Business Roles: Laundry List

In my attempt to classify the parties involved or affected by business, I have generated a growing list of roles, which may be of use later. I'd like to record them for later consideration, but my sense is that much of this material is a work in progress - the list is not comprehensive, and the items in the list may my misidentified.

Ownership Roles

On of the characteristics of a business that sets it apart from certain other types of organizations is that the business is owned. However, it's not entirely clear to me what is meant by "owning" a business. It seems to encompass a number of things:

• Holding legal title to the assets of the business or an indirect claim against the assets of the business
• The ability to exercise or delegate authority pertaining to decisions that involve the assets of the business
• Being entitled to receive a share of the profits of the business

It seems that ownership is not a single role, as there may be owners who have some of these qualities, but not all of them. An investor, for example, may have a claim to the profits of a business but have no authority over decisions pertaining to the business.

Employee Roles

The role of the employee merits special consideration, as it is not the same as ownership or mere participation in the organization.

• The responsibility to make decisions or delegate the authority to make decisions, but only in areas in which the a higher authority (owner or superior) has delegated authority to the individual
• The responsibility to perform actions that are necessitated by business decision
• Being entitled to a compensation (wage, salary, commission, or retainer) in exchange for their participation in the organization but has no claim on the profits

Traditionally, employee roles are divided into specific roles according to the degree of authority: executive, manager, director, supervisor, worker. I'm not immediately certain that this is entirely accurate, or the best approach, but acknowledge that it is common.

It's also worth noting that employees are often differentiated from vendors, but I am presently unclear on the rationale for this distinction. There are some areas where there are differences, but they merit more detailed consideration than the present topic requires.

Vendor Roles

Vendors are considered to be separate from the business. A "vendor" is generally an individual or organization that provides goods and services to the business, but is not considered to be part of the business.

• The vendor is responsible to provide goods and services to the business
• The vendor may have responsibility for making decisions pertaining to the business, if this is part of the service they provide
• The vendor has autonomy in making decisions pertaining to the item provided to the business
• The vendor is entitled to payment in exchange for the goods and services provided to the business

It's generally accepted that a vendor is an outsider to the business, and the distinction is fairly reliable when a vendor sells material goods to the business. The line becomes blurred when a vendor supplies services to the business, especially consulting services, in which instance it takes on more of an "inside" role to the business. This merits further consideration.

Customer Roles

Customers to a business are those who purchase the products or services of that business. They are generally an individual or organization outside of the business, whose decision to buy from the business is independent.

• The customer is responsible for paying the business for the product or services received
• The customer is entitled to receive the good or service in exchange for this payment
• The customer has no authority to make decisions pertaining to the business
• The customer may be affected by the product purchased from the business

Some distinction is to be made between the customer of a business (the individual who tenders payment in exchange for a good) and the consumer of the product (the individual who consumes or uses the product purchased) - especially since the contract exists between the business and the customer, but not between the business and the consumer.

Community Roles

Aside of the roles described above, there are individuals who are members of the community in which a business operates and in which its products are used.

• Members of the community may be impacted by the actions of the business
• Members of the community have no direct role in the operations of the business
• Members of the community have no obligations to the business, nor does the business have any obligation to them.

It's noted that the "community" consists of companies as well as individuals, so in this way the competitors of a business are also members of the community, though in an economic rather than a geographic sense.

Absence of Role

While the purpose here is to define the various roles related to business, it also seems an opportune time to consider instances in which there is no role or relationship between an individual and a business.

Specifically, to claim there is no role, there is no relationship or interaction between the business and an individual, and the individual will not be impacted by the actions of the business. Which is to say that if either of those statements are not true, then there exists a role for that individual.

Business Roles: Classification

As a prerequisite considering the consequences of an action, it is desirable to identify and classify the various parties involved in a general sense, as a means to derive conclusions that have a broad impact. The core problem with many ethical systems is in the failure to consider the full scope of consequences, which often stems from considering only the effects pertaining to one category. Hence, it would seem that a more precise classification would lead to more reliable conclusions.

However, I've considered this at some length and have arrived at no conclusion. For any distinction, there are always gray areas, which would lead to uncertainty over whether a given individual or role falls into a given class of parties.

For example, the simplest distinction would be to determine whether an individual is "inside" or an "outside" a business. But this is not as simple as it might seem, as the criteria for being "inside" are unclear. It is not a matter of physical location (such that everyone on the premises is an insider), not is it a matter of authority and influence. So in the end, I have not been able to identify a single criterion that could be consistently applied.

From a perspective of ethics, the key considerations derive from actions undertaken: parties who have the authority to make decisions, parties who have influence without formal authority, parties whose are involved in the action precipitating from a decision, and parties affected by the consequences of the action. But even this is unclear, as a person who is in the role of "employee" may fall into all of those groups.

So in the end, I am presently unable to derive or accept a classification of parties that is sufficiently accurate, and will for the present proceed without classification until such time as I can arrive at a more acceptable definition, as an unsuitable classification will result in specious reasoning.

Analysis of Action

As ethics pertains to action, it would seem to be of value to determine some of the roles of individuals who may be involved or affected by a decision, in a general sense. However, before taking that step, it’s necessary to further consider the notion of “an action.”

Action

At its most basic level, an action consists of an activity that can be expressed as a verb (to purchase, to sell, to manufacture, to transport). That’s not to state that the other elements (who acts, what they act upon, what is affected, the manner, etc.) are unimportant, merely that the “verb” is the essential element. My sense is it would also be an active verb, as a passive verb implies being the subject of an action undertaken by another party, and a verb that merely describes a condition (merely “to be”) is of little interest to ethics.

The activity has a limited duration: it begins and ceases at definite times. To carry a stone from one place to another begins when the stone is picked up, persists during the motion, and concludes when the stone is put down. One may niggle over the details of precisely when the action begins and precisely when it ends, but even this acknowledges the existence of a beginning and ending to an action.

The action may also consist of multiple activities that occur, which are generally but not necessarily simultaneous. In the example given, there are three activities: picking up the stone, transporting it, and putting it down again. This seems a bit overly concerned with self-evident details, but my sense is that it bears consideration in situations in which analysis could be affected by the failure to correctly “bundle” activities into a single action.

Metadiscourse: I need to work out the terminology here – action, activity, and act – it’s all getting a bit tangled up.

Decision

Before an activity is undertaken, there is a decision to act. While there is the notion of spontaneous action, my sense is that this is a largely a false notion: while a person may act on the spur of the moment, doing the first thing that comes to mind, this constitutes a decision to act upon the first thing that arises without further consideration. It could also be argued that some actions are entirely accidental and unintentional - and while I cannot presently dismiss that argument, it seems to me that the majority of actions are neither accidental nor intentional, but are undertaken with some intent.

However, the converse cannot said to be true: that every decision results in an action. This seems self-evident, but my sense is that considering a decision that results in no action may be a notion that leads to specious reasoning: specifically, in the equivocation of "not acting" to "acting." Even if there is deliberation, leading to the decision from refraining to take action, a decision has been made. And it seems to me that there are still ethical consequences of a decision not to act, but I have the sense that these cannot be considered the moral equivalent of deciding to act. I will need to reflect on this further at another time. For now, the point is that an action is proceeded by a decision.

It’s also worth noting that an activity may include multiple decisions.

Consequences

After an action is undertaken, there are consequences that result from the action being undertaken. In some way (in fact, in several ways), the situation has been changed by the action having been undertaken.

Ethics is keenly interested in the consequences of action. When an action is assessed, it is most often due to the consequences of that action. The root action of dropping a stone is neither ethical nor unethical, but if the stone is dropped in such a way that someone or something is damaged by it, we then consider whether the act was ethical. That is, the actor should or should not have undertaken the action, not because the action was good or bad in and of itself, but because the consequences were good or bad.

It’s also worth noting that evaluating the ethics of an action that was taken in the past is of limited use: the past cannot be altered, though it may serve as a lesson to be taken into consideration in future. It may also be as the basis for future actions (does an activity in the past necessitate activities in future), but this seems a separate matter.

Primarily, ethics is concerned with the consequences of future actions, as a method to evaluate whether an action that has not yet occurred should be undertaken. That is to say, that the usefulness of ethics is in guiding decisions to act.

Situation

It also occurs to me that the environment has an impact: the particular details of the situation in which a decision is made. The decision is an attempt to effect a change in conditions – therefore the "before" state that describes the situation prior to action is the status quo that an action affects to achieve the “after” state.

Conditions also affect the decision: an action that is considered to be “right” in some conditions may be considered “wrong” under others. To return to the root example, to drop a stone is of no consequence if the preceding conditions are that there is nothing in a position to be damaged.

The conditions that exist after an action are included in the consequences. Of greater concern are the preceding conditions, which must be taken into account when making a decision. It may be that these conditions should be included in the decision, but because the decision cannot affect the preceding conditions, it does not seem logical to package them.

Chronology

The order above seems arbitrary, more related to the logical relation of the concepts than the chronological order of the elements of action. To put this straight, the order would be:

1. Preceding Conditions
2. Decision
3. Action
4. Consequences

Because of the interdependency of these four elements, an ethical evaluation that omitted any of them would likely be incomplete.

Authority to Decide

While I remain uncertain as to whether the beneficiary of an action bears any responsibility for the ethics of that action, it seems clearer that a party who has input into a decision bears some degree of responsibility for the influence they have over the decision-maker.

This is to be differentiated by the degree to which a decision-maker considers himself to be constrained or compelled in his ability to make a decision due to the influence exerted upon him, which is a related by separate topic that bears further consideration. For the present, I am considering the other party, which exerts influence upon the decision maker.

It seems less arguable that a party who exerts influence upon a decision bears some degree of responsibility for the decision itself. Influence, itself, seems to stem from the perceived ability of the influencer to punish or reward the decision maker for his decision that is in the interests of the influencer. The punishment or reward functions as an added consequence to the decision-maker and is taken into account among the factors of consideration.

However, the decision to inflict a punishment or grant a reward is, in itself, a matter to which ethical consideration must be applied. The point of exerting influence over another person is to affect the outcome of their decision - an influencer does not seek to punish or reward for its own sake, but as a means to affect the outcome of a decision and subvert the independent process of the decision-maker. In effect, the person who exerts influence is attempting to make the decision, and therefore bears responsibility for the outcome of a decision that results from the influence they exerted.

In the context of business, this is most common in authority relationships, such as that between supervisor and subordinate. The subordinate is not authorized to make a decision, but yields to the will of his superior, due to the ability of the supervisor to reward or punish. While the subordinate has the ability to refuse an order (again, the condition of "being influenced" has been deferred for later consideration), it is the intention of the superior to preempt the employee from making a decision contrary to the desires of the superior. In effect, the superior has made the decision as to what action should be undertaken, and the subordinate is merely deciding whether to comply with this decision.

My sense is that this remains abstract, and a more concrete example is in order: an employee in the role of a buyer, who is allegedly responsible for determining from which to purchase a given product for use in the business, is ordered by an executive to purchase from a specific supplier. In such an instance, it would not be entirely accurate to assert that the buyer is making an independent decision - but rather the decision of which supplier to use is made by the executive, and the authority of the buyer is removed to the executive whose orders have influenced the decision.

In such an instance, the executive should rightly be held responsible for the consequences of the decision - though it may be argued that the buyer would be responsible for a separate decision - to accept or refuse the order he has been given.

Influence, authority, and orders are substantial factors in decision-making within an organization - but they may also be substantial factors in making any decision in a social environment: the executive in the previous example may have been influenced by a regulator, who was influenced by a politician, who was influenced by his constituency. So the chain of influence may be a significant factor in determining the appropriate party who can be said to have made a decision.

Activities of an Organization

Another hypothesis that bears consideration (see original post) is that an organization does not make any decision to act, nor undertake any action as an organization. The same can be said of business: the business itself does not decide or act. Decisions and actions of the individuals who compose the business decide or to act, and not all decisions or actions are made in interests of the business.

The interests that drive a decision, then, may be considered as a differentiating factor: if the intention of a decision to act is made with the intention of accomplishing a purpose that serves the interests of the business, rather than those of the individual making the decision, then the activities that precipitate from that decision can be considered to be "business activities."

However, that alone seems insufficient. There is some danger in assigning responsibility for an action to an individual or entity simply because they derive a benefit from that action. The example that comes to mind is in a charitable donation of funds that were gained by an unethical activity - are those that are benefited by the donation to be held accountable for the activities that generated the funds donated to them? This seems unreasonable, in that they had no part in making the decision of how the funds were generated.

It seems to me that authorization is also a factor, and is likely more important a factor than the receipt of benefits. If a charitable institution engaged in unethical activities to raise funds to support its operations, then it is to be held responsible for the decision to undertake those activities. It might also be suggested that if the institution encouraged others to undertake those actions for its benefit, it is to some degree responsible for providing that motivation.

But this runs afoul of the premise: that the institution does not decide or act, but certain individuals within the organization have made the decision to decide or act. And while the decision was made in the context of the institution, and for the benefit of the institution, the responsibility for the decision rests with an individual.

And the argument at this point comes full circle, because the individual who made the decision to participate in or encourage others to undertake an unethical action was motivated to do so to his desire to achieve some benefit for the institution.

I don't think that this has been fully explored, but it seem to be pointed toward the conclusion that the actions undertaken to achieve a certain goal can be said to be related from, or even to originate directly from, that goal. Hence any decision made to benefit a business precipitates actions that can be called "business activities."

This seems a matter of classification that may have no direct bearing on ethical responsibility: the decision-maker rather than the benefactor is responsible for the ethics of a decision, though it may be said that it is for the sake of the benefactor that the decision was made.

Purpose of Business

As with any other organization, a business is created to fulfill a specific purpose, and that purpose is significant in that it drives the behavior of the individuals who carry out the activities of the business. Also as with any other organization, there are those who are involved with the organization, but do not actively support its agenda or interests, but are driven by ulterior motives. In doing so, they act as individuals - and while the business may ultimately be held accountable for their behavior, it cannot accurately be stated that their actions are driven by the purpose of the business.

Ostensibly, the purpose of a business is communicated through its mission statement. Hence, it would seem reasonable to consider the ethics of a business according to the behaviors encouraged or required by its mission statement, and presume that if those who act to serve the business do so in a manner that is true to its mission, then its actions are as ethical as the mission of the business - specifically, that if a mission is good, then any action undertaken in pursuit of that goal is also good by virtue of its intention. However, this does not stand under scrutiny.

To begin, most mission statements are multifaceted, listing a handful of different goals. While the goals expressed in a mission statement are most often positive, or at least intended to be positive, there may be synergy or conflict among the individual goals. If the ethics of a mission are to be evaluated, a separate evaluation must be performed on each goal, and the results compounded - presuming that a goal may be assessed.

It's also worth noting that the choice of goals is arbitrary: there is no singular goal that can be said to be true of all businesses, as each company has its own mission, and its own goals. While it can be said that "to generate a profit" is a characteristic that distinguishes a business from other forms of organization, and that a profit motive is always present, it may not be the primary goal for a business. A business may be formed to manufacture a product, with profit being a precipitating or secondary goal. This is evident when companies continue to operate at a fiscal loss, though there is generally an interest in returning to a profitable state at some future point - but failure to generate profit does not derail the company's pursuit of its primary goal.

There is also the problem of the veracity of a stated goal: a business, like a person, may profess to have noble goals, but the actions they undertake may not be in line with those goals. In some instances, the business may act to achieve prerequisites to that goal, or it may act to achieve an undisclosed goal. For example, I have noticed that most mission statements do not include "to make a profit" or any variation thereof. This does not indicate that profit is not a goal. More likely, it was deemed as self-evident and therefore unnecessary to mention in the mission statement.

There is also the problem of the mutable nature of mission statements. A "mission" is a vague notion to begin, often used to describe goals that cannot be achieved (or that the business knows will not be achieved) as a means to perpetuate the existence of the business as a profit-making entity. Also, a mission will change over time, just as a business may change or evolve. It is not uncommon for businesses to update their mission statement, and this may occur many months or years after the organization has changed course, or that the mission may be changed in advance of undertaking any action to pursue a new direction. In both of these instances, there will be disagreement between the written statement and the actual mission of the business.

As such, the very nature of a mission statement and its lack of reliability is in then accuracy and comprehensiveness of that statement at any given time. It would seem a safe conclusion that the mission statement, like any other professed set of values, is unreliable, and that the actions of the business must be evaluated to determine the ethics of the organization, as derivative of its actions.

I already have the sense that this needs further consideration: in the consideration of ethics, it was noted that ethics do not apply directly to an organization, but to individual actions, which would seem to preempt this line of logic entirely. But in the sense that an organization can be deemed to be ethical as a consequence of its actions (and not vice-versa), perhaps it makes sense to retain until the foundational matter can be reconsidered.

Disambiguation of Business

The term "business" is ambiguous, so it seems necessary to consider some of the definitions of the term, if only to dismiss them from the context of the present study. "Business" is sometimes applied to connote an entire industry - all businesses that sell clothing are said to be in the "clothing business." "Business" is sometimes applied to connote the commercial sector - all businesses in a given country or economy, or even the world.

The problem with such uses of the term is that it is most often used when an individual is unable or unwilling to identify the specific firms involved. That is to say, the behavior of a few specific firms (even an imagined behavior that is not evidenced in action at all) are used to imply those of all firms of a similar nature.

While ethics deals in generalization, with the intention of application in specific situations, it applies to the decision making process - which itself may bear further consideration - which is done on the level of an individual firm. Even in situations where a cartel or industry group arrives at an agreement for a given course of action, it is the decision of each firm to abide by this agreement, and the decision is revisited each time the firm is faced with the situation in which such a decision must be made.

Arguably, considering ethics even on the level of a single firm may be too ambiguous and abstract. The "business" does not make a decision, nor does it undertake action, as an indivisible unit. An individual within the business makes the decision, others support the decision. This merits further consideration.