Jacob Hetu

SBU537
4.1 Assignment
Title – People are the Purpose, and People are Important
Chapter 7
Business and Ethics-Business and ethics must be integrated into holistic business models
Key Ideas:

 Business decisions involve ethical considerations

 Many of our incomplete narratives about business rely on separating ethics from
business
 We have to integrate out economic interests with our broader human interests, and
our models of business need to reflect such integration
 Research shows that when business is intentional about addressing ethical
considerations, it can create positive outcome sand increased trust with stakeholders
 Companies around the world are making tangible investments in responsible
operations

CarMax value statement “ We value integrity above all else.” “Ensure every associate applicant,
customer, vendor, and a shareholder is treated equitably, and we respect the attributes they
offer.” Their code of business provides tools to help business people confront ethical situations
so that they continue to work with integrity.
The need for business and ethics to be integrated
Vocabularies are important. IF we tell students that business and ethics don’t mix or take the
joke that they don’t mix serious, then we will apply that to the world. One of the main pillars of
the book is that in the traditional narrative of business, business and ethics are separate
elements. A hall mark of the new story is that companies are starting to treat business and
ethics as complementary. Conscious Capitalism – business founded on a moral basis of lifting
people out of poverty and increasing the wealth of everyone involved. Most people want to do
business with companies that are committed to acting ethically. We should not let the worst
business actors represent the whole institution. JUST Capital surveys the public and ranks every
company of a certain sized based on what they are doing with respect to key societal and
ethical issues.
SC Johnson – “A family company at work for a better world”. Herbert F. Johnson Sr., the son of
the company’s founder, once stated, “The goodwill of people is the only enduring thing in any
business. It is the sole substance. The rest is shadow”. 25 years of sustainability reports.
Developed a peer reviewed science based program that evaluates the impact on human health
and the environment for all the ingredients they use. 1976 SC Johnson leader developed the
company’s business principles in a formal document titles “This We Believe”. Business is how
humans create value for and trade with each other. Old narrative insists that business is about
narrowly defined self interest and money.
Business and ethics are integrated meaning that business choices have ethical implications. 1)
impacts how others make sense of our virtues and values. 2) Involve social norms, rules, and
laws. And 3) generate harm and benefit to different stakeholder groups? The new model of
business all builds explicitly on the idea that business and ethics must always be combined.
Business must have societal legitimacy
Business must have societal legitimacy if they are to continue to operate effectively in society.
Many new companies have focused on this by focusing on their communities. Companies need
a “license to operate” from society. American Express focuses on communities and
preservation. They hope to develop leaders who solve complex social problems and have spent
over 70 million in 2008 I micro grants. 3M is a large conglomerate with business from worker
safety to consumer goods. Their Corporate Responsibility states “Our commitment to
Sustainability drives our prupsoe-0driven innovation that improves every life, and we are
always trying to do more.” Also actively engaged in community involvement and supports a
culture of service amongst workers. The emphasize their ethics and compliance practices, code
of conduct, an commitments. They also have an independent ethics and compliance team that
reports to a separate committee with the Board of Directors. Employees know they do not
have to compromise ethics. Alibaba is using AI and partnering with cities to reduce traffic and
pollution.
What Research Tells Us

There is a growing body of research that supports integrating ethical concerns with other
business concerns. Entrepreneurial organizations benefit from strong relations with
stakeholders, including suppliers. This can lead to new tips on trends and better problem
resolutions. Trust in other parties also allow for better negotiations and better outcomes for
both parties.
Chapter 8
Realizing the new story
Key Ideas
  Many companies need to focus on employee engagement and building trust with
stakeholders.
 There are useful tools that can help businesses reenergize their purpose, build trust
with stakeholders, integrate with society, engage employees, and integrate business
and ethics.
 The time for change is now, and businesses need to assume a leadership role.

New York Life and the new story of business

New York Life, founded in 1845 is a mutual insurance company, meaning policy holders are also
owners or shareholders. Many insurance companies focus on ROE. New York life does not and
follows the new story. The are purpose driven, focusing on “providing long term financial
security for its policy holders.” CEO Ted Mathas – While ROE is irrelevant, that doesn’t mean
we don’t care where every dollar is invested.” Profits are a means to an end and the end is the
long term financial security y of the policy holders. The stock has paid a dividend every year
since 1854 to its policy share holders. They also understand that it must create value for all its
shareholders. Third, the are committed to being involved in society. Fourth, Mathas
understands that people are different and the only way the company can thrive is to
acknowledge, understand, and celebrate these differences.
Recovering and Re-energizing purpose: Asking tough questions
Many businesses have begun to recover and re-energize their purpose where appropriate.
Important questions that successful and reenergized businesses ask.

 Who are we?

 What do we stand for?
 What does society expect from us?
 What do we want others to say about us?
 How can we get young talent to join us?
 What do we need to change?
Companies purpose must be expressed in its set system of processes so that it will not be
regarded as empty words. “If we do this, is it in line with what we stand for?”
Unlocking stakeholder value
Most businesses pay some attention to stakeholders. Customers, suppliers, employees,
financiers, and society are all critical for a company’s success. Stakeholders are
interdependent. Wal0mart pioneered supply chain management, which is in its most simple
form a simply connecting suppliers with their customers.
We need to ask some critical questions and develop conversations that lead to policies and
practices around these questions. For instance:

 How does creating value for customers affect the value we create for others
stakeholders (and ask this question for each stakeholder)?
 How are we engaging with each stakeholder? Do we know how each stakeholder wants
to engage with us?
 How is our purpose connected to how we engage our stakeholders?
 Are our stakeholders trying to make our business better and more effective?
 Where are we making trade-offs amongst stakeholders, and who can’t they be avoided?
 What capabilities (know-hows) do we need to engage with multiple stakeholders?
 What partnerships do we need with stakeholders?
Leads to innovative thinking. Stakeholder value will come to replace shareholder value.
Unilever CEO “It is not about putting purpose ahead of profits, it is purpose that drives profits.”
Over half its products are sustainably sourced.
Building a better Society
One of the most important decision executives and boards can make is what societal issues the
business must deal with. Relevant questions to ask are:

 What current and future societal issues are connected to our purpose?
 What current and future societal issues do our employees care about the most?
 What current and future societal issues affect our customers and other key
stakeholders?
 What can we do with respect to the societal issued we have identified? How can we
improve what is happening?
No business can solve all the problems, but they can donate, provide time, form partnerships.
People, People, People
If there is one thing that stands at the very center of the companies mentioned, it is that they
all understand that business is fully human institution. Business sis people cooperating
together to solve problems that people can’t alone. Every business should ask:

 Are our hiring, development, promotion, reward systems consistent with our purpose
and our claim to prioritize people?
 How do our people push back against management/executive authority? Do we value
such pushback?
 Do we encourage our people to bring their whole selves to work?
 DO we encourage a sense of balance or integration in our employees’ lives and do we as
executives act as role models?
 Are we creating a business that we would want our children to work in?
Benefits to attract the best people:

 Basic necessities: free food, free rides to work

 Healthy lifestyle: on-site fitness, free yoga, discounts to gym facilities
 Physical and psychological health issues: on-site medical facilities, free counseling
sessions
 Taking care of employees’ dependents: Paid daycare, generous maternity/paternity
leaves, bring pets to work
 Self-development: stipend to travel, fully equipped music studio.
 Recreation: free days out, ping-pong areas
 Consumption: product discounts
Often missing from these, even though attractive, is the degree to which employees actually
find meaning in their work.
Putting business and ethics together
Ethics is complicated and sometimes answers seem to be insoluble. Questions relevant in
making ethical decisions are:

 How does this issue affect our purpose?

 Who can we involve in a conversation about what to do?
 Who is harmed by and/or benefitted from this decision?
 What relationships are most important?
 Whose rights are enabled, and whose values are realized by this decision (and whose
are not)?
 What kind of person/company will I (we) become if we make this decision?
 What relationships will be strengthened or weakened by this decision?
 How will we know when it is time to change our point of view?
We are at an inflection point in history of business and it is time to think broadly and creatively
about how business can achieve its full potential and how to avoid its historical weakness. In
order to succeed we need to use “And” and pay attention to : 1) Purpose and profits,
2)stakeholders and shareholders, 3) society and markets, and 4) humanity and economics, and
5)f Business and Ethics.

Implementation
Apple has a suppler code of conduct and it publishes a sustainability report and a ESG report.
According to Investor’s Business Daily, Apple is ranked #5 on 2022’s 100 best ESG Companies
(Seitz, 2022). This is due to Apple’s pledge to be carbon neutral by 2030. Apple has also
doubled their renewable energy sources to 10 gigawatts. Furthermore, Apple is funding the
conservation of rainforest mangroves in Colombia and India. Another way apple is standing out
from the old story of business and shareholder value is by focusing on technology education
and job opportunities, especially for minorities. Currently, apple is using at least 20% recycled
material in all their products. They aim to eventually use 100% recycled material (Richardson ,
2022). The claims and goals found in apples ESG and sustainability reports are being acted
upon and strived for. Apple is recognized as an example of the new story of business.
Business and ethics are integrated in Apple’s business strategy. Apple not only uses their strict
code of supplier conduct to regulate their suppliers, they also launched a $50 million education
fund for workers that will go toward skills development and improved work environments (King
& Mihalcik, 2022). These classes include coding, manufacturing as well as technical
certifications and leadership training. Apple even went as far to end relationships with 12
refineries and smelting companies over concerns the ore was being sold to finance armed
conflicts. Apple also supports local communities by matching each dollar that an Apple work
donates to an organization through the Apple Employee Giving program and also donates
money for every hour that an employee works as a volunteer(Gallagher, 2022). This is
supporting the community, individuals, and the employees. The employees are made to feel
valued by getting to choose and support their own charities. Since 2011, Apple staff have raised
over 880 million for charities. One example of criticism of Apples negligence of human rights is
the example of Foxconn. Foxconn makes around 70% of apples iPhones. In 2010, 14 workers
18-25 committed suicide due to the pressures of working in the huge factories(Mimi, 2010).
Apple CEO visited the factories and spent money to improve working conditions there
(Greenfield, 2013).
 Apple’s current mission and vision statements are “to bring the best user experience to its
customers through innovative hardware, software, and services.”  CEO Tim Cook sets the vision
by saying “We believe that we are on the face of the earth to make great products, and that’s
not changing.  I would combine them both to make a simpler and concise vision. The new one
would be “We are going to bring the best user experience to our customers by doing what we
were put on this earth to do. Create great products.”    Furthermore, I would create a slogan
to address “How can we get young talent to join us” (Martin et al., 2020). A potential slogan
could be “Apple, great products, greater people.” I think this would also show that Apple is
focused on customers and employees (people) more than just products and profits.
Lisa Jackson is Apple’s Vice President Environment, Policy and Social Initiatives (Apple
Leadership, 2023). She reports directly to CEO Tim Cook. Apple uses policies on sustainability
to create total value chain. Apple uses recycled material in its products to help reduce cost and
material that goes to the landfill. They also create better and longer lasting products so
customers are satisfied and get the best value for their dollar.
Business is a group of people cooperating together to solve problems that they could not by
themselves (Martin et al., 2020). This is hard to do when there are barriers working together
and barriers of change. Most people want to make changes and improvements. However,
suggestions are often ignored (Kotter et al., 2012). Part of prioritizing people, is also taking
their suggestions seriously. Hiring an employee doesn’t stop the process. Employees need
continuous training and performance evaluation. It is important to ask if those are consistent
with one’s purpose and sense of balance. Part of aligning the employees towards the change
goal is aligning systems to the vision. Performance improvements and incentives must me
changed and modified to support the new story of business (ibid). A powerful question to ask
when creating a change is “Are we creating a business that we would want our children to work
in? (Martin et al, 2020). Human resource people in successful businesses often care deeply
about their employees.
Empowering employees for broad based action or responsible business would need to start at
the interview process. Upon hiring the employee, training would need to start during
orientation. That way from day 1, employees would know what is expected of them and what
the company expects. During orientation, a brief explanation of the mission statement, vision,
values, and ESG goals could be taught. At an employee’s 90 day review, further explanation of
charitable works, environmental initiatives, and other employee programs could be introduced
as well. Management would need to be onboard and take it seriously so that new employees
can see that their leaders are “walking the walk and talking the talk”.

A potential scorecard and Evaluation tool could look like this:

New Story Score Card and Evaluation

Question  
Does creating value for customers affect the value we create for other
stakeholders? Yes
Are we engaging with each stakeholder? Yes
Do we know how each stakeholder wants to engage with us? No
is our purpose connected to how we engage our stakeholder? Yes
Are our stakeholders trying to make our business better and more effective? No
are we making trade-offs among stakeholders? Yes
Do we know what partnerships we need with stakeholders? No
Are current and future societal issues are connected to our purpose? Yes
Do these affect our customers and other stakeholders? Yes
Are there ways to improve the societal issues we have identified? Yes
Are our hiring, development, promotion, and reward systems consistent with
our purpose and our claim to prioritize people? No
Do people push back against management and executive authority Yes
Do we value this? No
Do we encourage our people to bring their whole selves to work? Yes
Do we encourage a sense of balance or integration in our employees lives? No
Are we creating a business that we would want our children to work in? Yes
Ethical issues  
 Does this issue affect our purpose?  
Are people harmed by this?  
are people helped by this?  
Does this issue change the person or company that we will become?  
will this strengthen the company overall  
will this weaken the company overall  

Questions that scored a “no” would need addressed.

Structure
Training
Systems

I am certain that I would encounter troublesome supervisors. There are always people who
want to push back or do not want to change current ways. These are people who were trained
in the older ways of command and control style of management (Kotter et al., 2012). They may
say “we already tried that or we do not have time for that”. Honest dialogue and being open
about why you need them to join in and support the change would be the best way to deal with
them. Outright firing someone is only going to make you seem like you are trying to control
and not lead. A discussion can open up roadblocks and help discover why they won’t change. If
this doesn’t help and they still don’t change, then it may be time to part ways.
One KPI each quarter could be new product announcements. Another one could be the quality
control numbers. For instance, how many “great products” are defective each month out of
how many made. Another one could be waste saved from the landfill each month. It is
important to have these in place so that short term wins can be used to celebrate and show
progress to the employees currently onboard with the change effort and to sway the
employees who are not. This helps build the necessary momentum (ibid).
It is important to have a leader who is both a good leader and a good manager. A leader who
has charisma and the financial business skills can not only inspire others, but also make sure
that the change effort is going to be financially sound. They can provide proof that their ideas
are going to work and show evidence of the success and small wins.
References

Apple leadership - Lisa Jackson. Apple. (n.d.). Retrieved January 29, 2023, from
https://www.apple.com/leadership/lisa-jackson/

Apple. (2022). Apple 2022 ESG report. 2022 Apple ESG. Retrieved January 29, 2023, from
https://s2.q4cdn.com/470004039/files/doc_financials/2021/q4/_10-K-2021-%28As-Filed
%29.pdf
Gallagher, W. (2022, December 8). Apple staff have raised over $880 million for charities since
2011. AppleInsider. Retrieved January 29, 2023, from
https://appleinsider.com/articles/22/12/08/apple-staff-have-raised-over-880-million-for-
charities-since-2011

Greenfield, R. (2013, October 30). How Apple fixed its Foxconn Problem. The Atlantic. Retrieved
January 29, 2023, from https://www.theatlantic.com/technology/archive/2012/05/how-
apple-fixed-its-foxconn-problem/328307/

King, M., & Mihalcik, C. (2022, March 30). Apple releases Supply Chain Report, launches $50M
education fund for workers. CNET. Retrieved January 29, 2023, from
https://www.cnet.com/news/apple-releases-supply-chain-report-launches-50m-
education-fund-for-workers/

Kotter, J. P. (2012). Chapter 7. In Leading change (pp. 106–120). essay, Harvard Business Review
Press.

Kotter, J. P. (2012). Chapter 8. In Leading change (pp. 106–135). essay, Harvard Business Review
Press.

Martin, K., Parmar, B. L., & Freeman, R. E. (2020). Chapter 8. In The power of and: Responsible
business without trade-offs (pp. 141–156). essay, Columbia University Press.

Mimi, L. (2010, December 14). Struggle for foxconn girl who wanted to die. South China
Morning Post. Retrieved January 29, 2023, from
https://www.scmp.com/article/733389/struggle-foxconn-girl-who-wanted-die?
module=perpetual_scroll_0&pgtype=article&campaign=733389

Richardson , D. (2022, April 20). How Apple is making progress on its ESG goals. UNLEASH.
Retrieved January 29, 2023, from https://www.unleash.ai/change-management/how-
apple-is-making-progress-on-its-esg-goals/

Seitz, P. (2022, October 24). Buy an Apple iPhone, Fund Mangrove Restoration Projects.
Investor's Business Daily. Retrieved January 29, 2023, from
https://www.investors.com/news/apple-stock-esg-investing-interest-from-recycling-
environmental-commitment-2022/