so, it was enough for journalists to label it a “sea-change,” “threshold,” “turning point, “and “major re-alignment, capable of unleashing a virtual tsunami.

One business practitioner interviewed on CNBC in mid-January, 2014 made the startling claim that the turning point had come quite unexpectedly in just one year. I contend that conclusion is overly dramatic, though I readily concede that the five-point difference was oddly too much for a part of the system. Specifically, “an unpredictably large number of packages overwhelmed UPS,” with thousands of Christmas presents left undelivered by Christmas Eve.[5] Natalie Godwin, a spokesperson at UPS, explained. “The volume of air packages in our system exceeded the capacity of our network, as demand was much greater than the forecast.”[6] The network’s capacity itself became transparent as a constraint, as a result of demand having been much greater than anticipated. The words “capacity” and “much” point to, or intimate, a systems-level problem not just for the package-delivery company, but also for the U.S. (and perhaps global) system of commerce.

Crucially, that a percentage change of just 5 percent of total sales revenue represented as increased demand can pierce the capacity of a major link in the commercial chain from manufacturers to customers suggests not a pivotal year, but, rather, a system too (i.e., artificially) inflexible or hard. Rather than being able to adapt to changes in the environment, as any fit species does through the evolutionary process of natural selection, the American system of commerce lacks the built-in ability to stretch (and contract). By implication, reaching a threshold point, such as in demand for products sold online, is in terms of the system and behaves as a wall rather than a semi-permeable membrane. It is worth pointing out that a threshold point concerning the system of commerce also no doubt exists in terms of society (i.e., changes in daily life) and even in terms of products (i.e., transformative products as mainstays as a result of ecommerce). Just as the loud kids tend to get disproportionate attention, a rigid and complacent system gets noticed (i.e., becomes transparent as a system) more than its share. Relying on such a system warrants the warning: Watch out for the “big one”—a major earthquake of sorts capable of a truly dramatic land-shift.

1. Jennifer LeClaire, “Online Holiday Shopping Soars 25 Percent to $23 Billion,” E-Commerce Times, 4 January 2014.

2. CNN Money, “Holiday Online Sales Surge,” 5 January 2004.

3. US Census Bureau, The Department of Commerce, “Quarterly Retail E-Commerce Sales 4^th Quarter 2004.”

4. The National Retail Federation.

5. Donna Leger, “UPS System Overload Delays Holiday Packages,” USA Today, 24 December 2013.

6. Ibid.

Irrational Exuberance in Taxing and Regulating Marijuana in Alaska

As the citizens as well as legislators of Colorado were no doubt marveling in astonishment at the seismic $5 million figure for just the first week of legalized marijuana sales, Alaska Lt. Governor Mead Treadwell received a petition to legalize recreational use. With over 45,000 signatures, of which only 30,169 are sufficient, the petition correlates with polls in early 2013 revealing that 54 percent of voters support the legalization.[1] As with many other governmental matters, the devil is in the details.

Already, the legislative proposal would levy a $50 tax on each ounce of pot sold. Just imagine if such a tax were levied on each ounce of alcohol sold! Alaska lawmakers may have insisted on the exorbitant tax as part of the proposal from a desire to bilk the consumers as if they were a golden egg (or bowl), or to discourage them on moral or public health grounds from ingesting the particular product. The “crowding out” effect on State taxing power due to more and more federal taxation was certainly a political force behind the support of legislatures in Colorado, Washington, and Alaska starved for revenue.

Yet the hypocrisy practically leaps off the page in Bill Parker’s statement that marijuana is “a substance objectively less harmful than alcohol.”[2] Parker had been a legislator and the Alaska Public Safety Commissioner. Similar hypocrisy infects the comparison with tobacco, in that at least one study in 2012 reports that moderate pot recreational use does not harm the lungs whereas cigarette use does.[3] So the proposal’s prohibition of pot-smoking in public (as already was the case in Colorado) is at the very least irrational, if not reefer madness unplugged. Even the restrictions on drinking alcohol in public may be excessively paranoid, given the passing of the religious taboo against alcohol.

Nevertheless, the proposed prohibition on public smoking of marijuana (without a corresponding ban on tobacco use in outdoor public places on account of the danger posed by second-hand smoke) did not stop Tim Hinterberger, one of the proposal's principal sponsors and a professor of developmental biology at the University of Alaska in Anchorage, from accepting the proposed system of “sensible regulation,” not to mention taxation.[4] “Replacing marijuana prohibition with a system of taxation and sensible regulation will bolster Alaska’s economy by creating jobs and generating revenue for the state." The professor cheers the end of the black market in pot without realizing that the proposed $50 tax per ounce would keep the underground alive. 

Generally speaking, the highest tax rate does not necessarily proffer the most tax revenue. One could even say that the more greedy and unreasonable a sales tax, the more the underground market can be expected to thrive. Once unleashed, freedom naturally finds its own way home.

In short, it would seem that irrational exuberance is not limited to Wall Street. Perhaps the real question is why human beings have so much trouble getting over not only prejudice and moralizing, but also overreacting to the unknown. It is as if legislators and regulators assume that regulations cannot be added if needed as unforeseen dangers are uncovered or encountered. The sheer rigidity and overreaction as evinced in the regulation of the recreational use of pot may even point to a subterranean fault in the American psyche. Perhaps at least some of the widespread pot use stems from the natural frustration in being repeatedly slapped in the face by a hypertrophic fear of change and the supporting pathological ignorance that can’t be wrong and presumes itself as fully justified in snatching whatever authority it has.

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[i] Hunter Stuart, “Marijuana in Alaska Gets One Step Closer to Full Legalization,” The Huffington Post, January 8, 2014.

[ii] Ibid.

[iii] Mikaela Conley, “Marijuana Smoke Not as Damaging as Tobacco, Says Study,” ABC News, January 19, 2012.

[iv] Stuart, “Marijuana.”

The 11-Inch Footlong at Subway

It is perhaps all too common for companies that franchise out stores to insist to complaining customers that the franchisee bears full responsibility for any dissatisfaction. That franchisees are bound to certain standards in a legal agreement with the company is apparently of no consequence. The refusal to take responsibility is perhaps all too common in the retail sector. It is more convenient to point to the other guy’s responsibility than to one’s own. In fact, this mentality may be said to characterize business culture today. The sordid condition can be seen in the knee-jerk avoidance company statements made on the heels of a customer-led controversy.

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available at Amazon.com.

Mistrust in Business: A Nietzschean Critique

In his commentary on the loss of trust in business, government and society, Michael Wolff laments to decline of trust through what he calls “consumer history.” As trust can be maintained with little or no further cost once established, Wolff is perplexed as to why more business practitioners, politicians and even religious functionaries do not rush to fill the gap.

The full essay has been incorporated into (or swallowed up by) On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, available in print and as an ebook at Amazon.

A Society Based on Corporate Culture: A Case of Sickness behind Fakeness?

Scripted "conversations" for employees.   Some customers as "members," and the others "not."   A larger cup of coffee being an "upgrade."   It occurs to me that a blue collar worker would simply laugh in the face of a chain retail store employee using any of these misappropriations as if they were natural and fitting.  That the rest of us don't laugh and the employees are not even likely to be aware of their own fakeness, much less stop it, tells me that modern society has to some extent adopted the corporate practice, even if tacitly.  That is to say, many of us have been mindwashed into accepting fakeness as authentic in the public square.

The full essay has been incorporated into (or swallowed up by) On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, available in print and as an ebook at Amazon.

Best Buy: A Retail Company Using Apology to Sell Still More

As I was entering a “Bestbuy” store one summer day wearing shorts and a tee shirt and carrying my ubiquitous book bag (as you might expect), the security person, whom the manager later told me also works at a prison, walked after me as though stalking me, practially yelling “Sir! Sir!” Reaching me as I was talking to a salesperson who was treating me as though I were a customer, the lineback demanded to look in my book bag immediately. I stated matter of factly that I had had no opportunity to stash anything from the store in my bag while walking in the front door (after which he saw my every move).  Nevertheless, I opened my pouch for him and he was satisifed. After I left the salesperson, I reported the incident to a manager, whose “company apologizes” was belied by his curtness and fake politieness. Can a company even apologize? 

The full essay has been incorporated into On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, which is available in print and as an ebook at Amazon.