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A business case for doing ‘the right thing’?

We should do what is right without working out whether it’s profitable… or should we?

A few days ago, Rob Briner, a Professor of Organizational Psychology, tweeted, “Why oh why oh why do we keep having to make a ‘business case’ for doing the right thing?”

The source of his exasperation was a tweet from the American Psychological Association, in which they argued that supporting employees with mental illness is good for business (as well as the right thing to do).

This was not a unique case of opposition between what is morally right and what is profitable. James Elfer, an organizational change consultant, responded with a picture of the front page of a research project he is writing as part of an MSc course:

I have much sympathy with the sentiment. There appears to be something inherently repulsive about calculating whether ‘doing the right thing’ improves the bottom line of a business. It’s the kind of issue don’t really think about — you just do it. And indeed, sometimes we do the right thing, even if it makes us materially worse off. If we see someone drop their wallet, most of us will not quickly grab it and keep it (and its contents) for ourselves. We don’t take advantage of an unattended till to walk away without paying. We do the right thing, and hand the wallet back, or wait for the shop assistant to return to the checkout.

Can’t escape the trade-off

Is it really that simple, though? Sharing some of our wealth with those less fortunate than we are is the right thing to do. But what is the ‘right’ amount to donate? We can only spend a pound coin once: if we put it in a collection box, it is no longer available to buy a flapjack or a bag of crisps with it. Few people give up snacks altogether to give away all the money they’d otherwise spend on them. So, undeniably, we make a choice.

At some level, we make a trade-off. Would it be the right thing to give the pound we spend on a bar of chocolate to a homeless guy on the street corner? There comes a point when buying something for ourselves is more important than the warm glow we get from giving money away. Otherwise, nobody would ever buy a snack.

More even than us individuals, companies have to make decisions on how to spend money. They have budgets for paying staff, keeping the office clean, and perhaps for free coffee and subsidized meals. They need to advertise their wares, and invest in developing new products and services. And of course, they must make sure there is some profit at the end of the year so a dividend can be paid to the shareholders. Here too, a pound spent on supporting people with mental illness is a pound that cannot be spent in any of these other areas.

Each one of these other areas is, one way or another, good for the business. Paying employees well means you can hire the best, and that they are productive. A clean office means there are no health and safety risks, and maybe free coffee and subsidized meals are more effective to motivate staff than just distributing that money on extra salary. Developing new products and services means that the company can remain successful in the future.

In all these areas, if money is to be spent, there is almost always a business case showing that doing so is good for the business. (This is not the case for shareholder dividends, but in the long run these are necessary to ensure investors continue to provide the capital the business needs.)

If businesses are considering ‘doing the right thing’, they must make trade-offs just like we have to when we choose what to do with our pound. We cannot do the right thing in isolation — not as individuals, and not as organizations.

And that means that business cases need to be made — even for ‘doing the right thing’.

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Written by

Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

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