BUSINESS ETHICS

Nelson Evening Mail, Volume LXXII, 25 November 1938, Page 7

BUSINESS ETHICS

PRIVATE CONTROL OF SYSTEM PROOF REQUIRED THAT IT IS WORTH RETAINING CO-OPERATION BETWEEN MASTER AND MAN "The subject of ‘Business ethics and its relation to the retention of , private contnl of business,’ on which I am to speak to-day, is one which I consider of importance par- i ticularlv in view' of the revolution- I ary changes so evident at the present time—changes that not only suggest the possibility of ownership of business passing from private to State control, but the limitation of the rights of the individual and the restriction of self enterprise.” said Rotarian S. Cannington in addressing the weekly luncheon of the Nelson Rotary Club. “Although we may or may not be particularly concerned or consider it prudent to comment on conditions existing in our own country. I feel that every thinking man is concerned with the world-wide conditions existing at the present time—when the tendency is to %i\e the minimum service for the maximum return, when government becomes the assertion of the party in power without any regard for the rights of the minority, when brotherhood is derided instead of practised, and when unionism becomes a means of destruction instead of construction. "My remarks are not actuated solely bv our local conditions, but by the general econom** condition of the world, by the craze for excessive leisure, by the persistent demands for rights irrespective of the fulfilment of the duties necessary to qualify for such rights, by the abuse of the present capitalistic system. by unionism losing sight of the high ideals that actuated its creation, and above all by the decline of the high ideals of patriotism and the true spirit of brotherhood. "I cannot maintain that the highest ideals have always actuated business in the past, but I do suggest that business practice has in the main been influenced by such ideals, and that the business of building up the Great British Empire of which we are so proud, and the building of our world wide trade has only been possible by true patriotism of all classes of the British people and the enterprise of the individual. BLACK PATCHES “Unfortunately there are black j

: patches in the history of British business. but this cannot be attributed to the form of control ol' business, but i mainly the fruits of ignorance, the ex- : ploitation by the few, and the disruption between master and man. the fault 1 of which lay with both parties “History records that up to the fourteenth century master and man worked well together, that guilds were the common meeting place of both, and the : duties and rights of eacli were invariably designated by the guild. With the i advent of the modern era of trade and • commerce trade societies multiplied, and became rich and arrogant and lustj ful of power, whereas previously they rwerc poor and humble with ideals of ! service. This change brought about the I bregk between master and man -the i masters developed into an employing | class, and the man into a class of workI ers by the day. Gradually the gulf widened, each distrusting the other—on the one hand the master making an ef-, fort on the rights of the worker, and on the other a determined resistance by the worker. "Guilds which at the close of the fourteenth century numbered 40,000 became practically defunct, and for some long period workmen were unorganised and at the mercy of the unscrupulous. I suggest it was the action of the unscrupulous and the failure of the men to retain their just organisation that poisoned the mind of a section of the community, and created that spirit of direct opposition to the employer of labour until to-day he is considered by a certain section as a parasite that should be destroyed, and by others as a cow' that should bo tolerated, not fed but incessantly milked. “I believe that private enterprise and ownership is the only sure developer of national progress and security, and the main incentive to patriotism, justice and happiness, and it is with the view of advocating the high ideals of this form of control and deprecating the abuses still practised by some that I speak to-day. SYSTEM TO PROVE ITSELF ‘‘ln this w'orld of changing conditions the continued existence of any system | can only be assured by such system proving itself worth saving. Therefore as business men we must by maintaining a high standard of business ethics prove that the present form of control is for the general good of the people, and not for the profit of a few, and that such system is not only worth saving, but its continuance is necessary in the interests of progress and the happiness j of the people. ‘‘At the outset I would emphasise | that business ethics is not only a code , of honour that should dominate the ! business man in his dealings with his client and his fellow business men, but 1 also a code of honour between employ- [ er and employee.

j “Unfortunately there are many inj fluences at work tending to cause cleavage between employer and employee. A j definite spirit of mistrust appears to | have been created partly bcause of that small number of employers who consider that the only objective of business is profit, no matter how attained, and w'ho consequently take every advantage of extracting the last ounce of flesh from their employees. These employers are not only dishonourable to their employees—who after all are their fellowmen with equal rights to live and share in the prosperity of their country—but they are traitors to their fellow business men as by their greed, selfishness and inhuman treatment of their fellowmen they have created that unrest that has fed and inspired certain extreme forces that fight on the side of the employee. I am ~ure that such extreme forces are not the wish of the majority of men. They are forces unfortunately that are not dominated by the desire to obtain just rights with due regard to fulfilment of duties by the employee, but forces that are fed on hatred of what they term the capitalist class, that are fed on the desire to crush that which creates employment, and further that demand rights out of all proportion 4 o the services given. TRUE UNIONISM I “1 am a believer in true unionism—or | perhaps it would be more palatable to some if I said organisation—of both employers and employees, and have [sufficient faith in my fellow’men to believe that the true ideal*; nf lininnicm

based on the desire to obtain just rights, but w'ith the objective to render just and more efficient service, is still paramount in the breasts of the majority. Unfortunately history records that such ideals have not always been recognised by employers, and have not always been encouraged by those who hold themselves out as exponents of the • workers’ rights, and consequently from | the muck-heap of mistrust has grown | misunderstanding and disloyalty, j “1 feel certain, fellow Rotarians, you I will agree that efficiency and success in ( business can only be attained by the I goodwill and co-operation of all conj cerned in the operations of the business. and that such goodwill and co-op-eration can only be consummated when trust and iriendship is firmly established between employer and employee, and u'hen duties and not rights are i considered paramount. This I believe ! should be the first objective of business. -Just how it is to be attained is diffi--1 cult, but I do emphasise that unless I such a spirit of friendship is cultivated jvvith the resultant better understanding I and harmony between employer and employee then private enterprise must j wane if not fail altogether. ! “At a recent conference of the Rotary j Clubs of New Zealand, a speaker refer- | ring to the question of fostering goodwill between the employer and cmI plovee emphasised the value of studyI ing the comfort and welfare of the employee. and dealt with the advisability or providing adequate protection for old age and sickness. That is sound, in that could the spectre of poverty be removed greater contentment and happiness must result. Unfortunately, however. although the larger class of business can deal, and in many cases has dealt with this problem, the smaller employee is not. under present conditions, m the position to do so. Employers, however, must face this problem, otherwise it becomes a State liability, and should the State be compelled by circumstances to take over the exigencies of workers in business, then surely they have a right to business itself. A BETTER SPIRIT J “1 do suggest that employers could by co-operation themselves and co-ord-ination w'ith the existing organisations of the men (unions) find a solution to this problem, and thus bring about a better spirit than exists to-day. “Some of you business men may consider that I am harping on the usual give, give. give, but that is not so. Man has a right to the fruits of his labour, j be he employer or employee; man has [also a right to a sufficiency in the time jof sickness and distress, but it must j also be remembered that man has ccrjtain obligations to fulfil to qualify for such rights, and the employer has a de- | finite obligation to fulfil the first two requirements before he can expect a just l and unqualified fulfilment of the third. | PRESENT CONTROL IN JEOPARDY i “I firmly believe that business control as we know it is in jeopardy, that > the problem must be solved by employ - I ers themselves, and that the solution mainly depends on the practicability of co-ordination between both parties necessary to business—master and man.

“I am not emphasising the faults of the men as this address deals more with the duties of the employer, but also because I do not consider that such destructive criticism is conducive to the settlement of the difficulties associated with business, but what I do emphahise is that the continued existence of our present system of control depends on our obtaining and retaining the confidence of the men by proving that the present system is the best, that its continuance is necessary in the interests of the men themselves, and that employers with the co-operation of the men are capable of handling the system. PROFESSIONAL DISTURBERS “One thing that employers must be united against and must appeal to their employees to understand. Is the true character of the professional disturbers (which is in marked contrast to the honest union worker), who in the name of friendship and brotherhood or comradeship create unrest and disturbance which disorganises trade with the ultimate inconvenience and financial loss partially affecting employers, but mainly the workers and their dependents. “I believe the worker as an individual and th® workers as a body under correct union principles if given the freedom of self-expression are out to co-operate with their employers to the ultimate advantage of the business and men concerned.

“Briefly the ethics or code of honour between employer and employee is of the greatest importance, demanding as it does friendship and trust, the fruits of which can only be prosperity and happiness to each party to the transaction.

“Time will not permit me to deal more fully with this phase of the subject. as I must briefly refer to ethics as it applies to the customer and to the fellow-business man.

“There is an old saying, ‘the customer is always right,’ and possibly you know of cases where an employee has been penalised or reprimanded to enable the employer to cater to the conceit of his client. I do not believe that such is frequent, but what I wish to emphasise is that business ethics is not a means of toadying to the conceit of a customer, it is something of a higher character. Briefly, it is the duty of the seller to deal fairly and squarely with the buyer, to not only give him the service and information that the buyer must receive to conform with the law, but any additional information in the possession of the seller which may be of vital interest to the buyer in his decision to buy. The buyer certainly has the right of inspection, but although he is not likely to buy bananas which are obviously rotten, he may quite easily be induced to buy a worthless fabric sold on colour appeal. “Business ethics between the seller and buyer is therefore something more than mere legal requirements or the completion of a transaction for the purpose of a profit. Profit although a necessity and a just reward for services rendered should be a secondary consideration “It is here that the Rotary slogan should be emphasised, ‘Service above self. He profits most who serves best,’

which if actuates business transactions would cause clean and honest deals, raise business to the highest and rightful plane, and bring satisfaction and just returns to both parties to the transaction. For after all, business is merely service—the service of tending the sick and distressed, of advising, of teaching in addition to the service of production and distribution. Each is a definite necessity, and every service to be efficient must be rendered not with the idea of mere reward, but with the ultimate objective of the general good

of the whole. ETHICS BETWEEN BUSINESSMEN “I now come to the last point and one that is of the utmost importance to business because it afTects the inner workings of control itself in contrast to the external dealings with man and customer, and that is the code of ethics between business men themselves. “I feel certain you will agree that unless there is a high standard of honour between the component parts of the system of control of business then the system itself must fail. There is no doubt that there is still room for improvement and greater organisation between the various parts of the system to enable waste to be eliminated, more efficient service and more equitable returns to the servers. In discussing business one invariably finds that the parties to the conversation each consider their service is less rewarded than the other services concerned with the transaction, and' though genuinely believing this a disgruntled and dissatisfied condition arises which is not in the interest of the most satisfactory fulfilment of the whole transaction. It is in the general good of business itself that such dissatisfaction or even cause for dissatisfaction should be removed.

“I suggest that one of the contributing causes of the lack of organisation is the inherent desire of man to his own dependency—or in other words to be a king in his own right: answerable to no man. This, of course, is a fallacy as no man is master unto himself—all men being subservient one to the other. But still we continue to carry on business in every man's own way—quite independent of our fellowman. True there is a certain amount of organisation, but the lack of complete organisati >n and unity among business men—and I re f er to professional, producing and general business pursuits—is in marked contrast to the almost perfect organisation of the worker.

“Employers and business men generally must be completely loyal to their own profession, trade, farming, etc., organisations. But we must go further than this. Although there is a similarity in the objective of the various classes of business there is no unity of the classes, but the reverse is evident. It must be acknowledged that no one section can stand independent of the other, and even more should it be emphasised that public destructive criticism of one section by another means the lessening of the prestige of the whole.

“I therefore suggest that not only should the sectional organisation receive the fullest support of their own trade, etc., but the time is now opportune for the sectional organisations to give serious consideration to the promotion of an all-embracing body that would be representative of all classes of business. An organisation where all sections can meet on common ground, where the problems of e-ch section in relation to the others can be thoroughly investigated not from the parochial view of one section alone, but without bias, and with the ultimate objective «>i the general flood of the whole. Such organisation to be effective would require the whole-hearted support of all classes of business and complete unity and confidence between all parties. “I would just briefly refer to three serious breaches of ethics that a business man experiences which are not only a deterrent to the individual but to business generally:

(a) Breaking trade agreements by secret rebates or commissions.

(b) Demanding concessions and advantages by threats of undercutting, etc. (c) Taking advantage of another’s misfortunes.

Some of you must have suffered by one or more of them. They are ever present breaches committed by businesses run solely for profit at any cost without regard to the duty of service. Breaches that could not be committed by those carrying out the Rotary slogan of ‘Service above self.’”