The Fannie Mae Mask of Social Responsibility

 

When you look at the eight questions presented by Entine and Jennings and then look at the business operations of Fannie Mae, the simple question of “Is Fannie Mae a good company?” is just that, simple. Simply putting, Fannie Mae, although good intentioned with attempting to make housing and “the American dream” affordable, created much more of a catastrophe then the good it was trying to provide. Entine and Jennings (2012) coined the term “rain forest chic” as a label for certain types of companies, and Fannie Mae fits the bill to a tee. Created and applauded for making affordable housing more available to those in need, Fannie Mae actually expanded that problem it was created to solve. Management was strictly motivated by profit and increasing their bonuses and instilled that in their employees as if it were the company’s original mission. Using the Entine and Jennings test two questions stand out the most to me below, which are in bold:

    Does the company comply with the law?
    Does the company have a sense of propriety?
    How honestly do product claims match with reality?
    How forthcoming is the company with information?
    How does the company treat its employees?
    How does the company handle third-party ethics issues?
    How charitable is the company?
    How does the company react when faced with negative disclosures?

How honestly do product claims match with reality? As the issues with Fannie Mae are a bit older now, the truth of the Fannie Mae disaster has since been unveiled. By simply reading newspaper articles, you will quickly learn that Fannie Mae was not accurately depicting their accounts. The purpose of this was to make a profit and achieve inventive goals.

Secondly, how does a company treat its employees?

Fannie Mae was well-known in the end for being an over-demanding work horse, requiring their employees to work long hours and push through as much as they could for only the management to benefit from the hard work. They furthermore did not think of the rest of the country during their monetary-driven reign and what it would do once all the chips fell.

It is companies like Fannie Mae that make it difficult for other companies to be trusted or to be looked at for anything other than a power and money-driven business.

Tradition v. Modern

When you talk to a person of the newer generations and ask them what they think when they hear the term “traditional”, the images of days before computers, cell phones, and $2.00 an hour minimum wage instantly appears in their minds. When it comes to corporate social responsibility and the traditional model, it is also a practice that is not necessarily practiced anymore. Traditionally, corporate social responsibility meant that things said or done by the business were taken at their word, and trusted without fail. Over the years, however, it is evident that this type of business practice is not only flawed, but outdated.

This way of business operation is different than what Entine and Jennings proposed when they developed eight questions about any and every company that may produce suspicion or a company one simply knows little about and would like to learn more about:

    Does the company comply with the law?
    Does the company have a sense of propriety?
    How honestly do product claims match with reality?
    How forthcoming is the company with information?
    How does the company treat its employees?
    How does the company handle third-party ethics issues?
    How charitable is the company?
    How does the company react when faced with negative disclosures?

The purpose of these questions is to acquire an in depth look into companies regardless of propaganda, television ads, newspaper articles, and any other source of information which could be bias if the questions are answered properly. These eight questions give you specific information about the legal practices of a business, whether a business is honest, good to employees, charitable, and how they deal with undesirable press and how cooperative they are with that information.

“No company is ethically perfect. No company, just as no individual, is without sin or exempt from mistakes.” (Jennings, 2012) The beauty of Entine and Jennings’ model is that no one wants to enter into a business deal verbally or based on a simple word anymore, and this models allows for businesses to learn a lot about one another with minimal room for a catastrophe or bad business dealing.

Corporate Social Responsibility and Generation Y

When one says “Corporate Social Responsibility”, what is the first thing that comes to mind? In today’s world, companies are trying harder than ever to become socially responsible, and this is partially potentially due to the fact that one of the main characteristics of the Y Generation is well-known for caring a great deal about the environment. Furthermore, Reisenwitz and Iyer (2009) found that Generation Y customers are not as loyal to a brand as the previous generation is, and is more likely to try different brands when they do not suit their needs (p.92).

If the companies were not trying to target their product to Generation Y consumers or attempting to appear better than their competitor, where would the company fall in the ethical pool of their product-making? It seems that unless the company believes they can make a quick buck on appearing socially or environmentally conscious, their lack of effort to be a better business, operate better, or make a better product falls by the waste side. That being said, Jon Entine and Marianne M. Jennings, authors of Business with a Soul: A Reexamination of What Counts in Business Ethics, state that, “such a simplistic equation of social responsibility obscures the reality that business ethicists have failed to examine closely either what constitutes business ethics or whether these particular firms would qualify as ethical by standards other than those measured by political issues or self-defined parameters.”

In order for a business to be ethically, morally, and socially responsible (whether their product or business is doing well or not), the consumer must be partially responsible for holding them accountable. To be honest, though, it would take more than just the consumer to hold the business responsible - the responsibility also falls on the business themselves, as well as the government or overseeing agency to keep the company in line.

To conclude, I will leave you with a few questions to ponder:

Would you be more likely to buy from a business that was socially or environmentally conscious instead of one that wasn’t?
Who do you feel is responsible for keeping a company socially responsible?