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Mapping organisational virtue How virtuous is your business?

In this article I would like to suggest that we can usefully get away from discussions of Corporate Social Responsibility (CSR) and focus instead on ‘organisational virtue’, and although this might sound like a rather philosophical ‘take’ on organisations (and it is), I also want to demonstrate that it has very practical implications.

I want to suggest that there are two dimensions along which we can make a judgement about organisational virtue and that we can make some sort of assessment of where any organisation is on those two dimensions, and do it over time so that we then have a map.

I want to suggest that we can then see not only where we would like the organisation to move to if it is to become ‘better’ (which does not necessarily mean more successful in conventional terms), but also how it might get there.

I will illustrate this with a practical and real-life example based on some of my research, although I shall not name the organisation to preserve its confidentiality.

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Geoff Moore is Professor of Business Ethics and Deputy Dean (Learning & Teaching). His research interests lie particularly in the application of virtue ethics to business organisations. He has published widely on this and other aspects of Business Ethics/Corporate Social Responsibility and sits on the Editorial Boards of the Journal of Business Ethics, Business Ethics Quarterly and Business Ethics: a European Review.

TWO DIMENSIONS FOR ORGANISATIONAL VIRTUE The first dimension of organisational virtue is do with the purpose of the organisation. Why are we here? What difference do our goods or services really make in contributing to a society that is a better place to live? I am not aware that these kinds of discussion take place with any regularity (or at all?) within corporate boardrooms.

Nor does the conventional approach to CSR put such issues on the agenda because CSR has become increasingly a strategic matter – aligning the CSR strategy with corporate strategy so that it makes its contribution to the bottom line.

This is because conventional corporate governance and the kind of CSR that goes with it – shareholder-oriented corporate governance – assumes that this kind of debate is already decided.

The ends of business are already given and it’s all about shareholder value.

But the way of thinking about business that I am advocating raises questions

on precisely this point. It suggests that the ends, or purpose, are never about shareholder value or, more generally, success, but are always about the contribution a business makes to society.

So the question that ought to be going on inside a business (and on which we could form some kind of judgment even if not easily a quantitative one) is this: to what extent do the goods and/or services that the business produces contribute to the overriding good of the community? This is obviously challenging for tobacco companies, armaments manufacturers and so on (some of which, of course, do rather well in CSR terms). But even for other businesses these are serious and significant questions which ought to demand Board time on a regular basis.

The second dimension is to do with excellence and success. The idea is this. It is possible to ask a business, through its managers, what it means to be an excellent x, y or z type of

business. Managers seem to have no difficulty talking about the excellence of their products, customer service, the way they treat their staff, about being socially and environmentally responsible and so on. It is also possible to ask how the business measures success. This leads to another list, which is likely to be financially oriented but also to have other measures like customer satisfaction that feed in to success.

Then I’ve asked the managers to score where the business is now on excellence versus success out of 10 (so 8-2, 5-5, 3-7 would all be possible scores but 7-5 wouldn’t). I’ve also asked them where the organisation has been in the past (to get the time dimension), and what they think the ideal score for any business is.

We can then map this on a simple grid, as shown below – and this uses the data from the research I’ve done to illustrate how it works in practice.

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ORGANISATIONAL VIRTUE MAPPING

A CASE STUDY: MAPPING ORGANISATIONAL VIRTUE It seems clear that the virtuous organisation has a good purpose and places the emphasis just on the excellence side of success-excellence.

The managers I interviewed on average scored the ideal business as focusing on excellence over success by 5.1 to 4.9 – so they recognised the need for some kind of balance but that excellence should be prioritised over success. The vicious organisation (to use the technical term since the opposite of virtue is vice) occupies the bottom of the diagram though I suspect most organisations with a bad purpose are also success oriented (bottom left).

The business organisation in which I did my research had an interesting history – it had come about as a result of a merger of two separate organisations A and B. So in this case I was able to get a sense of the position of the two organisations before they merged. Hence A had the success-excellence balance about right but did not have such a good purpose as B. B, however, was clearly much more success oriented. The merger caused moderation on both dimensions, so AB was less success oriented than B but had a better

purpose than A. In terms of where the organisation was going (the merger having happened relatively recently), the interviewees thought it was moving in the right direction as far as purpose was concerned (the dotted arrow pointing vertically up from AB) but also moving in a more success-oriented direction (the horizontal dotted arrow) as the achievement of financial results became more pressing. Combine those two and it can be seen that the organisation was moving away from the virtuous position – at roughly 90° to where it should be going if it wanted to be virtuous.

“It seems clear that the virtuous organisation has a good purpose and places the emphasis just on the excellence side of success-excellence.”

In one sense it is a fairly easy task to map your own organisation onto a grid like this although, as so often, it is the process (and wide engagement in it) that is important as well as the results that emerge. But this should also lead to a discussion about which direction the organisation is headed in, whether that is the desired direction and, if not, what might be done about it.

And all of that ought to be a lot more profound than discussions of (strategic) CSR.

SO HOW VIRTUOUS IS YOUR BUSINESS?