Is business fundamentally unfair? - RSA

Is business fundamentally unfair?

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  • Economics and Finance
  • Leadership

Last week I heard that a (now former) financial services CEO was asked by his team if “fairness” should be one of their core values. “No. That’s ridiculous. Life is unfair” said the CEO.

In competitive markets there are always winners and losers, the argument goes. Unfairness is built into the system and to commit to fairness would just invite a perpetual stream of insoluble complaints, as unfairness is also often just in the eye of the beholder.

Nevertheless, whilst the cry of “it’s unfair” is sometimes no more than an emotive appeal, it is not always just that. In fact, if any one word sums up the pervasive societal distrust of big business, it is “unfairness”. Whether the issue is high pay, tax avoidance, insecure work, environmental harm or the misuse of personal data, this word underlines a now chronic dis-ease – a sense that business too often takes advantage of imbalances of power and knowledge to perpetuate and increase unfairness in society.

How can we respond to the idea of “unfairness” in businesses?

One response to this complaint is to look at law and regulation. But while the law clearly matters, it is rarely the whole answer. A market system always exists in a social and cultural context, and law helps shape but does not determine how people behave, nor societal expectations.

So is there a way we can think about what it means to be “fair” in business, which might shed more light than heat, and contribute usefully to the vital dialogue now taking place about the role of business and how it can better serve society?

First, it helps not to think about “fairness” in the abstract, but “acting fairly”. Any business is primarily a series of relationships between people. It is a form of social organisation.

We don’t stop being human when we go to work, and it is possible to consider all the relationships a business has – with employees, customers, suppliers, investors, and the communities in which it is situated– through a human lens.

Looked at this way, the question of acting fairly arises in every core part of a business, including in relation to its responsibilities to the environment and future generations.

How can business act fairly?

But what then does it really mean to “act fairly”? This is admittedly a deeply contested question, but arguably, it is about three things: how a decision is made, in what frame of mind, and with what result.

Thinking about fair processes and fair outcomes matters, but the frame of mind in which decisions are made is also crucial. For instance, if the business defines its purpose as to maximise shareholder value, there will be a particular hierarchy of relationships, and we know that taken to extremes this narrow view of business purpose has legitimated the denial of a wider responsibility, encouraging exploitation and unfairness.

The economist John Kay spoke at Blueprint’s conference in 2014 of how the scales fell from his eyes when he realised it was not the job of a director of a company to maximise anything. It was their job to balance. If a business seeks to put the quality of relationships internally and externally at the heart of its long-term success, it changes mind-sets and enables a balance to be struck. Seeking to act fairly becomes an aim, not a constraint.

Making fairness a business aim

Businesses operate in a closed loop system of resources, where every decision results in one or more set of stakeholders gaining ground over others.

We can all think of the many situations in business where decisions result in complex trade-offs. But especially when difficult decisions have to be made, such as on relative pay, pension reform, redundancies, or plant or office closures, the frame of mind is crucial as it shapes both the process and the desired outcome of at least avoiding manifest unfairness to anyone.

Enabling and welcoming scrutiny of decisions; seeking diverse voices in making them; understanding the wider social context in which those decisions are viewed; these will all be vital elements of a changed business culture that embraces the challenge of acting fairly.

In this kind of culture, fairness is operational and, as such, becomes the lifeblood of a purpose-led business. In this kind of business, the desire to act fairly reaches beyond the avoidance of manifest unfairness and the requirements of contracts, to create strong relationships that produce loyal customers, reliable suppliers and improved products and services.

It helps turn what might otherwise be a mere financial vehicle into a vibrant community of people that can do lasting good, while delivering sustainable financial returns.

Viewed in this light, I’d argue that fairness is not only possible, not only desirable, but absolutely necessary for business to thrive now, and in the future.

On March 5th A Blueprint For Better Business is hosting a panel discussion on How Not To Run An Unfair Business in partnership with the RSA to explore what fairness in business is, why it matters and how business leaders can challenge themselves to go further on fairness.

Watch the event live and join the debate on Twitter: #RSABlueprint

If you would like to explore this topic in more depth, you can download A Blueprint For Better Business’s report Fairness in Business

Charles Wookey is CEO of A Blueprint for Better Business, an independent charity that acts as a catalyst to help businesses be inspired and guided by a purpose that benefits society. Prior to playing a central role in founding Blueprint, Charles worked in business and as a House of Commons Clerk, in an economic think tank and, latterly, advised on public policy for a major faith institution.

If you would like any more information about Blueprint or the Five Principles please contact [email protected]

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