Ignoring an injustice you see unfolding on the street is an unfortunately common occurrence–the product of an unpleasant human trait known as the “bystander effect.” Much of the research in this field has been conducted on instances of public-space injustice, such as ignoring racial slurs or physical violence. Often, it is the result of a “diffusion of responsibility,” meaning that when others are around, we assume someone else will take action. This behavior has been frequently cited in recent times, calling attention to our responsibilities as citizens in times of heightened cultural tensions over racial, political, gender, and ethnic injustices.
But every day across the business world, the bystander effect is in operation. Big tobacco infamously employed “the most systematic corporate deceit of all time,” meaning hundreds, possibly thousands, of employees acquiesced in the face of clear injustice on the scale of a global humanitarian crisis. History may be repeating itself with participants in the vaping industry. What if tobacco executives’ behavior was not an exception, but the rule in today’s capitalism?
Doing to others . . . what’s in service of shareholders
The active, or passive permissiveness of business culture should be shocking to societies built upon universal legal, religious, and cultural values like the “golden rule”: Do unto others as you would have them do unto you. This incongruity is even more striking, as there is a credible link between companies adhering to the golden rule, the creation of company promoters, and customer growth. And yet “doing to others what’s in service of shareholders” has been because of a norm that often, many employees are neutral in situations of injustice that will also benefit shareholders. This month, for instance, we got a peek inside Facebook’s inner monologue, as internal emails show executives debating technical and policy shifts that affect so many people’s lives. It was not a flattering picture.
The culture of shareholder primacy, that late-20th century credo famously denounced by one of its chief advocates (Jack Welch, former CEO of General Electric, flip-flopped on it), has become so extreme that the effective implementation of it has shifted from “shareholders as first priority” to the more extreme position of “shareholders as sole priority”–an absolutism that leaves other stakeholders not just as lower priorities but instead as a target for maximum value extraction, no matter the negative impact.
Extremism is dangerous in almost any form, but extreme capitalism has led to crimes and injustices against the planet (e.g., Volkswagen’s emission testing fraud, the oil industry’s campaign to roll back climate regulations), human health (e.g., Purdue Pharma’s Oxycontin crisis), family livelihoods (e.g., Wells Fargo’s creation of millions of fictional accounts), economies (many Wall Street banks; many tech companies), and democracy (e.g., Facebook’s impact on the 2016 U.S. election).
Bad ethics have existed as long as commerce itself, but companies operating on a global scale with millions or billions of customers are capable of disruption on an unprecedented scale. Shareholder absolutism has seeped so deeply into business culture that research that my firm, Enso, a creative impact agency, has conducted indicates that the majority of Americans work for companies that don’t align with our values. Are employees powerless, and is shareholder absolutism truly an unshakeable tenet of business – even in cultures that claim adherence to the golden rule?
From external to internal activism
There are signs of a rising impetus toward more purposeful business, with demands from traditional activists highlighting corporate malfeasance, consumers demanding more ethical choices, and even investors demanding the longer-term viability of ethical corporations. But the greatest of all motivations could come from inside companies – from employees refusing to stand by negative consequences, from extrinsic to intrinsic motivation.
Labor unions and collective bargaining have been the traditional vehicle for employee advocacy and concerted power, but while membership in some European countries is still high (as high as 91% in Iceland) membership has declined significantly since the peak in the 1970s, in the face of a variety of forces including consolidated corporate power, legislative restrictions, and other cultural forces. In recent times, there are some visible instances of employees embracing unionization.
Beyond unionization, workers are starting to get more vocal. Google’s workers conducted a very public walkout, that resulted in some concessions from management on the treatment of sexual harassment victims. Earlier this year, Google workers also successfully halted the company’s cooperation with the military to analyze drone footage. Susan Fowler‘s blog post outlining her experience working at Uber initiated a wave of change that included the replacement of the CEO. Thinx employees’ anger over the gap between the brand’s feminist image and the reality of being an employee forced the CEO to depart the company she had started.
The forces driving this shift
In general, employees’ visibility to internal affairs may be rising. What could have remained locked in filing cabinets and contained in closed meetings in previous generations can spread with incredible velocity among workforces and the media in the form of corporate email leaks. Google’s internal reliance on email distribution lists and forums has spread contentious news fast, including the infamous James Damore memo.
A succession of corporate scandals and increased transparency has decreased faith in leaders; only 36% of Americans trust business leaders to do the right thing, according to our research. Global research that Edelman has conducted suggests that 60% of people believe CEOs are driven more by greed than making a positive contribution to the world.
To realize the potential of inner activism, we need to move beyond a sense of diffuse responsibility. Anand Giridharadas’s recent book, Winners Take All, makes the case that technology industry workers have a “folk memory” of being rebels; outsiders that have limited responsibility because they are not “in power.” Without fully internalizing their massive power, the conditions exist to deny massive responsibility. As Kara Swisher has said, we need less blind “cohesion” in teams, and more “irritants” who challenge the company to address negative consequences.
With transparency and responsibility, employees need a critical third ingredient to affect change: hope that their action can make a difference. According to our research, 81% of Americans believe business can be a force for positive social and environmental change. To realize this potential, we need more examples of employees moving beyond a mind-set of diffuse responsibility, refusing to ignore injustices, and changing the trajectory of their companies. That will require workers supporting each other in a culture where confronting negative consequences is not seen as a disruption, but a critical contribution.
Companies and leaders have a choice. One path is to pursue a shareholder absolutism doctrine to the exclusion of other voices. At best, this is likely to lead to disengaged workers and as recent scandals have shown, at worst, an increasing likelihood of a rising crescendo of dissent, leading to devastating consequences for the company and leaders. Another path is to actively engage with workers: Facilitate dialogue between teams about the values, aspirations, ideals, and principles workers want to live by, and how the company could live up to those ideals. Only after that dialogue occurs can companies credibly claim to abide by the golden rule, and protect shareholders’ long-term interests.