When the collapse of a Bangladesh garment factory killed over 1,100 workers last month--and eight more perished in a fire at another clothing factory soon after--astonishingly, the clothing retailers tied to these tragedies claimed to know nothing at all about where their merchandise is made or under what conditions. Of course, such ignorance (along with cost savings) is one of the virtues of contracting out: You can always deny knowing anything about what your contractors or subcontractors are doing.
These hideous stories reminded me of the venerable concept of "plausible deniability"--a term coined during the Kennedy administration by the CIA to describe the act of withholding information from senior officials so, when questioned or confronted about some action, the officials could credibly deny knowing anything because they had arranged to be intentionally kept in the dark. If this sounds like Children's Place, Walmart, and the other manufacturers who act to ensure they don't know what they would be embarrassed by knowing, it should. It's also a term that describes the many bankers a few years ago who claimed ignorance about the conditions of their balance sheets or untoward risk-taking going on in their trading operations.
Legally Sound, Ethically Corrupt
The memorable lyric from the Fleetwood Mac song, "Tell me lies, tell me sweet little lies," describes an ethical conundrum confronted by leaders of organizations of all sizes. The legal concept is simple: What you don't know can't be held against you. But what may be good for legal formalities is toxic for ethics. As an employer, you are morally (if not legally) accountable for what you pay--even if your employees are ostensibly on a contractor's payroll. You are also morally responsible for the resources used and the waste produced by your operations--even if others shield you from directly seeing what you are causing.
Some years ago when I wrote about plagiarism, a colleague in journalism told me that bylines helped combat fraud in his industry. I didn't say it "completely prevented fraud" because, after all, nothing is foolproof, but it certainly helped. Similarly, when I had lunch with a senior banking executive in charge of risk management, she told me that when she made a presentation to the board of directors based on her employees' work, she insisted that they sign their names to the work.
Sort of like bylines on articles or employee-signed presentations, the Dodd-Frank mandate that CEOs attest to financial statements, the requirement that politicians "approve this message" when they buy advertising, the very act of signing something creates a stronger psychological link between an individual's identity and their work. This connection will make them take the work and its integrity much more seriously. As Soichiro Honda once said during a presentation, one of the reasons his cars were of higher quality was that when they broke down, people were cursing him and his name.
Lessons From Small Business
Family-owned businesses often have better reputations and higher quality because of this effect--what you put your name on, you will take more responsibility for. Perhaps if clothing executives had to attest that they knew and had approved the conditions of where their clothes were made, there would be fewer factory deaths. Every business can profit from this fundamental behavioral insight--have employees put their names on their work. Not only will they get credit for what they do, they certainly become more responsible for their actions.