Can a ‘for profit’ corporation enjoy healthy revenues year after year and exhibit good morals at the same time? The largest companies in the nation have evolved over the years to find more ways to streamline operations, reduce waste, increase the productivity of their employees, preached corporate ethics to their employees, try to be involved with local communities by giving to the local youth clubs or donations to a regional cancer research center. But is this to be a good citizen of the community, or is it a show?

Corporations have moved further and further away from encouraging independent thought of their employees to one of ‘corporate thought’. Six Sigma programs have swept across corporate America like wildfire. Employees are being driven to compete against one another, strive to be their absolute best, and to achieve the Six Sigma black belt. Corporations scour the college campuses looking for future managers and leaders. They hire graduates right as they hang up their cap and gown and indoctrinate them into ‘their’ corporate mentality. To begin the brain washing as early as possible before they can discover the concept of free thought.

Ethics, as defined in the dictionary:

1. the body of moral principles or values governing or distinctive of a particular culture or group: the Christian ethic; the tribal ethic of the Zuni.

2. a complex of moral precepts held or rules of conduct followed by an individual: a personal ethic.

Corporations preach loudly that they embrace a corporate ethics policy. Employees in some companies are required to attend mandatory ethics training. And some companies even require the employees to sign a statement that they understand and will follow the corporate ethics policy. The purpose of an ethics policy is to tell the employees what is right and wrong. Don’t cheat, be honest with the customers, don’t commit fraud, treat all people equally, don’t exchange money from the Government and/or subcontractors in return for preferred treatment. The list goes on and on.

But what really is all of this ethics stuff? As defined in the Websters definition shown above, it is a “body of moral principles“. My question however is whose moral principals? A corporate defined morality, or a standard of morals that is generally accepted by everyday people who work hard and raise a family?

The answer is that the larger the corporation is, the larger the effort they have to display that they embrace moral principles, while not actually embracing any of them. Corporate ethics and personal ethics are often two completely different things. In the past decade corporate ethics policies have moved from teaching employees how to be polite and honest to now being a policy of how to not put a company in a bad light. Or in other words, if you do something that places the company into an embarrassing situation then you will be reprimanded or dismissed from your job.

So back to the question, can a company that is ‘for profit’ ever be able to live by a set of moral standards that are sincere? No, they can not. A corporation is at the core only interested in one thing, profit. And to make that profit grow year after year a corporation will have to resort to abandoning any moral values that they might have had in the earlier years. Profit and morality can not coexist, it is no longer possible in the age we now live.

Some would say that corporations are in business to make a profit so nothing else matters. While the fact that companies can only survive by making a profit is indeed true. The crux of the matter here is “at what cost” will a company go in order to increase profits. When the standard way of doing business fails to increase profits year after year they can either expand their products, grow into more regions of the world, or they can abuse the very customers they count on for their revenues and this way squeeze more profits from existing customers. It is at this stage when a company crosses the line from moral to immoral.

We have all heard the stories over the years of products being recalled due to dangers that were a result of ‘cutting corners’ in the manufacturing processes. The companies that got caught committing fraud by manipulating their earnings data, or the companies that knowingly underbid a contract just to win it only to go into extensive cost over-runs later that get passed back to the tax payers in the case of defense contractors. Or how about the outright misrepresentation of financial products only to get the sales but knowing full well that what was sold was nothing more than a bag of financial toxic waste.

Take the case of KV Pharmaceutical who entrusted Citigroup to help it with its investments. In 2005 Citigroup kept pitching over and over that KV Pharmaceutical should invest in auction rate securities. The pharma company went along with Citigroups advice and invested over $27 million in the investments that Citigroup pitched. Well now KV Pharm is suing Citigroup because those investments blew up only a couple years later, and Citigroup never warned them. Even when Citigroup knew they were in trouble and was attempting to sell them to anyone no matter what.

An email that is being presented in the court case is akin to a smoking gun :

Citigroup traders were receiving e-mails like this one intended to boost sales: “Hit all bids . . . Times like these, we need to do whatever is necessary. Just make sure all hands are on deck and paper is sold,” (Source: McClatchy)

Due to the losses that KV Pharm suffered they have had to lay off 700 employees. And how about JP Morgan selling financial products that put local governments on the brink of bankruptcy.

The Securities and Exchange Commission has sued J.P.Morgan Securities and two of its former bankers for using “unlawful incentives” to win business from Jefferson County commissioners. The commissioners JPMorgan sought to influence included Larry Langford, Shelia Smoot, Mary Buckelew, Steve Small and Jeff Germany, the lawsuit says.[...]

[...]As part of the settlement, J.P. Morgan will forfeit $647 million of interest rate swap termination fees. The investment bank will also pay a penalty of $25 million to the SEC and $50 million restitution to Jefferson County.

The bank admits no wrong-doing, but the lawsuit accuses J.P.Morgan Securities and the two bankers, Charles LeCroy and Douglas MacFaddin, of arranging more than $8 million of payments to close friends of multiple Jefferson County commissioners in exchange for them doing business with J.P. Morgan.[...] (source: Birmingham Weekly)

And let us not forget Enron, WorldCom, Tyco, the CitiBank credit card lawsuit that found Citibank guilty of stealing money from Credit card customers that were deceased, and numerous others that would take a book the size of the New York telephone directory to list them all. Each time these ‘for profit’ corporations get discovered doing unethical business practices they swear they will never do it again, pay a fine, and then call all employees in to another round of ethics training as a show. The companies lie low for a little while and then it starts all over again.

But ethics is not the problem. Telling the world that you have in place a strong ethics policy is just show and tell, it has no meaning other than a way to protect the top management and giving the lower level employees a speed track to the exit with their desk stapler and family photos in hand, and stripped of their company badge.

So just how do we, the ordinary Joe’s of the nation, live with these corporations? In many aspects these corporations have us as hostages. No recourse, no other choices, and no where to go to seek restitution for grievances. You can try to sue them, but you will be up against some of the largest and highest paid corporate lawyers in the nation. Are you able to spend hundreds of thousands of dollars, if not more, in order to seek restitution? The legal system itself is enough to discourage the ordinary person all by itself. Unless you have a case as strong as the one depicted in the movie “The Rainmaker“, your chances of ever getting a large corporation to admit wrong doing, or even be forced to pay damages is remote. The system is designed to protect the corporations, not you.

What do we do? Is there anything we can do? Corporations need us to buy their products, they need us to trust them so that we feel comfortable buying their products, they program us by making us believe they are good corporate citizens, if their is little competition then it really does not matter anymore if we trust them or not for we are hostages to the products. The ‘Too big To Fail’ is not just how intermingled a company is with the financial system, it is in some aspects also a “You need us and if we go down where would you go“.

The financial crisis that has gripped this nation, and the world, has shown us very clearly that morality and profits can not co-exist. They may want us to believe they are an honest and moral company with outstanding ethics. But we are merely being brain washed. At what point in time did corporate America turn to the dark side? Why do we sit back and just take it? Why do we just keep paying them more and more money? And why is it that when they screw up it is up to us to pay for their mistakes?

And what happens when an employee of a large corporation tries to do what is morally right for a customer when it goes against the corporate mantra of ‘all things for profit’?

This video tells you what happens:

Morality and Profits = Oil and Water

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