Read time: 3 mins
Ethical Behavior in Business: Lessons From a Sandwich Shop
Business decisions tend to change when financial values turn from hundreds of dollars, to hundreds of thousands or millions. In this video, Daylian Cain, Program Convener on the Values-Based Leadership online program from the Yale School of Management Executive Education discusses how decisions may be made differently in a small business, like a sandwich shop, or a large corporation.
As a lecturer in Negotiations, Leadership, and Ethics at Yale SOM, Daylian Cain’s research focuses on judgment and decision-making, and behavioral business ethics.
No matter the size of an enterprise, today’s organization is being held to a higher standard by stakeholders and customers. Business leaders are faced with an increasing number of ethical challenges, urging them to rethink the role of business in society and translate ethics into business.
Transcript
Money makes people a little crazy. Once millions of dollars get involved, we do two things wrong: we throw money around, like in big, fat round numbers. As if the money, like, doesn’t matter. Like, we could do a lot of things with this money, we should be more careful with it. But the other thing that happens is once millions of dollars get involved, we kind of lose sight of ourselves. The deal gets big and our values get small.
Imagine that you and I had this recipe for some sandwiches and some great sauces. And we start a sandwich place. And it works really well. And people love our business, we make a living. It’s great. Let’s just say you spend a little extra money on importing some mayonnaise. This question is all about, like, how well you serve your customers. Imagine that at the end of the year, you realize you could save 180 dollars if you just use standard mayo. Let’s say you wouldn’t lose many customers, maybe none at all. Maybe none would even know the difference. The point is, you can cut corners on quality and save 180 dollars. And your idea is that it’s not worth it. Spend the money.
Now, imagine the same scenario, but you have a thousand chains, a thousand locations. So if you change the Japanese mayonnaise, now as CEO of this huge multinational firm, you gain 180,000 dollars. That’s a totally different temptation. I don’t mean you’re pocketing it. I mean, the firm saves 180 grand. In the one-person mom-and-pop shop, the idea is that the savings are small and take a long time to build up – a whole year, less than a dollar a day. But when you scale, the pennies add up and so the temptations change.
It’s not just that 180,000 dollars is a Ferrari to you. It could be a person’s wages. In fact, several people’s wages. Maybe you don’t have to fire someone because you, you know, changed your mayonnaise. The point is this: at the top of a multinational firm, money is gonna pile up. One of the dangers is that 180,000 in savings seems so salient, but the love of that sandwich, the feeling it gives the customer, that interaction with the shop floor, is now a distant memory. So the money is close to you, but the customer, the client, and the problem is now distant.
Now, I’m not saying what the right solution is, but just notice how the perspective changes. So, should you put fancy Japanese mayo on your sandwiches? I’m not so sure, but you should be careful how you look at it.