Discussing Fairness in Business

By 06/03/2019Blog

Charles Wookey – Speaking at the RSA – 5th March 2019

For more on this topic download A Blueprint For Better Business’s paper Fairness in Business.

Thank you, Matthew and the RSA team for collaborating with us to hold this event this evening and to the panel.

Who is us? A Blueprint for Better Business is a charity focussed on helping build a better society through better business.

Along with many others, we believe that there is now an urgent need to move from an economic system optimised for growth and profit to one optimised for human well-being and a sustainable ecosystem.

We believe a crucial element needed for business to play its role in this system change is to displace two dominant ideas that have shaped business in the US and UK over the last 40 years. One is that the purpose is to maximise profit. The other is that people are essentially self-interested. If businesses think differently about why they exist, adopt a more realistic view of people, and act accordingly, they have a huge agency to help build a better society.

We work mostly with leaders of major companies who are personally committed to advancing this way of thinking and acting in business. We want to help create a new normal which is vital if the system shift we all depend on is to happen.

 So, why are we here, why this audience and what are the key points in the Fairness in Business paper which those of you here in the hall were sent and, I’m sure, have all avidly read?

Perhaps we should start with Marx – Groucho that is not Karl. He said that the secret of business success is honesty and fair dealing, so if you can fake those you’ve got it made…

We are here because fairness is one of the central issues at stake in businesses becoming enablers rather than blockers of this system change. Accusations of unfairness, of using its knowledge and power to exploit rather than serve people, and to externalise environmental and social costs lies at the heart of the disconnect between business and society.

But fairness means so many different things and in many ways life just unfair. Competitive markets create winners and losers.  So is it helpful to challenge businesses to be fair or is it pie in the sky? Does it shed more heat than light?

These are questions about philosophy, practical business and society. Hence the panel we have this evening. And this audience brings together a fantastic range of senior business leaders, together with many RSA members themselves from business and civil society. It’s the right mix of people in the right place.

So what is the argument in our paper Fairness in Business, which I make clear is not a set of answers but provocations?

The first thing is that a sense of fairness seems to be something deeply ingrained in humanity from the earliest moments of our lives. Children have a great sense of fairness, particularly as regards themselves. But in practice, we are often conflicted about what fairness means in a particular situation.

It helps to think not about “fairness” in the abstract but about acting fairly. Then it’s worth noting that any business is, in fact, a social organisation – it’s first and foremost a series of human relationships with customers, suppliers, employee’s communities, investors and so on. Once we think of business in this way the question of ‘are we acting fairly?’ in relation to each of our stakeholders is engaged.

We argue that in thinking about what it means to act fairly three things matter: how a decision is made, in what frame of mind, and with what result. All three are important but the most important is the frame of mind – which of course goes back to purpose and what the organisation sees itself as existing to do.

When difficult decisions are being made in competitive situations about the sharing of benefits or burdens there are always trade-offs and opportunity costs. Being fairer to one means being less fair to another. Sometimes there are very difficult competing goods at stake. But we argue that even if it is not possible for a business to be fair to everyone, it should be possible to avoid being manifestly – clearly and patently unfair – to anyone. Hence the quirky title of this evening’s debate – how not to run an unfair business.

This frame of mind sees acting fairly not as a constraint but as an aim. It requires clarity of purpose and consistency of having fair processes, treating people with dignity and respect, consulting and communicating the basis of decisions made, and enabling and welcoming scrutiny. It invites the difficult question of what are we going to give up to become fairer. Most importantly it needs careful thought if those who are affected by decisions but whose voices who are seldom heard or silent – whether distant communities or future generations – are properly represented.

And where structural problems impede acting fairly, businesses can use their agency together to advocate for change that benefits society rather than protecting self-interest.

The key is to keep looking through the human lens. Businesses are just people. The desire to build strong relationships of respect and care is deeply human. And building a business with that frame of mind helps turns a mere financial vehicle into a vibrant community who can help create a better society whilst delivering sustainable financial returns.

 If you would like to explore this topic in more depth, you can click here to download A Blueprint For Better Business’s paper Fairness in Business