Algorithms Are a Poor Substitute for Human Decency

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Businesses are slowly coming to the realization that they must commit to a broader social purpose or face disconnected stakeholders and social opprobrium. The good news is that business ethics is suddenly back in vogue. The bad news is that business ethics has become inordinately complicated, expensive, and arbitrary.

What does it mean to be an ethical company in this climate? Whose assessment of ethical standing should matter?

Is Apple a Leader in Ethics?

When Ethisphere, a company that defines and measures corporate ethical standards, announced its 2022 "Most Ethical" list, many were surprised to see that, for the first time, Apple made the cut. The firm that started 2022 with controversy over how its new AirTags are being used to stalk people was now being feted for its virtue. The same company agreed to pay $500 million to settle a lawsuit accusing it of secretly slowing down older iPhones so customers buy a new device. Apple knew of a supplier using child labor but took years to cut ties.

We could fill countless pages reciting recent Apple scandals, yet they made it to the list again this year. And if you want an explanation, all you'll get at the moment of this writing is a broken link to learn more from Apple’s ESG site/Report.

None of this is to deprive Apple of its rightful standing as one of the world’s most innovative companies. I am an Apple customer, writing these very words on an Apple product. But I argue that even avid customers must regretfully assert that Apple is not a paradigm of aspirational leadership in business ethics.

Profiting from Complexity

So how did Apple get this recognition? Because Ethisphere uses a complex proprietary algorithm to determine the World’s Most Ethical Companies. And they are not alone.

There is a growing trend to make business ethics assessments inordinately complicated and somewhat detached from a conventional understanding of the term. While this may serve the interests of a host of industries profiting from the complexity, it undermines regular people’s faith in capitalism and the ability of companies to meet stakeholder expectations in a productive way.

And it’s not just big corporations falling into this trap. Crisis Text Line is a tech-driven non-profit that uses AI to help people cope with trauma. A scandal emerged when it was discovered and publicized by Politico that the company was selling the data they collected from text conversations with people in distress to a for-profit spinoff to create customer service software. Helping to prevent suicide is a noble value proposition. Selling the data of the most vulnerable to create additional value is ugly.

Outsourcing Ethics to Computer Algorithms

Why are the potential ethical and social harms of business activities so consistently under-considered? Research over the years has demonstrated that in the pursuit of profits, even well-intentioned folks tend to rely on sophisticated quantitative modeling tools to assess financial risk. They are outsourcing their thinking about ethics to computer algorithms. Consequently, even when we think about the possibility of ethical and social harm, it generally tends to be under-analyzed.,

Our perception of the ethical risks when there is money to be made tends to be asymmetrical. The possibilities for gain are of primary significance in assessing the attractiveness of alternatives. So, when the possibility for profit exists, we tend to under-consider the ethical risks that have been identified.

An advocate for mindfulness would argue that a mindful manager would be aware that their perceptions are asymmetrical—but is that realization enough to radically change the dominant behavior? The acceptability of a risky alternative depends on the relation between the dangers and the opportunities reflected in the risk and some critical aspiration levels for the decision-maker. Usually, aspirations relate to financial performance. As such, ethical and social risks are most often ignored or underappreciated.

There is a further tendency for managerial evaluations of alternatives to focus on a few key aspects of a problem. Most managers limit the scope of their assessment to the variables with which they are most comfortable dealing. Given the fact that most managers are trained in functional disciplines, like finance or marketing, and have limited exposure to ethical analysis, the tendency to focus on a narrow set of issues does not bode well for robust risk analysis. Furthermore, managerial forecasts of anticipated future outcomes are often rooted in scenarios of success rather than past results and therefore have a tendency to be overly optimistic.

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Ethics Are a Problem in Need of a Human Solution

So, what’s the solution? Algorithmic justifications are not a sustainable replacement for real ethics. What we need to do instead is sit in our current reality, realize that we are facing significant ethical problems, see how we and others have messed up, and commit to fixing whatever it turns out to be.

This sort of work may make some of us feel uncomfortable in the near term, but only through this type of process can we hope to start to solve the actual problems we are facing. Which means we will need to rely on our own ethical faculties. I’m thinking of the advice offered by the late poet Allen Ginsburg: Be bold and careful. Only then will we find our way to a world where wellness, business, and ethics can thrive.