13 Jul #129 – Integrity Idea 003: Pay Today
ESSENCE: From time to time, we are devoting posts to describing specific actions a faithful leader can consider in leading faithfully through business a better way. We are calling these Integrity Ideas.
INTEGRITY IDEA: Pay Today
COVERT-OVERT CONTINUUM (six Continuums for action): Practices
COVERT-OVERT RATING (several levels from Highly Covert to Highly Overt): Highly Covert
STAKEHOLDERS SERVED: Employees, Customers/Clients, Suppliers/Vendors
Most Integrity Ideas are practical actions that will begin to Re-Align the organization with Biblical beliefs, principles and priorities. “Pay today” is about paying employees for their work, paying refunds to customer/clients, and paying suppliers/vendors promptly. It is about foregoing leverage with customers and vendors and eschewing manipulative compensation practices with employees–living the Golden Rule consistent with good stewardship. It is about cultivating a “Should We” rather than a “Can We” culture–doing the right thing, in the right way, for the right reasons.
From time to time, we are devoting posts to describing specific actions a leader can consider during the Re-Align step of Integriosity®–actions that will begin to Re-Align the organization with Biblical beliefs, principles and priorities. We are calling these “Integrity Ideas“.
Some Integrity Ideas will feel like a good fit, and others will not. The choice should be based on which approach is best for stewarding the organization toward its WHY.
INTEGRITY IDEA: Pay Today
“Pay today” expresses a Biblical principle found in several passages:
You shall not oppress your neighbor or rob him. The wages of a hired worker shall not remain with you all night until the morning. (Leviticus 19:13)
Do not withhold good from those to whom it is due, when it is in your power to do it. Do not say to your neighbor, “Go, and come again, tomorrow I will give it”—when you have it with you. (Proverbs 3:27-28)
Business as usual–the way of the world–says to use leverage to its maximum advantage. As we have emphasized numerous times, if a business is operating on the business as usual principle of Profit as Purpose, employees, customers and vendors can never be more than tools to be managed toward that end (“No one can serve two masters“, Matthew 6:24).
Employees. While there are legitimate uses of deferred compensation that are tax efficient and benefit employees, many employers use the deferral of compensation in one way or another in a manipulative fashion to incentivize employees in various ways. Consider the classic delay of bonus payments to keep employees longer.
As we explained back in post #015 (Business As Usual–Self-Interest), whatever the goal of an organization, its achievement requires aligning people’s interests with that goal. The goal of Profit as Purpose requires aligning people’s interests with the goal of profit maximization. In an organization conducting business as usual, with Profit as Purpose and the self-interest assumption, people’s behavior will be manipulated through mechanisms of reward and punishment.
The self-interest assumption leads to the belief that morale problems can be “solved” with money. While using the self-interest assumption to motivate people will work–at least for awhile–it is far better to cultivate a Re-Imagined Culture that people never want to leave.
Customers. How many times have you been told by a “customer service” representative that it will take weeks to process a refund? It certainly doesn’t take weeks for the same business to process your payment. Presumably, someone decided that the bottom-line benefit of the “float” on refunds outweighed the negative bottom-line impact of a lost customer. Perhaps they concluded that a customer being refunded is already a lost customer, so there is no benefit from treating them fairly or well. Business as usual and Profit as Purpose.
Vendors. It is certainly a common business as usual practice for businesses to delay paying their vendors until the last possible moment. Those with leverage use it to negotiate extended payment terms. This can put pressure on vendors. There can also be a business as usual reason for paying early if a business determines that the benefits to the bottom-line of early payment (e.g., goodwill with vendors, discounts) outweigh the benefits and potential detriments (e.g., eroding vendor goodwill, less beneficial terms) of preserving working capital.
While there may be business as usual reasons and rationales for paying employees what they are due, refunding promptly and paying vendors promptly, “pay today” as an Integrity Idea is about doing it simply because it is the right thing to do to treat others as you would wish to be treated–living the Golden Rule.
And as you wish that others would do to you, do so to them. (Luke 6:31)
The Integriosity model organizes “heart change” along six Covert-Overt Continuums. There is nothing magic about these categories, but we believe they are helpful in thinking about practical execution of a Re-Imagined Purpose, Re-Imagined Values and a Re-Imagined Culture. The Continuums are Prayer, Proclamation, Policies, Practices, Products, People.
Each Continuum represents an area in which leaders can begin to think about, plan and institute Re-Alignment changes to the heart of the organization.
“Pay today” is a Practice. Practices reflect, and at the same time help shape and reinforce, an organization’s culture. Purpose and values define the culture of an organization; the culture shapes the behavior of the people in the organization; and the behavior of the people drives the results of the organization. As Chris Houston write in his book For Goodness Sake:
Corporate cultures do not spring from words, hopes, or even powerful ideas. Like strategy, culture arises from and is made real by the actions and decisions of real people.
COVERT-OVERT RATING: Highly Covert
The Integriosity model breaks the Covert-Overt Continuums into six gradations–from Highly Covert to Highly Overt–that we believe are helpful in beginning to pray and think about what is most appropriate for an organization at a particular moment in time.
Most Integrity Ideas will have one place on the scale. Some can vary depending on how they are implemented . “Pay today” is Highly Covert (an action that would be taken by a secular company), but it can move to the overt end of the Continuum if the leaders of the organization choose to explain it in terms of faith and Biblical principles.
STAKEHOLDERS SERVED: Employees, Customers/Clients, Suppliers/Vendors
When we categorize faith-based actions, we also consider the stakeholders principally impacted by the action: Employees, Customers/Clients, Owners, Suppliers/Vendors, Community and Kingdom. “Pay today” serves the stakeholders being paid promptly, whether that is Employees, Customers/Clients or Suppliers/Vendors.
Do not withhold good from those to whom it is due, when it is in your power to do it. (Proverbs 3:27)
It is easy to say “pay today”, but the easy thing is not always the right thing to do. Proverbs 3:27 says “Do not withhold good from those to whom it is due, when it is in your power to do it.” We believe “power to do it” must be considered in the context of good stewardship of the organization.
Back in post #082 (Culture and Capital), we suggested that an organization that is aligning its Culture with Biblical beliefs, principles and priorities must steward its capital in accordance with three key principles, Sustainability, Mutuality and Generosity. The Integrity Idea of “pay today” requires consideration of all three.
• Sustainability. As a business pursues its purposes, it must do so in a way that is sustainable across all of the dimensions of its interactions with its stakeholders. The most important principle in stewarding an organization on God’s behalf is not to destroy it! An organization can die if:
• Leaders fail to foresee the organization’s dependence on a form of capital or fail to take steps necessary to identify sources of that capital and nurture those sources to ensure that they remain healthy and available.
• It runs out of financial capital (i.e., cash).
• It is unable to attract and retain qualified people.
• It is unable to secure natural resources, supplies of parts or distribution channels needed for its operations at prices that allow it to be profitable.
• It loses the trust and support of the communities in which it operates.
Sustainability is impacted by an organization’s relations with its employees, customers and vendors, which can be impacted by payment Practices.
• Mutuality. Mutuality is about ensuring that transactions are “fair” to both parties, regardless of bargaining leverage. “Pay today” is about being “fair” despite leverage. For an organization aligning its Culture with Biblical beliefs, principles and priorities, mutuality is simply the right thing to do AND it is good long-term stewardship of the organization’s broad capital.
• Generosity. As explained in post #044 (Righteousness–Living Generously), leading faithfully through business a better way requires more than “giving generously”–it requires the “vertical integration” of generosity by “living generously”. Living generously is about operating the organization (and, in the process, generating wealth) in a way that generously loves others and stewards creation. Living generously is living sacrificially–choosing to give something up or to forego a benefit because it benefits the common good–because it is faithfully doing the “right thing”. In this respect, generosity is closely tied to mutuality–treating vendors, employees and customers more fairly than you might need to based on your bargaining leverage is living sacrificially–and it is faithful stewardship.
If leaders determine that an organization “can” responsibly institute practices of “pay today”, then “pay today” can help reinforce the development of a “Should We” Culture . As we explained in post #016 (“Can We” Ethics”), a “Should We” Culture asks “Whether or not we CAN do it (or get away with it), SHOULD WE do it?” “Should We” can call people to a standard higher than merely man-made laws or the current societal ethics–it can call them to the Biblical standards that they were created to emulate and it can call them to an organization’s faithful values.
PERSONAL NOTE (from PM): I must admit I am guilty of an inconsistent personal “practice” when it comes to payments of bills. For small local vendors, I “pay today”. For large institutional vendors (e.g., credit cards, insurance, taxes), I set up payments for the due date even though I have the “power” to “pay today”. I guess it is time to reflect further on my inconsistency.