CSRwire Talkback

By James Hoopes

CEOs, gurus, and pundits who urge business to use CSR to “rebuild trust” are making two mistakes.  First, CSR should be mainly an end in itself, not primarily a public relations tool. Second, distrust of corporations should be encouraged, not discouraged.

Let's take the second mistake first.

Business leaders want to rebuild public trust when, instead, they should encourage today’s widespread suspicion of corporations. Public mistrust is a healthy reminder to executives that corporate power, like all power, corrupts.

Distrust of government is a great democratic tradition. That same distrust should be applied to corporations. Public distrust is as good a tool for fighting corruption in business as it is in government.

The most dangerous corruption in today’s corporate world is not financial but cultural. Corporate culture is laden with seemingly friendly fuzzies that are really moral traps.  A good example is the popular notion of “values based leadership.”  The idea of leading by values encourages executives to overestimate their goodness, starting them on the slippery slope toward unwitting moral arrogance. 

Don’t Trust Leaders

Greed is not the sole cause of corporate scandals and failures.  Greed often has an enabler – moral pretense. The best book on Enron is aptly titled Conspiracy of Fools because Ken Lay and Jeffrey Skilling used the idea of values-based leadership to convince themselves they were moral leaders! The best book on the collapse of Lehman Brothers shows how the company’s leaders used moral pretense to hide their incompetence from themselves.

Thomas Jefferson saw his fellow slave masters use moral pretense to justify tyranny.

That unwitting hypocrisy inspired Jefferson’s greatest but now forgotten utterance, which applies to corporate power as well as any other.  Power, he said, “believes that it has a great soul and vast views, beyond the comprehension of the weak; and that it is doing God’s service while it is violating all his laws.” 

Democracy vs. Corporatocracy

The nutshell principle of democracy is not to trust leaders. That is why democracies limit leaders’ power. In a democracy, followers fire leaders. But in a corporation, leaders fire followers. 

The business corporation is one of the modern world’s most useful social innovations. Citizens and even CEOs, if they are wise, will guard the corporation’s usefulness not by rebuilding trust but by remembering the corporation’s potential for corruption. They should especially distrust corporate managers who claim the mantle of moral leadership.

CEOs should exercise moral leadership by dropping the idea of moral leadership.

Or better, they should teach their subordinates and even the public at large to distrust those who claim to be moral leaders. Genuine moral leadership depends on a paradox; you cannot become a moral leader by trying to become a moral leader. You have to try to do what’s right and let others decide whether you deserve to be followed.

Nix CSR As PR

That brings us back to the business Solomons’ first mistake: It is wrong to use CSR primarily as a public relations tool for rebuilding trust. Using CSR for an ulterior purpose violates millennia of moral wisdom that good is an end in itself.

CSR that is not primarily driven by a moral imperative is socially irresponsible.

Shouldn’t CSR be competitive and strategic, as is now the conventional wisdom?  Of course it should. Profit can and should be earned honestly and in a spirit of good will. But responsible people and organizations do the right thing even when it is not profitable.

CSR programs that are only strategic and not also driven by a strong moral imperative will not enjoy the full support of employees and other stakeholders. Saving the earth may be a good profit making strategy for the company. But employees and customers are more likely to want to save the earth for their children.

The CSR Paradox: Strategy vs. Ethics

As with moral leadership, a paradox applies to CSR. To achieve its greatest strategic usefulness, CSR has to be partly non-strategic. CSR that does not have a genuine moral imperative will look like business as usual and will not engage the moral imaginations of stakeholders, let alone rebuild trust.

Instead of aiming to rebuild trust in the public, CSR should aim to build character in the company and its employees. Aristotle said that virtue is a “habit” acquired by practice (the Greek root for “ethics” and “habit” is the same word – “ethike”).  CSR enables corporations to practice making a habit of good-willed virtues such as generosity and sharing.

Lots of corporate employees are generous and sharing people. Even CEOs may have a bit of good in them! But every human being, no matter how good, needs still more virtue. CSR is a good way to maintain and build good character in corporate folks.

With a primary objective like building virtue, CSR might even eventually rebuild the public’s trust in corporations. Such an event would be an opportunity to practice the virtue of truth telling. Companies could remind newly trusting citizens that as with government and all other forms of power, corporations are not to be trusted.

About James Hoopes

James Hoopes is Murata Professor of Business Ethics at Babson College. His most recent book is Corporate Dreams: Big Business in American Democracy from the Great Depression to the Great Recession. He is also the author of False Prophets: The Gurus Who Created Modern Management and Why Their Ideas Are Bad for Business Today as well as Hail to the CEO: The Failure of George W. Bush and the Cult of Moral Leadership.