Canadian Politics from Canada's Centre

Friday, February 16, 2007

Regulate Management and Business Conduct

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This is a call to governmental actors to regulate management and business conduct.

In the Olymel saga here in Quebec, a factory's workforce was threatened with layoffs unless they accepted paycuts, and management was simulatenously promised raises. This is just a most recent and local example of business ethics and management conduct run amok.

I've come to the conclusion that government needs to intervene once again to regulate managerial ethics and business conduct.

Management guru Henry Mintzberg recently gave an interview to La Presse. In it, McGill's world renown expert discussed Quebec's lower productivity level as compared to the rest of Canada and the US.
Mintzberg's view was that this was the result of Quebec not generally adopting the same abusive and short-term views as are prevalent amongst management elsewhere. The problem isn't in Quebec, Mintzberg said, but with business practices elsewhere.

For example, the practice of laying of thousands of workers creates short-term productivity gains. Managers tend to be remunerated for those. Yet these cuts leaves the firm bare for the long term.

Professor Mintzberg expressed himself - rather eloquently - as follows:

"Je dis simplement que la productivité n'est pas la seule mesure pour évaluer la santé d'une entreprise, d'une économie et d'une société.

Si c'était le cas, le grand modèle à imiter serait Wal-Mart. Avec ses salaires, son antisyndicalisme et les économies de bout de chandelles qu'elle réalise aux États-Unis dans l'assurance santé de ses employés.

On ne construit pas une économie saine et équilibrée de cette façon. Tout ce que l'on réussit à faire, c'est de gonfler la richesse de quelques-uns et augmentant le nombre de laissés pour compte. Malheureusement, le modèle Wal-Mart, son organisation «lean and mean» fait des ravages."
I couldn't express it any better myself. Here's a translation:

"What I am saying is simply that productivity is not the only measure with which to assess the health of a company, an economy and a society.

If that were the case, the great model to follow would be [the] Wal-Mart [model]. With its [minimium-wage] salaries, anti-union philosophy and corner-shaving savings achieved at the expense of its employees' health care benefits.

We don't build a healthy and balanced economy in such a manner. All we really accomplish is to increase the wealth of a handful of people while increasing the number of people left out by the wayside. Unfortunately, the Wal-Mart model and its "lean and mean" organization is creating havoc."

Here are some ideas for our MPs, MPPs and [in Quebec] MNAs to consider:

1. A professional code of ethics for managers. We have workers' rights, but something more is clearly needed. That something more is managerial obligations. Positive obligations setting out things that must be done, in addition to workers' rights concerning what cannot be (e.g. discrimination).

2. An explicit stipulation that management's salaries fluctuate on the same level as those of the average worker. COLA raises only for the sales staff? COLA raises for the sales VP and managers. (COLA: Cost Of Living Allowance; managerial slang for raises tied to inflation.)

2.a. Similarly, the number of executive level managers laid off should be proportional to the number of workers laid off. Don't need that factory? Guess you'll have to drop the assistant VP of Production.

3. Make having a chief ethics officer (CETO) and department mandatory for publicly traded companies and companies over a certain level of revenue. Make these executive level managers responsible for specific tasks and areas such as ensuring fairness in human resource management.

4. Consider some of the ideas of the Complete Guide to Ethics Management.

5. Look at the great reasons for why managers should be ethical at this forum and see what legislative initatives can be implemented. The forum thread looks at "why managers should be ethical" and considers many interesting points, including notable the environment.

It's time for our politicians to step up to the plate and legislate some strong ethics into our increasingly laissez-faire business environment.

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