How business delivers the good

Policy Review, Jul/Aug 1996 by Hood, John

Similarly, automation and computers have improved workplace safety far more than has government regulation or union activists. Computers allow employers to track accidents carefully and devise solutions to systemic problems. More generally, it now takes fewer employees to manufacture goods in America-and that means fewer chances for injuries, illnesses, and accidental deaths as more workers move into services.

Advocates of "corporate social responsibility" spend a lot of time talking about what they perceive to be the wasteful or destructive properties of goods and services, while ignoring their value to consumers. They can applaud Ben & Jerry's or the Body Shop as exemplars of responsibility, because ice cream and cosmetics do little "damage to the ecosystem." On the other hand, they rarely save lives, alleviate pain, or feed the hungry.

Critics of free enterprise denigrate plastic for being nonbiodegradable and polluting. Yet plastic is the essential ingredient of many of the products and services that make our standard of living possible, such as medical devices, telecommunications, wastewater treatment, transportation, safe and tasty food, and computers.

Even where activists concentrate their attention-such as the relationship between employers and employees-they get the story wrong. They allege that in the absence of government regulation or a sense of responsibility beyond the profit motive, companies will inevitably mistreat their workers. But in most American workplaces today, employers are constantly mindful of the well-being of employees. If workers are not competent, healthy, and motivated, businesses will fail.

Social-responsibility analysts usually employ flawed measurements of responsibility. They gauge the fairness of employment decisions by whether a firm's work force reflects the racial and gender composition of the surrounding community, not by whether the firm actually discriminates unfairly. They measure responsibility towards families by the number of workers covered by company health insurance, or by the presence of on-site day care. But in many cases, such benefits are not worth as much to an employee as are higher wages, flexible benefits plans that allow workers to choose the nonwage compensation most valuable to them, or the freedom to work part time rather than full time.

Doing Well, Doing Good

On a more fundamental level, social-responsibility activists barely understand how the search for economic return on investment can motivate companies to "do good." When downsizing, for example, it is almost always in the interest of companies to treat their workers with respect and to help them find newjobs. For one thing, layoffs affect not only workers being let go, but also those who remain. Retained employees watch how their former coworkers are treated and wonder what will happen to their own livelihood.

Poorly handled layoffs can cripple employee morale and so hurt productivity. After the breakup of the Bell System in 1984, AT&T was forced to reduce its work force by more than 100,000 employees. To head off morale problems, the company created a "safe landing" program to help laidoff workers find otherjobs.