Personal Morals and Business Ethics

A few weeks ago, I posted a column on employee empowerment that used the example of a Girl Scout selling cookies outside a medical marijuana dispensary in San Francisco. It generated vehement response in some forums, many excoriating the parents of the girl for exposing her to immoral activities.

Why? Use of marijuana for physical and behavioral issues requires a prescription, and is an accepted therapy in California. In Colorado, where recreational use is permitted, Girl Scouts are forbidden to sell in front of pot shops, just as they are from selling in front of bars, night clubs, adult video stores, or any other business whose patrons must be 21 or older. That makes sense, and is consistent. No scouting council (as far as I know) forbids them from selling in front of physician offices or hospitals, both of which dispense powerful, and legal, drugs.

Morality differs from place to place, and shifts over time. Smokable intoxicants have been legal in Holland for decades, just as nude bathing is in Germany. I don’t hear claims that the Dutch or Germans are immoral as nations.

On the other hand, few of us would defend stoning or amputation, forced marriage of pre-teen girls or honor rape as moral acts, yet they are legal and considered righteous in parts of the world. Some business owners claim a moral right to refuse service to gays and lesbians, but I’m personally not clear on how that differs from the not-so-far-gone practice of denying service based on skin color, when some people claimed that allowing races to fraternize was immoral. We can agree to disagree.

Business ethics, on the other hand, are pretty close to universal (although perhaps not universally observed). I know of no jurisdictions where it is permissible to sell poisonous or dangerous products labeled as safe. Nowhere can you legally contract for goods and services with no intention of paying, or collect payment with no intention of delivering. Honesty and integrity are the underlying assumptions in every business transaction, from the smallest to the biggest.

The dictionary says that ethics are the application of moral principals. That is true, but in business, my moral compass doesn’t have to agree with yours as long as my ethics do.

 

 Hunting in a Farmer’s World: Celebrating the Mind of an  Entrepreneur, is an ownership book, not a management book. “John Dini’s writing is crisp, peppered with good data and concise, pointed stories, revealing how deeply he knows the head, heart and guts of entrepreneurs.” (Read more reviews)

Posted in Thoughts and Opinions | 1 Comment

One Response to Personal Morals and Business Ethics

  1. Peter Hirst says:

    I agree, morals are personal and ethics a code of behaviour and both require defending.

Leave a Reply

Your email address will not be published. Required fields are marked *

Who’s Picking Up the Tab?

When a small business is sold, the total price of the business includes not only the cash paid, but any obligations assumed by the buyer on behalf of the seller. Transfer of a loan balance, accrued vacation pay for employees or continued employment for the former owner are all considered part of the purchase price.

The calculation of Earnings Before Interest and Taxes (EBIT) presumes that debt financing is a choice. An owner can reinvest profits, or share the risks of the business with a financial institution in return for an interest rate. No sane buyer would merely assume debt without considering it in the cost of acquisition.

In a long essay on government last week, The Economist said “Many democracies now face a fight between past and future, between inherited entitlements and future investment.” In my posts on the issues surrounding Baby Boomer retirement, I frequently receive angry comments from the succeeding generations about the debt and entitlement burdens that they are inheriting from the Boomers.

The Greatest Generation and the Silent Generation used the voting booth to develop a social safety net for Americans. The Boomers’ first President was Bill Clinton; elected long after these Great Society programs were entrenched. For the last 40 years, the taxes collected from the largest and most productive generation in history paid benefits for those who preceded them.

A business can fund growth by reinvesting profits or borrowing more. Increasing debt is easy if revenue and profits are expanding. Only when the growth curve levels off does rising debt become a threat.

Piggy bank timeGrowth in the US GDP is leveling off, just as the country needs to find massive amounts of working capital to meet its rising social obligations to the Boomers. Political candidates who put it on the front burner are guaranteed to be unelectable. Nonetheless,  a bill is coming due that will easily consume the nation’s cash flow, and which could eclipse all other spending needs.

When a business struggles to pay its debts, it has to either raise revenues or reduce expenses. As new generations become the majority, they will have to choose between taxing themselves or reducing their obligations to the Boomers.

 

 Hunting in a Farmer’s World: Celebrating the Mind of an  Entrepreneur, is an ownership book, not a management book. “John Dini’s writing is crisp, peppered with good data and concise, pointed stories, revealing how deeply he knows the head, heart and guts of entrepreneurs.” (Read more reviews)

Posted in Exit Planning | Tagged , , , , , , , , , | Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

The Disconnect Between Skills and Jobs

A Gallup/Lumina Foundation Poll released a few weeks ago is getting attention in the business community. In a survey of 623 business leaders, most said that higher education was important, but where an employee earned a degree, and what the degree was in, were far less important in hiring decisions than basic job skills.

There is a serious disconnect between the suppliers of pre-employment skills (the university systems) and their consumers (business). In another Gallup study, this one of Chief Academic Officers, some 96% were confident or extremely confident that their institutions were doing a good job of preparing their students for success in the workplace. Only 11% of business people in the Lumina  poll strongly agreed with that statement.

college diplomaIn 2013, 37% of college graduates under the age of 25 were working in jobs that didn’t require a college education. Most of these were employed in health care or retail. Low wage (less than $29,000 a year) jobs account for 19% of employment, but since 2009 have accounted for 40% of all new jobs.

Multiple surveys of small business owners show that a majority identify “finding qualified candidates” as their biggest HR issue. Clearly, they have looked at the current crop of college graduates and found them wanting. With those in academia apparently oblivious to the problem, there is no sign that the situation will change in the near future.

Small businesses have always been the incubator for job training. They create about 2/3 of the new jobs in the US. Owners long ago accepted that younger employees were more likely than others to eventually be wooed away by corporate mermaids with their siren song of better benefits and career paths.

Today, small businesses are using technology to reduce head count. The positions available are increasingly divided between those requiring real talent from day one and those that can be filled by a warm body. The impact on large companies who have traditionally depended on the small business training ground for basic skills is yet to be fully felt.

If you have warm-body jobs, you are likely filling them with employees who are academically overqualified. If you require appropriate education, job skills or technical training, you are lucky to be filling them at all.

Posted in Management, Top Blog Posts | Tagged , , , , | 3 Comments

3 Responses to The Disconnect Between Skills and Jobs

  1. Rod Giles says:

    I am also aware that a very large nimber of successful companies are started by people that have no particular education but have a belief in themselves and their abilities and go ahead in the wider marketplace in spite of ” no education” . In fact in my experience I have seen may qualified people totally able to think productively for themselves. I have also seen many untrained and uneducated personal really achive if given the right support and oportunity. I therefor do not believe there is a hard and fast rule but a need to really have a very good look at what is wanted and expected and chose the right cloth for the right suit and not just stick to one size fits all.
    Further to this is that I think that the young are sold the idea that a education is going to give them the right to a job of their wish and a good education will gaurentee a salary to suit. However there are not enough positions available any longer as the world become increasingly more crowded with quailfied graduates , less jobs and more automation.
    Given this situation the responsibilty of choosing the right person it is becoming more clouded.

  2. Mike Havel says:

    It sure would be a step in the right direction, if the Public Colleges would direct our tax payers $$ into degrees programs for which there are jobs, and reduce the $$ in degrees programs for which there are few jobs. Just like a business they should try to created an inventory of graduates that can be sold, make a good living, pay taxes, and donate back to their college. If someone wants to study in field in which their are few jobs, let then go to a private college. We do not need to be using our tax $$$ educating citizens into a field which there are no jobs.

Leave a Reply

Your email address will not be published. Required fields are marked *

Empowerment Requires Encouragement

We all want employees who are empowered to think. That doesn’t always turn out the way we hoped.

Girl-ScoutLast week the news feeds carried a story about a Girl Scout in San Francisco who set up her cookie table in front of a medical marijuana dispensary. She sold 100 boxes in two hours. I’m guessing that is substantially better than the results from an average Walgreen’s location.

In Colorado, the Girl Scout hierarchy immediately issued an edict forbidding their scouts from doing the same, nipping the problem in the bud, so to speak. (Although in Colorado even a medical justification for purchasing marijuana is no longer necessary.)

The annual cookie selling campaign is a big deal in Girl Scouting. There are incentives, or at least recognition, for selling the most cookies. I can understand the concern of the leadership at the prospect of young women in their uniforms as fixtures in front of pot palaces all over town. It’s probably not the best overall image for scouting as a whole; but you have to admire her entrepreneurial spirit. She was trying to support the stated goal — selling lots of cookies.

In business, we have a choice between controlling every action of our employees and letting them try new things on their own. The first approach is micromanagement, and eventually leads to a business where every new idea, and each variation from the rules, reverts to the owner for adjudication. Such stifling of initiative creates bottlenecks. It slows down the company’s reaction to change, and chains the owner to daily operations.

Employees need guidelines. If the scout in San Francisco had sold two hundred boxes at half price, it wouldn’t achieve the overall fundraising objective. There should be a clear delineation of the limits to decision-making without prior approval.

Even within those limits, employees with the best of intentions will still do things you don’t like. They create a shortcut in a process, or grant a concession to a customer, thinking that they are serving the overall company goal.

The best response is to congratulate them on their initiative, explain why there are implications beyond their immediate purpose, and let them know that there is no penalty for experimentation within your guidelines.

Drawing up a whole new set of rules in an attempt to prevent them from making a mistake in the future throttles their creativity and hinders your flexibility. Do it too often, and you will be stuck in farming micromanagement.

My latest book, Hunting in a Farmer’s World: Celebrating the Mind of an  Entrepreneur, is now available in paperback, hardcover and Kindle. It is an ownership book, not a management book. Please click on the link above to see what business owners think of it.

Posted in Uncategorized | Tagged , , , , , , , , | 2 Comments

2 Responses to Empowerment Requires Encouragement

  1. Hi John,
    I think few business owners would call micromanagement a good thing, if you put it in those terms. The trouble is finding the balance between delegation that keeps your business strong and creates a product you can continue to be proud of and realizing that all of this does require some amount of letting go. I’ve left this comment over in the BizSugar community as well where Christi Brendlinger was good enough to share this post. Wonder if you or she or both could share some guidelines with our community about exactly how you go about striking this difficult balance.

    • John F. Dini says:

      It’s a great question, Heather. I think there may only be a state of imbalance. Either you are giving employees too much leeway, and suffering the occasional setback because of it, or you are trying to avoid the setbacks, and reining them in. The “balance” lies in determining how much of a mistake a company can afford in the name of learning.

Leave a Reply

Your email address will not be published. Required fields are marked *

What Price Sochi?

In business, there is a danger that a big new project, landing a giant customer, or an unexpected personal event will draw your attention away from the job of running your business.

When an owner is the driving force behind day to day operations, he or she often lacks the ability to deal with a huge challenge and still maintain a handle on the company. I’ve seen family illness, building a new home, or adding a new product line consume an owner’s attention until the core business foundered.

XXII WINTER OLYMPICS SOCHIThe Sochi Olympics were Vladimir Putin’s BHAG (Big Hairy Audacious Goal). Despite throwing $51,000,000,000 at the project, he faced a lot of skepticism as the games approached. It really looked like the Russians had taken on more than they could handle.

By any reasonable measure, the games were a resounding success. Iffy conditions are always a factor in winter sports, but the athletes and most of the spectators have been lavish in their praise of Sochi. Security held up. If stray dogs and unfinished hotel rooms are the worst stories thousands of reporters can dig up, things went pretty well.

Mr. Putin put his personal stamp on the spectacle, appearing regularly to cheer for Russian athletes. His presence reinforced a message; “This is what I have done, and I’ve done it well.”

Did the protestors in Kiev understand that Putin had a bet in Sochi he couldn’t afford to lose? Did they anticipate that Russia, in the middle of pulling off this BHAG in front of the whole world, would be unable to prop up Yanukovych as it otherwise might?

The story in the Ukraine hasn’t reached its conclusion yet. It would be ironic if the biggest public relations triumph of Vladimir Putin’s career resulted in the failure of his strategic plan to reestablish the Russian Federation as  a counter balance to the European Union.

Focusing your efforts on a huge goal is exciting. When you achieve it, the satisfaction and gratification is wonderful. Everyone in your company shares in the adrenalin rush.

But sometimes the biggest impact on your business is from the things that happened while you were looking elsewhere.

My latest book, Hunting in a Farmer’s World: Celebrating the Mind of an  Entrepreneur, is now available in paperback, hardcover and Kindle. It is an ownership book, not a management book. Please click on the link above to see what business owners think of it.

Posted in Thoughts and Opinions | Tagged , , , , | Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *