17
The Obscene Watermark: Corporate Responsibility at Dunder-Mifflin
Ryan’s about to attend the Michael Scott School of Business. I’m like Mr. Miyagi and Yoda rolled into one … There are 10 rules of business that you need to learn. Number one. You need to play to win … but … you also have to … win to play. Got it? And … I will give you the rest of the 10 at lunch. (Michael Scott, “Fire”)
In “Product Recall,” the Scranton branch of the Dunder-Mifflin paper company faced a crisis. Michael described it best:
Apparently a disgruntled employee at the paper mill decided that it would be funny to put an obscene watermark on our 24 pound cream letter stock. Five hundred boxes has [sic] gone out with the image of a beloved cartoon duck performing unspeakable acts upon a certain cartoon mouse that a lot of people like … I’ve never been a fan. (“Product Recall”)
The watermark was so obscene that NBC had to “black bar” it. The backlash was huge. Dunmore High School (a “keystone account” holder) sent their prom invitations out on the obscenely watermarked paper, and Barbara Allen (one of Dunder-Mifflin’s oldest clients) nearly lost business and found the watermark “horrifying” and “disgusting” (despite Dwight pointing out that the sex was apparently consensual, since both animals were smiling). It put the branch at “threat level midnight”1 and the entire day (so said Kelly) was “bananas … B.A.N.A.N.A.S.!”
Business ethics, the branch of philosophy that deals with moral obligations of the business world, raises two very important questions regarding what we shall call (as Michael did) “the watermark boner.” First, is the company morally obligated to “make amends” for its mistake or is it only morally obligated to minimize the resulting “profit loss”? Second, if Dunder-Mifflin is responsible, who should bear the brunt of the responsibility for the incident: the disgruntled employee, the paper mill floor manager, quality assurance, Michael Scott, Jan, David Wallace … ?
What is the single most important thing for a company? Is it the building? Is it the stock? Is it the turnover? It’s the people. The people. My proudest moment here wasn’t when I increased profits by 17 percent, or cut expenditure without losing a single member of staff. No, no, no, no. It was a young Guatemalan guy, first job in the country, hardly spoke a word of English, but he came to me and he went “Mr. Scott, will you be the Godfather to my child?” Wow. Wow. Didn’t work out in the end. We had to let him go. He sucked. (Michael Scott, “Pilot”)
In the name of profit, corporations do seemingly immoral things all the time. Power plants won’t control their pollutants—dumping them into nearby rivers or releasing them into the air—because the efforts to control the pollutants reduce their profits. Car companies won’t recall defective parts if the recall will cost more than the resulting lawsuits. Companies will close plants with short notice, leaving hundreds or thousands of loyal employees out of work with little warning. Oil companies will drill for oil in third world countries, leaving huge environmental messes.2 Our first reaction is to declare it immoral for companies to do such vile things. But before we rush to judgment let’s consider things from “corporate’s” point of view.
Corporate might argue along the following lines: when people buy stock in a company, they are—quite literally—handing over their money to the manager of that company. When they do so there is an implied agreement: “I, the stockholder, give you, the manager, my money under the condition that you use it to make as much money as possible.” With this agreement a promise is made, and this promise creates a moral obligation for the managers to spend the stockholder’s money only in ways that ensure the most profit. Thus, managers— and in fact the companies themselves—do not have “free rein” to do whatever they wish with the company’s money—for it is the money of the stockholders. They can only spend that money in ways already approved by the stockholders: the ways that make the most profit. So, on this argument, even though protecting the environment, reducing deaths by recalling defective parts, and ensuring jobs for loyal employees seems nice to us on the outside, managers are not morally obligated to do such things. Such things are not profitable. Since the managers are morally obligated to spend the stockholders’ money in profitable ways, if they can get away with “vile” things that save them money,3 not only is it morally permissible for them to do so, it is morally obligatory.4 We’ll call this the “Stockholder Theory” (for it suggests that a company’s moral obligations are only to its stockholders).
Although the watermark boner isn’t as big a deal as environmental pollution and the death of vehicle drivers and passengers, the Stockholder Theory still entails specific things about how Dunder-Mifflin should handle the incident. Take Barbara Allen, the client who nearly lost business and found the watermark horrifying and disgusting. What Dunder-Mifflin should do is ensure that it retains Barbara’s business. This will obviously mean refunding her money for the watermarked paper, and she will probably need other incentives if she is to continue her patronage. The incentives might include some free paper—Michael offers her 6 months’ worth (or 25 reams, whichever comes first)—but whatever they offer her can’t end up costing the company more money than keeping her business would make them. Bigger clients, like Dunmore High School, could be given greater incentives to stay—since their continued business will generate more profit—but the same rules apply; keeping their business can’t cost more than it will make. You’ve heard the phrase, “It’s all about the bottom line.” Well, according to the Stockholder Theory, making it all about the bottom line is morally obligatory and—although keeping customer business is preferable—efforts to do so can’t cross that line.
That Dunder-Mifflin ascribes to the Stockholder Theory is fairly evident. All the company seems willing to do to make amends for this mistake is “apologize” (except for Angela, who can’t seem to apologize to anyone) and make sure it doesn’t happen again—two things that clearly only consider the bottom line. Apologies are cheap, and letting it happen again would cause a huge loss in business. There are many other examples of the bottom line having the last word at Dunder-Mifflin—the cheaper health care plan in “Health Care,” the downsizing in “Halloween” and “The Merger” … and no open bar at The Dundies! (Whether Michael ascribes to the Stockholder Theory is unclear. His attitude towards Barbara is fairly “Stock-holderish”—25 reams of paper is pretty cheap. But in “Business School,” Michael seems to suggest that business is “all about the people.” Of course, he says the same thing in the pilot, when talking about the Guatemalan guy—but then turns around and fires him.)
As you may guess, there are some serious objections to the Stockholder Theory. First, it’s unclear that implicit agreements exist, at all, between stockholders and managers.
… a [stock]holder buys shares of a corporation from pervious owners, not from the corporation itself, and even in the case of original purchases of stock, there is no agreement beyond the prospectus … [stock]holders expect to be treated as “investors,” … and expect corporate managers to consider a wide constituency when making corporate decisions … the lack of any face to face dealings … and … any specific representation by management to individual [stock]hold-ers further mitigate against any presumption that an implied contract exists.5
So it seems that no “I’ll get profit at all costs with your money” promise is ever made by managers to stockholders. It’s also unclear that buying stock in a company makes the managers of that company your “agent” whose moral responsibly is solely to you. Managers have many other duties—some of which they directly consent to and some of which are defined by law. When these duties conflict with your interests, it seems that you (the stockholder) will—and should— get the short end. Wouldn’t the same be true of the manager’s moral duties? Additionally, if a manager was really your “agent” in this way, the manager would be able to make your decisions for you—but in normal modern business relations they can’t. When it comes to major corporate decisions (like mergers), managers have no say. But, most importantly, your conditional involvement with the company seems to remove the manager’s obligations to you. As a stockholder, you don’t “own” the company (or even a piece of it); your money isn’t forever sunk into the company in such a way that the company’s success is inevitably tied to your own. Only if that were so would you own the company in such a way that the managers would be morally obligated to you. But you can sell your stock whenever you wish! Accordingly, the managers are not obligated to look after only your interests. If you don’t like what they’re doing, then you can get out.
As an alternative to Stockholder Theory, let’s consider “Stakeholder Theory,” according to which a company is morally obligated to consider and act in the interests of everyone who has a stake in the company: employees, manufacturers, customers, and even society. No one person or group of people owns a company;6 people simply become involved with it—whether as a stockholder, an employee, or a customer—by their own consent on a conditional basis (all with the hope that it will benefit them). The company’s obligations, therefore, are to everyone so involved, that is, the stakeholders. So the managers—acting on behalf of the company—are morally obligated to weigh the interests of all such parties and act accordingly.
Perhaps, a hundred or so years ago when businesses were smaller (or even today with some very small businesses), when ownership was more explicit and direct, this was not the case.7 But today, Stakeholder Theory seems right. And that being the case, it seems that Dunder-Mifflin needs to do more than simply refund money and apologize for the watermark boner. Ultimately, it would need to repair any damage done by the watermark. Perhaps Dunder-Mifflin should personally call everyone invited to the prom and explain that it wasn’t the school’s fault. Perhaps it needs to make amends for its mistake to Barbara Allen with much more than 25 reams of paper— even if it cuts into profits. Perhaps, if she calls for Michael’s resignation, she should get it (we’ll talk about this in a moment.) Most likely, the best way to “make up” for the mistake would be determined on a case-by-case basis. Regardless, Dunder-Mifflin needs to keep in mind the wellbeing of all its stakeholders—and that includes its customers.
Considering the interests of all stakeholders, of course, includes the interests of the employees. Dunder-Mifflin can’t make amends in such costly ways that it has to start laying off employees. Employees are stakeholders too; a balance must be struck. But simply apologizing and refunding doesn’t seem to be enough.
Doesn’t Someone Need to be Fired?
If I could leave you with one thought: remember it wasn’t me. They are trying to make me an escape goat. (Michael Scott, “Product Recall”)
Usually, when companies make major mistakes, someone loses his or her job. Indeed, this happened in the case of the watermark boner. Although Barbara Allen called for Michael to resign, Creed got Debbie Brown (the floor manager at the paper mill) fired. But should anyone get fired? Maybe whoever is at fault should get fired. But who is that? And after all, couldn’t it just simply be the company’s fault, not an individual’s fault?
Just like the issue of “which bear is best,” when it comes to the issue of corporate responsibility, there are two schools of thought. One is that when things like the watermark boner happen, it is the business itself—not any one individual—that is at fault, and it is the business itself that should bear the brunt of the moral and financial responsibility. Let’s call this the “corporate responsibility” school of thought. The other school of thought is that the individual(s) responsible for the mistake should be held responsible. Let’s call this the “individual responsibility” school of thought. We all know that the black bear is the best, but which school of thought is right?
There are three major problems with the corporate responsibility school of thought. First, we usually think that responsibility for a wrong—especially moral responsibility—can only be attached to something if it intentionally causes the wrong. But only individual persons—not businesses—can form intentions and intentionally do anything. After all, only individual persons have minds, and intentions are mental states. Although businesses are collections of persons that we sometimes describe as having intentions, such talk is metaphorical, not literal—like when we describe a car as “trying” to start. Businesses and cars don’t really have intentions because they don’t have minds.
Second, holding the entire business responsible unduly punishes the blameless. Most Dunder-Mifflin employees didn’t have anything to do with the watermark boner, and making the entire company bear the brunt will hurt everyone. This seems unfair—especially if there is someone directly responsible. Third, “spreading around” the responsibility in this way only encourages more irresponsibility. Other disgruntled employees will also pull obscene watermark tricks if they know that the entire corporation will pay for what they have done (instead of them paying personally).8
Of course, there will be times when no one is responsible; sometimes business mistakes are just the result of innocent decisions of separate individuals doing their jobs as they should. Perhaps different people choose, independently, different materials that, when combined, don’t work properly (Kevin and Oscar don’t work properly when they are bored and play Hateball).9 In those cases, it seems that—since no one person is to blame—the company should shoulder the responsibility. But that was not the case with the watermark boner; clearly, an individual should be held responsible. But who?
The obvious answer might seem to be to assign the blame to the paper mill employee who was directly responsible for the watermark; that employee seemed to play the most direct causal role. Clearly, the paper mill was thinking like this when they fired Debbie Brown, the floor manager, after Creed alleged that she had missed her “quality assurance inspection” meeting with him. The paper mill didn’t know who was specifically responsible and simply fired the most causally responsible person they could identify. (Although it should be noted that, in fact, no such meeting was ever scheduled; Creed made it up to save himself from becoming a homeless man … again.) But there are two major problems with stopping our investigation there: Dunder-Mifflin is clearly partly responsible for the incident and the paper mill is not a part of Dunder-Mifflin. As was revealed in the episode “Take Your Daughter to Work Day,” Dunder-Mifflin is a middleman—buying paper from the paper mill and reselling it at a higher price (the daughters at work pointed out that this seems to be unfair). So firing someone at the paper mill does nothing to absolve Dunder-Mifflin or its employees.
So which Dunder-Mifflin employee should bear the brunt of Dunder-Mifflin’s moral responsibility? Who is, we might say, “blameworthy”? Maybe the person who is most causally responsible for the incident should be fired, but identifying that person is difficult. Causal relationships are not easy to pin down. Something like, “if one fails to do something that would have prevented an incident, then one is causally responsible (at least in part) for that incident,” might work as a criterion for causation. But—regarding the watermark boner—such a thing is true of almost everyone at Dunder-Mifflin. The watermark boner would have been avoided had only the sales staff refused to sell any 24-pound cream letter stock, or had only Angela not written the check to the paper mill for the paper, or had only Devon done a better job of arguing to save his job (getting Creed fired instead) on Halloween 2005, or had only Josh Porter (Stamford Regional Manager) not taken the job at Staples and merged the Scranton branch into his … the list could go on. But it doesn’t seem right to blame the sales staff, Angela, Devon, Josh, etc., for the watermark boner—so it seems that mere causal responsibility isn’t enough for blameworthiness.
All is not lost. When it comes to “being blameworthy” for office blunders, a different criterion works better. “If one fails to perform an action that it is one’s job to perform, and that failure causally contributes to a negative incident, then one is blameworthy for that incident.” And this seems right. We don’t want to blame the sales staff for the incident because they sold the paper—even though selling the paper causally contributed to the occurrence of the incident— because it is their job to sell the paper. But we do want to blame Creed. Every week he is supposed to take four hours and do a quality spot check at the paper mill, but Creed chose to blow off that weekly responsibility—all year long! Had he not blown it off—and instead done his job—he might have caught the watermark and prevented the paper from being sent. (Notice also that if we found out that Creed had been doing his job, but the disgruntled paper mill employee found a way to “sneak it past” his inspections, we wouldn’t be inclined to blame Creed.) If the criterion is right, Creed is blameworthy for the incident.
But we can’t stop there. We must ask if anyone else fits the criterion. And it seems that Michael does. Of course, he denies this in his apology video:
By now you are probably sick of hearing about Dunder-Mifflin and our embarrassing watermark boner. [I have literally apologized an infinite number of times over this, and still there are calls for me to resign, calls from an annoying woman and possibly over the media a little.] Well let me tell you something. Something from the heart. [I will not resign.] I am not leaving this office. It will take a swat team to remove me from this office and maybe not even then. There is no way I will resign. It wouldn’t be fair. Not to the good workers I work with. Not to my clients. And especially not to me. Let’s not forget who this whole resigning business is about anyway. [I need this job. My mortgage is hundreds of dollars a month. With this job I can barely afford that. I have a company car, but I still have to pay for the gas. Gas prices are high and I have no savings whatsoever. And it wasn’t even me. It’s not fair that they want me to resign.] If I could leave you with one thought: remember it wasn’t me. They are trying to make me an escape goat. If I am fired, I swear to God that every single piece of copier paper in this town is going to have the F-word on it—the F-word. You have one day.10
But none of this matters! Granted, he didn’t personally put the watermark on the paper, and yes he needs the job, but none of this changes the fact that had he been checking to ensure that the spot checks were being done—something that his job clearly includes—he would likely have prevented the incident. Unless Creed was somehow tricking Michael into thinking that inspections were happening when they were not, Michael is guilty of contributing to the incident by failing to do his job and is thus blameworthy.
The same is true of Jan. She knew that Michael was inept as a manager, but still allowed him to keep his management position—probably she wanted to keep Michael wearing schoolgirl dresses in the bedroom. But since Jan’s job involves ensuring the quality of the employees under her (no pun intended), and doing so would have prevented the incident, she is blameworthy as well.
Of course, this line of responsibility might also be tracked all the way back to David Wallace (Chief Financial Officer) and the corporate big wigs. But since they were already planning to fire Jan for gross incompetence, they can be absolved of responsibility. They were doing their job before the incident occurred. So ultimately the morally appropriate response to the watermark boner would be to hold Creed, Michael, and Jan responsible.
But should the responsible individuals be fired? Sometimes less severe punishments (such as a demerit, citation, violation, verbal warning, written warning, disciplinary review, or one of Jim’s full disadulations) will do. But the watermark boner was serious enough to warrant firing. Creed, Michael, and Jan should all have been fired.
You might disagree. If one willfully avoids doing one’s job (like Creed), one should be fired. But what if one doesn’t willfully slack off ? Michael’s problem is ineptitude, not laziness. He intends to be a good manager, he just doesn’t pull it off. Is this enough to save his job? Well, I can’t keep my job on good intentions. If I can’t teach philosophy, I should be let go—even if I intend to teach philosophy (and try really hard). The same is true of office work. If someone intends to do his job, but simply cannot do it, then he should be fired.
Just intending to do their jobs doesn’t let Michael and Jan off the hook. Taking the management position away from Michael was something Jan knew should’ve been done, but she willfully avoided it. Making sure the inspections were happening was part of Michael’s job, but he willfully avoided it. He even let Creed talk him out of doing his job when Michael was forced to let someone go.
The only real difference between Creed, Michael, and Jan is this: Creed failed to do a bigger portion of his job. Checking up on Creed is only one of Michael’s many responsibilities. Checking up on Michael is only one of Jan’s many responsibilities. But one of Creed’s main responsibilities is the mill inspection (he is, after all, quality assurance). So if “the amount” of your job you willfully ignored makes a difference, then perhaps only Creed should be fired. But, then again, ensuring the quality of employees is one of Michael’s main responsibilities; ensuring the presence of competent managers is a main part of Jan’s responsibilities.
Much more could be said. All in all, if you think only Creed should be fired you need to point out what is different about what he did and show how that difference is relevant to “firing decisions.” I can see no such difference and thus conclude—since Creed, Michael, and Jan are all equally blameworthy for a fire-worthy incident—they should all be fired.
A Boss is Like a Teacher, and I am Like the Cool Teacher
Dunder-Mifflin is morally and socially responsible for making amends for the harm they caused their customers by the watermark boner—even if it cuts into company profits. It should not cause all the employees to lose their job, but if some of the higher ups have to take a bit of a pay cut, so be it. The company has moral and social obligations beyond the bottom line. But since this was not just an “anonymous mistake” for which no one was to blame, someone should be held directly responsible. Since the incident was big enough to call for firing, I guess that Michael and Jan have Creed to thank for shifting the blame to Debbie Brown—well, maybe not Jan; she got fired anyway.
NOTES
1Which, if you don’t recall, is the title of the movie screenplay Michael wrote and the employees read in “The Client.”
2For specifics and more such examples, see Tom Beauchamp and Norman Bowie (eds.), Ethical Theory and Business, 7th edn. (Upper Saddle River, NJ: Prentice-Hall, 2004).
3Now, of course, sometimes such things won’t turn out to be profitable. If your company pollutes and everyone finds out about it, people might stop buying your product—and that will cut into profit. If that is the case, on the Stockholder Theory, the managers are obligated to do something about the pollution. But it would not be because polluting is wrong; it would be because polluting is cutting into profits and the managers are obligated to seek the highest profits.
4For a classic rendition of this argument see Milton Friedman’s article “The Social Responsibility of Business Is to Increase Its Profits,” and John Hasnas, “Two Normative Theories of Business Ethics: A Critique” (pp. 50 and 65 of the aforementioned Beauchamp and Bowie).
5John Boatright, “What’s So Special About Shareholders,” p. 76 in Beauchamp and Bowie.
6There are obviously exceptions in the case of very small businesses—but we aren’t really concerned with those here.
7Of course, when ownership is so direct, the manager and owner are often one and the same. Personal moral obligations more readily apply in such cases.
8For more on such arguments see Manuel Velasquez’s article “Debunking Corporate Moral Responsibility” in Beauchamp and Bowie (pp. 109–121).
9They call it that because of how much Angela hates it. See “Office Olympics.”
10The pieces of this quote in brackets were not spoken by Michael in the original airing of the episode, but were on the cue cards that Dwight was holding for him. I suspect they were edited from the episode for time.