July 31, 2013

Why Must We Think Long Term?

To follow up on the Q&A session with Marty the Health Guy, I came across a book called “Above the Board” by Patrizia Porrini, Lorene Hiris, and Gina Poncini. Marty’s views on the ineffectiveness of legislation were confirmed by this book from a business ethics perspective. In addition to the importance of ethics and long term thinking, this post will discuss their application to Toronto’s ongoing transit debate.

The book “Above the Board” stated ethics and integrity cannot be legislated because regulations such as Sarbanes Oxley – introduced after the Enron collapse of 2001 – add costs and may not always be effective. However, there is still a need for enforcement agencies (e.g. Securities and Exchange Commission, Ontario Securities Commission) to identify and remedy ethical red flags. 

Ethics must be embedded into the organization’s culture and maintained over the long term, as well as evolve to meet new challenges such as nuclear weapons, biotechnology, and the Internet. Ethics requires the consideration of all stakeholders including shareholders, employees, communities, and the next generation; the constant pursuit of excellence; and the focus on environmental, economic, and social/cultural sustainability.

There are several actions businesses can take to promote ethics; the most important of which is communication. Not only by drafting codes of conduct, company bylaws, and vision and mission statements, but also by telling stories reflecting company values. “Above The Board” provided examples ranging from the returning of a competitor’s information by a Walgreens employee to Anne Mulcahy’s turnaround efforts of Xerox in the early 2000’s. 
To benefit employees, companies could provide them benefits such as fitness reimbursement, on site exercise facilities, and training programs. 
To demonstrate community commitment, companies could give employees time off for volunteering. 
By keeping employees engaged, as well as maintaining high product and service quality, the most ethical companies perform better in the long term than their competitors as confirmed by Ethisphere’s annual “World’s Most Ethical Companies” ranking report from 2011.[1]
While these points are primarily business related, the underlying message of long term focus also applies to citizens and governments. In the case of governments, they are subject to elected officials who are often pressured to gain voter support in the short term, even at the expense of reopening long term plans. 

The ongoing transit debate in Toronto is one such example, with the latest round coming during five Ontario by-elections to be held August 1, 2013. In November 2012, Metrolinx, the City of Toronto, and the Toronto Transit Commission signed an $8.4 billion master agreement for four LRT lines, including one to replace the Scarborough RT. In May 2013, Toronto city council supported conflicting resolutions supporting the LRT plan and replacing the Scarborough RT with a subway, which prompted a clarification request from Metrolinx in June 2013. Last week, city council voted to support the subway option, even though funding sources for the difference of at least $1.1 billion have yet to be confirmed.[2]

The consequences of this indecision include further delays or possible abandonment of the goal to improve rapid transit in Scarborough, as well as the loss of funding for other transit priorities, cycling infrastructure, and affordable housing. The constant revisiting of established plans for transit and other sectors also lead to the long term erosion of citizen trust in elected officials. 

To remedy this issue, there should be laws in place which forbid this practice except under emergency circumstances and subject to supermajority approval, defined as two thirds as opposed to a simple majority. 

Finally, there needs to be established performance measures to ensure plans remain on schedule and within budget as a way to maintain accountability.

Sincerely yours,
Rob Z (e-mail)


1 comment:

  1. Good point. There are companies that provide those benefits and provide tools to grow up as an individuals because at the end, the company grows up with them.

    Now people forget about ethics. Politicians focus on get into the big chair to grow their own pockets, using the funds for their own priorities. From the top to the bottom, citizens committing fraudulent actions don't permit society to grow up in a healthy economic enviroment.

    - Beatriz