Categories: CSR reality check / History of PR / PR issues / Reviews
7 March 2011
Cant or Kant? PR-think gets heavy (part 1)
Public relations professionals don’t really do philosophy: we’re in the people business, and sound-bites suit us better than Immanuel Kant’s Fundamental Principles of the Metaphysic of Morals (1785). As for our clients, well, we’re bound to note their lust for the latest guru-speak getting lift-off from an airport bookshop.
Yet how our clients juggle individual moral rights, social roles and social conventions cuts to the heart of what PRs communicate. As Martin Sandbu, economics leader writer at the FT, says in his new and accessible book, Just Business – Arguments in Business Ethics, philosophical thought can illuminate how these processes are managed.
Sandbu begins by ripping to pieces the two dominant, and conflicting, management mantras that guide business decision making today: Milton Friedman’s shareholder primacy theory and stakeholder doctrine. He then uses Kant’s methodology to put forward what I consider to have the makings of a superior alternative.
First, he interrogates Milton Friedman’s managing-for-shareholders mantra and finds inconsistencies inherent in the theory, which casts doubt on its usefulness as a guide to action:
Friedman himself admits to qualifications on shareholder primacy. He says that mangers’ responsibility is to conduct the business in accordance with [shareholders’] desires, which generally will be to make as much money as possible while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom. But this is as unhelpful as it is eloquent. What is a manager to do if shareholders do not particularly care for ‘conforming to the basic rules of society’ – whether those of the law or those of ethical custom? …..
…if by ethical custom we mean the morality conventionally believed by a majority in society, it could conceivably be the case that conventional moral beliefs require society to be ‘socially responsible’, even against the desires of shareholders. If so, conforming to ethical custom would bind managers to pursing ‘socially responsibility’ to the detriment of shareholder profit, which is surely the opposite of what was intended. [Page 20]
I have to agree with Sandbu. There is a contradiction, though we both agree there’s also much to admire, at the heart of Friedman’s position, not least when it comes to property and shareholder rights.
However, while Sandbu is tough on Friedman, he reserves most of his wrath for the incoherencies inherent in stakeholder theory. He observes:
The imperialist nature of the stakeholder concept – its tendency to include an ever wider range of groups within the orbit of ‘managing for stakeholders’ – is part of what is wrong with stakeholder theory. For the more groups count as stakeholders, the less plausible it becomes to claim that managers either can or should run their business in the interest of all of them. Even if we set aside the difficulty of identifying who is and who is not a stakeholder, without which the admonition to ‘manage for stakeholders’ is rather unhelpful, there remains the problem of what exactly it means to manage in their interest. For, obviously, different groups have different interests, and sometimes those interests conflict. If we think of stakeholder theory as saying that managers should maximize the benefits of stakeholder groups – much as shareholding primacy says they should maximize the return for shareholders – we are hampered by the inconvenient mathematical truth that it is impossible to maximize two or more objectives simultaneously. If, alternatively, we think of the theory as saying that managers are the agents of stakeholders – much as shareholder primacy make managers the agents of the shareholders – we shall quickly find managers stymied by duties that conflict with one another. Shareholder primacy does not suffer from those problems. Even though it is mistaken in claiming managers’ duty is to maximize profit, there is at least no incoherence in what that duty, if it is actually applied, would consist of. [Pages 25/26]
The real problem with stakeholder theory, according to Sandbu, is that it lacks a coherent (logical) normative core that answers the question for whom business should be managed. Stakeholder doctrine cannot identify those stakeholders with an intrinsic moral importance (shareholders) from those with an instrumental moral value. Moreover, as R Edward Freeman, the guru of stakeholder theory, puts it, there are a number of stakeholder theories each with their very own normative cores. Sandbu remarks:
If there is no one definitive stakeholder theory that specifies the moral status of stakeholder groups and the duties of management, all that stakeholder approach per se does is to underline that such a specification is necessary. [Page 28]
Amusingly, Sandbu concludes that stakeholder theory is not a theory at all but merely an acknowledgement that business is a moralized activity:
Since that is something we already knew, we do best by simply leaving the term ‘stakeholder theory’ behind. [Page 28]
So, having shown how the existing “philosophical” and theoretical frameworks are deficient, let’s look at Martin Sandbu’s proposed alternative. He suggests, and I tend to concur, that a social contract approach, which draws heavily but not uncritically on the work of John Rawls, provides a more durable framework for corporate image-building. Here, in Martin Sandbu’s words, is why the social contract approach to business and reputation management is so compelling:
Once we acknowledge that business behavior must be morally justified and that mere social convention about norms cannot provide that justification, we recognize the need for principles, external to socially defined norms, that can adjudicate the truth and falsity of the claims those norms imply about what business ought to do. The metaphor of contract, the archetypal form of human intercourse in the economic realm, should be particularly congenial to those seeking an appeal of offering a general method for thinking about specific problems by focusing on what rational persons in an appropriate contracting situation would endorse. This is also its moral appeal: Unlike utilitarianism, social contract theory formalizes the need to justify morality’s commands to all affected individuals. [Page 179]
So, how realistic would it be to adopt a social contract approach based on Kantian morality? Sandbu says:
…the reasoning must be done in the face of the concrete challenges one may face. The true test of the social contract approach, or any other theory of business ethics, is whether it can help business people move from denial or confusion that recognitions of moral dilemmas often trigger, toward a more stable reflective equilibrium. [Page 195]
To give us a guide into how Kantian logic could be applied to real-life corporate dilemmas, he uses it forensically to examine some classic PR case studies. He pores over Texaco’s oil spills in Ecuador, Enron’s fraud, Guidant keeping quiet about its faulty defibrillators, Google’s support for state censorship in China, LeviStrauss’s child labour scandal, executive pay and remuneration, and sub-prime mortgages, to name a few among many.
Turning to the practicalities of his approach, he says that the normative conventions of corporate cultures of, say, Microsoft and Google, might well require different moral codes of behaviours for their internal and external communication (variety will remain powerful differentiators).
Indeed, it strikes me that my Ryanair case study – perhaps not as Sandbu might like – highlights a robust and social contract-type approach to a firm’s staff, customers and suppliers. Arguably, Ryanair has re-educated a whole industry in a whole new set of normative conventions, ones that have become accepted as the price of low-cost flights and commercial success. It also strikes me that the banks are in dire need right now of a social contract, though perhaps one that is nothing like Ryanair’s (though don’t get me wrong, I’m a big fan of the airline).
But Sandbu reminds us – as perhaps Michael O’Leary never would – that profit is not everything:
…there are a host of management theories that say that it is good for business to respect workers as rationally autonomous beings. In contrast, Kantian ethical theory argues that respecting autonomy is morally required, whether or not it helps the bottom line. [Page 153]
Martin Sandbu is on to something. What he writes about is very much a PR’s concern; it addresses what PRs do and what value they add to business and modern institutions.
His work suggests (at any rate I infer from it) that firms (and our clients in general) need to apply quite tough and honest rules to the contract they are seeking to strike with the outside world. When the contract is more self-interested than obviously aspirational, the underpinning of their case can be both moral and pragmatic. PRs should be skilled in helping clients develop that contract, with its curious blend of the selfish and the virtuous. PRs, of course, need to become especially skilled at framing narratives that are not full of the flaws that Sandbu exposes.
At the very least, I hope that corporate ethics, conflict resolution and reputation management will increasingly be influenced by the ideas Martin Sandbu explores in Just Business.
Just Business: Arguments in Business Ethics
Martin Sandbu, Wharton School, University of Pennsylvania
ISBN-10: 0205697755 ISBN-13: 9780205697755
CANT – KANT OR MAYBE JUST CAN’T ( CAN NOT)
Aristotle is surely the bedrock of ethics Kant my have his single purpose but Aristotle at least started from the point that said man alone can reaons and it is in using reasoning come the gratetest happiness and fulfilment.
Where is that when it comes to the Chicago School and stakeholders? Doesn’t the answer lie in the lack of reasoning that goes into defining stakeholders. Way back the Canadian Accountants identified stakeholders as those with rights to information other than shareholders/owners. It provided a framework against which you could argue or reason the case for who or what was a stakeholder.
We have just completed a critique of work done by a government department who saw stakeholders as other government departments with information to contribute to a national project, the public utilities that collected the data on supply and consumption and a government funded pressure group whose remit was to defend the interests of the poor or indigent in society.
An interesting way of talking to yourself and justifying it all by saying you had the consumer represented by this Quango. The private sector was nowhere in the piece. Though achieving the Government objective and policy will only be possible if the private sector is prepared to collaborate and drive the policy objectives forward. But it is som much easier to talk to yourself public sector, public utilities and a tame consumer interest group to justify the expenditure of many hundreds of thousands on what was presentetd as a stakeholder stud!.
Don’t be complacent the private sector is little better check out the Sustainability Reports that are reviewed and given awards by ACCA ( the Association of Certified Accountants) who lead the field in corporate governance research. The pattern is the same, it is just easier to talk to a few noisy pressure or consumer groups; set up a website ‘engage’ with the community, publish your self serving customer and employee satisfaction stats and you’ve done the stakeholder bit.
There’s a member of the extractive industries sector.that did everything by the book – the CSR, Corporate Governance and Stake holder engagement audit was a series of ticked boxes. Every community group, ngo and factionakl interest had been part of a quarterly get together. Funds had been spent, feel good projects iniated that read well in UK and US annual reports. Viilage lighting, black topped roads, resettled fishermen, millions to expand the local hospital next to the new LNG plant. But there was protest in the streets in a country that diddn’t do protest. We lloked at the sustainabilty study done by a UK university in the area. There was an underlying 60 per cent disatisfaction level against the company, rising to nearly 80 per cent when questions about economic benefit were asked.
Too easy and too lazy, Kant with his single imperative here is can’t be bothered, too expensive, too time consuming and probably too uncomfortable when you have to answer the questions about what did you do with the community relations and or public relations budget if this is the result.
I do not agree that business behaviour has to be morally justified God forbidd we should encourage boards of directors to pronounce on ethics, let’s leave that for clerics. But business and all organisations that are part of an economy must apply reason to their judgements.
Back to good old Aristotle; ” We should not follow popular advice and, being human, have only mortal thoughts, but should become immortal and do everything toward living the best in us.”
Economics is after all a moral philosophy not a science. Public relations practitioners should remember that publics are groups of stakeholders not stakeholder groups.
Be well and prosper
Peter, I’m one hundred percent with you about the need for business leaders to avoid sounding like priests, which is the direction that much of the discussion about sustainability and CSR leads them. One can only raise one’s eyebrows when CEOs talk about their planetary-saving virtues, putting people before profit, treating all stakeholders as equals, and how their social purpose has nothing much to do with their business purpose because they’ve gone Beyond Petroleum and on to a higher moral plane.
I’m a great fan of Aristotle. Much of what he said about virtues, excellence and social roles in business and society (though I’m no expert) appeals to me. I think that Sandbu admires Aristotle too. He says Aristotle has to be the starting point for understanding ethics in business. He also says, if I read it correctly, that Aristotle’s limitation was his over-emphasis on the importance of social conventions that are in harmony with the wider community.
For instance, Aristotle, unlike Kant, had a fixed notion of human nature and humanity and that led him to back slavery as being natural and therefore justifiable ethically. The great Walter Lippmann – another fan of Aristotle – accused Aristotle of talking nonsense – he infers it was a form of spin – when Aristotle wrote “it is clear that some men are free by nature, and others are slaves…”
Lippmann commented: “We find that he has erected a great barrier between himself and the facts. When he said that those who are slaves are by nature intended to be slaves, he at one stroke excluded the fatal question whether those particular men who happened to be slaves were the particular men intended to be by nature slaves. For that question would have tainted each case of slavery with doubt. And since the fact of being a slave was not evidence that a man was destined to be one, no certain test would have remained.” [Public Opinion page, 36]
That said, I also love Aristotle’s writing on rhetoric, as well as virtue and excellence, and I shall be writing lots of stuff in praise of him – pointing out his continued relevance – soonish on my blog.
Peter Walker is surely right to argue over stakeholder theory. But doesn’t he miss the importance of the “contract” bit of what Sandbu and Seaman are at?
My defintion of stakeholders is that they are people who have something “invested” in the firm. They need to have skin in the game. One definition is that they do well when the firm does well, and vice versa.
Most other defintions are motherhood and apple pie.
But it’s obvious that firms should take a wider interest than merely considering their stakeholders, and people who are not the firm’s stakeholders have a right to take an interest in the firm. They may, for instance, be neighbours who suffer a pollution risk. Or the whole of society which stands to suffer from a bank’s collapse. Or just busy-bodies.
Sandbu seems to be exploring the old idea of a “license to operate”, and that’s good. He’s also exploring ideas to do with firms learning to declare their character, so that stakeholders and others (customers, neighbours, society at large) know what to expect of the firm.
This model has the merit of not privileging Greenpeace (as a phoney stakeholder), but capturing the idea that a firm must live not only within the law, but within all sorts of understandings which are created by the interaction of its declarations and the reactions of the world(s) it lives in.
NGOs and others are well within their rights to seek their own ends by seeking public endorsement of their take on corporate behaviour (or the virgin birth, or whatever).
But the firm has a right to discover and describe a particular character, and to stand or fall by its success in the market place. Isn’t it this individuality which irritates so many campaigners? And doesn’t conventional stakeholder theory seek to over-weight the role of all-comers by institutionalising it within the firm’s constitution?
None of this requires that firms or anyone else becomes a philosopher or reads Kant, Rawls or anyone else. A decent statement of it might go: “All sorts of campaigners and theorists have gone overboard on the idea of stakeholders and corporate virtue. Actually, what we need is for firms to obey the law. After that, they’re on their own. They can develop and promote all sorts of ambitions and goals if they want, and if the public laps that up, all well and good. But we’d all appreciate rather more robust honesty from firms. That way, they won’t over-sell their virtue and (like modest people) they may be appreciated for it. And they’ll be safer from ridicule when they cock-up, which they will, sure as eggs.
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I think Richard is right. Stakeholders have skin in your game and are vital to your success. So the likes of Greenpeace are not stakeholders, and direct competitors are not stakeholders either (everything you do probably undermines them), even though they might have common interests sometimes on issues such as legislation and regulation (hello, trade associations) etc.. And, yes, Richard is also right to say that the point of my contribution was not to recommend that we PRs all start speaking like philosophers.
As to whether just obeying the law is always enough…that we can debate. But I am certainly not in agreement with those who claim we go to work to do two jobs: one to ‘do my job’ and the other to ‘change the world’ because, “we can do well by doing good”, which involves doing something else other than the job we do or just promoting the purpose (and benefits) for which our company exists…that leads us to Beyond Petroleum etc.. For full critique of that line, see here:
I’m not sure of the philosophy lying under Dr. Brad Rawlins’s paper “Prioritizing Stakeholders for Public Relations,” but at least he lays out a method for discovering who is and isn’t a stakeholder. Or, at least, some process to follow to uncover which stakeholders need what level of engagement. It’s worth a read. Disclosure: I serve with Dr. Rawlins on the Institute for PR Commission on Research, Measurement and Evaluation, and I assigned this paper in my PR Metrics class at Kent State University.
Sean, Sandbu tends to agree with you about truth telling.
Sean, I’ve just read Dr. Brad Rawlins’s paper “Prioritizing Stakeholders for Public Relations,” and I found it firmly grounded in Grunig’s “discredited” approach to PR. Not least by identifying the likes of Greenpeace as adversarial stakeholders (of nukes or GMOs and much more). That logic would have made Henry Ford and his Model T stakeholders in the horse and buggy industry and vice versa.
But the most serious limitation of the Rawlins’s paper is that it provides no guide whatsoever as to how organisations ought to behave – or how they can make choices – when faced with moral dilemmas, which result from conflicting societal pressures and objectives. It tries – and fails – to define stakeholders and then says: “the interests of key stakeholders must be integrated in the very purpose of the firm, and stakeholder relationships must be managed in a coherent and strategic fashion.” But that’s unhelpful, because Rawlins does not say how that can be done in practice. Hence, Sandbu’s take is far superior.
Here’s the link for anybody who wishes to double-check my assessment:
This has been an interesting conversation. Regarding my paper on stakeholder identification, the purpose of the paper was never meant to prescribe organizational behavior toward stakeholders, but to give a process by which stakeholders and their claims could be evaluated and prioritized. I would agree with you, and have in other writing, that it is impossible to meet the needs and demands of all stakeholders. Their own interests are often in conflict with each other, as well as with the purpose and mission of the organizations.
I’m not a big fan of prescriptive ethics, or moralizing, but rather prefer that organizations and people develop sound processes of moral reasoning to determine for themselves what is ethical or not. This does not mean that I endorse situational or relativist ethics, because I believe certain principles and values are more valid than others. However, I do favor virtue ethics over deontology, and authenticity over strategy.
I think, “philosophically.” we may be much closer in thought. I believe too much emphasis in stakeholder literature has been placed on “managing” stakeholders, as if they were assets or something the organization owned. The driving principle behind both Aristotle and Kant, is the the belief that men are rational and autonomous beings that should be respected for those properties. Therefore, they are owed truth, freedom, and pursuit of happiness. For this reason, stakeholders should be viewed as ends unto themselves and not means to the organization’s ends.
Since you can’t please everyone, I believe stakeholder relations are better managed by expecting an organization to manage its operations in ways that are authentic, genuine, and transparent to its values, goals, and mission. If an organization isn’t operating from values that are considered legitimate by society, (say the Klu Klux Klan as an extreme), should expect social protest. Communication with stakeholders allows for greater reconciliation between real behavior and actions and those espoused by the organization’s values. When an organization acts differently than what it claims it believes is appropriate, they should be held accountable by their audiences.
So, to defend my previous research on stakeholder prioritization, I still believe that an organization needs to identify its key stakeholders based on their relationships to the organizations, their claims to legitimacy, authority, and urgency, and their connection to the issue. How the organization decides to respond to each stakeholder should do so in a way that is true and authentic to their stated purpose and values. I’ve written more about that “philosophy” with a co-author, Dr. Kevin Stoker, in an article entitled “Taking the BS out of PR” in the journal Ethical Space. Perhaps fodder for another conversation.
Brad, thanks for a very thoughtful comment. I accept your point about your paper’s intention. My point does not withstand your remarks.
However, we may still disagree about Grunig and the usefulness or otherwise of his definition of publics and the implications for stakeholder prioritization that flow from it. I recently examined Grunig’s thinking, which is skewed toward an over-emphasis on managing campaigners opposed to globalisation etc., in an essay:
I’m glad to begin what looks like becoming a great and productive discussion with you in future…so, yes, I’ll follow your link with great interest.