Firms don’t possess ‘values’
The PR firm FleishmanHillard came out with a study the other day intended to help companies navigate “an issues-laden environment that quickly tests corporate values.”
The idea is that we live in turbulent times, and businesses need to demonstrate that what consumers care about, they care about — issues such as sexual harassment, ethnic diversity, racism and gender discrimination.
“A lot of these issues have exploded on the public and there’s a lot of activism surrounding them,” said Kristin Hollins, who heads FleishmanHillard’s regional corporate reputation practice group.
“Increasingly,” she told me, “consumers are saying that they want companies to have positions.”
I’m not so sure about that.
Nor am I entirely comfortable with this squishy notion of “corporate values,” as if making money wasn’t a good enough reason for a corporation to exist.
“It makes no more sense to attribute values to a corporation than to a wheelbarrow,” said Ian Maitland, a professor of strategic management and entrepreneurship at the University of Minnesota.
“The corporation has been designed to maximize profit and, as if by an invisible hand, thereby to increase our welfare,” he said. “If we believe that there are other values far greater than profit, then fine, let’s start nonprofits.”
The Merriam-Webster dictionary defines a corporation as “a body formed and authorized by law to act as a single person ... and legally endowed with various rights and duties.”
This idea of “corporate personhood” is important, but it wasn’t always the case.
The Founding Fathers were conspicuously wary of corporate power.
Thomas Jefferson said in 1816 that he wanted to “crush in its birth the aristocracy of our monied corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.”
James Madison noted in 1827 that “incorporated companies with proper limitations and guards may, in particular cases, be useful; but they are at best a necessary evil only.”
Until the 19th century, corporations were viewed in this country as artificial creations — the property of owners.
After the Civil War, as the economy rapidly grew, corporations became increasingly bold in seeking ways to advance their interests.
Business leaders zeroed in on the Constitution’s 14th Amendment, which says no state can “deprive any person of life, liberty or property without due process of law; nor deny any person within its jurisdiction the equal protection of the laws.”
In the 1886 lawsuit Santa Clara County vs. Southern Pacific Railroad Co., the company claimed it had been forced to pay an unfairly high amount of taxes and thus had been deprived of equal protection under the 14th Amendment.
There it was: A corporation defining itself legally as a person.
And the U.S. Supreme Court, without discussion or explanation, accepted this argument.
Corporations have enjoyed legal personhood ever since, with all the rights any American enjoys — not least the right to free speech, which is at the heart of the high court’s Citizens United ruling, allowing companies to make virtually unlimited political contributions.
The FleishmanHillard study is called “Navigating Zero Gravity.” It advises companies that “on issues of importance, especially those carrying expectations that companies will weigh in on, you cannot sit on the sidelines.”
Two-thirds of consumers surveyed by the firm said they stopped using a company’s products or services “because the company’s response to an issue does not support their personal views.”
However, 61% said that even if they disagree with a business’ stance, “they believe it is important for companies to express their views.”
FleishmanHillard’s Hollins said the important thing is that a company back up its words with action. Otherwise, she said, consumers will see an “authenticity gap.”
Yeah, maybe that’s a thing. Or maybe consumers would settle for companies just keeping their noses clean.
The duty of corporations, as corporate citizens, is to follow the law. Or as Google put it in the company’s code of conduct: “Don’t be evil.” (It quietly removed the phrase earlier this year.)
“You’re not there to make political decisions,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “You’re there to sell a well-made product.”
Wells Fargo says it has five core values that “guide every action we take.” These include placing customers “at the center of everything we do” and being “committed to the highest standards of integrity, transparency and principled performance.”
The bank has been fined over a billion dollars in recent years for a variety of missteps, including opening millions of accounts without customers’ permission.
Who cares that Wells has core values? The only thing most people care about is that the company understands the difference between right and wrong. Or, barring that, legal and illegal.
“Determining the right thing to do needs to be grounded in the values of your organization, a longterm perspective and deep commitment to carrying forward a company position,” the FleishmanHillard study concludes.
No, determining the right thing to do needs to be grounded in knowing the right thing to do, as defined by state and federal law, and by a broader awareness of ethical conduct.
The Founding Fathers were correct to fear corporations gaining undue influence over society. “Corporations have neither bodies to be punished, nor souls to be condemned,” Edward Thurlow, the 18th century lord chancellor of England, famously observed. “They therefore do as they like.”
That’s not personhood. That’s HAL, the crazed computer from “2001.”
This kabuki play of corporate values is little more than feel-good propaganda, which may be beneficial from a team-building or marketing perspective, but has nothing to do with a business’ day-to-day operations.
Again, there’s nothing wrong with making money or the pursuit of profit.
What’s wrong is pretending you have loftier goals in mind.
David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.