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Can Management Adequately Predict Your Business's Liabilities? Part Three - Social Norms And Behaviour

Kim Radok11 June 2017

CAN MANAGEMENT ADEQUATELY PREDICT YOUR BUSINESS'S LAIBILITIES? PART THREE - SOCIAL NORMS AND BEHAVIOUR

One of the factors revealed in the study of crime is how the changes in civil society cross over in to the business community. The following quote explains this concept.

"... is that changes in society drive changes in business, and that as society becomes more and more deviant, businesses in turn have to become more deviant to prosper, or even survive."

In "The Deviant's Advantage: How Fringe Ideas Create Mass Markets" By Mathews, R & Wacker, W (2002)

Deviant behaviour is just one of the areas of business which we see has been influenced by the attitude of people from outside the business environment. Following are a few examples of where deviant society's behaviours have worked their way in to the business community

One of these behaviours is the "entitlement concept" which now alive and thriving in the business community. A perfect example is where responsible people from the debtor businesses sign off on supplier's terms of trade without having any intention of honouring those terms, e.g. they agree to pay suppliers at 30 days, knowing their firm only pays at 60 days.

When it comes to B2C (business to consumer credit), many businesses no longer offer credit to consumers because all too often in the past, they could not get paid. With the endorsement of Government regulations and "do-gooders" interference, consumers could easily avoid paying their debts. Will B2B credit be restricted likewise to only the best of paying customers because of Government regulations plus the increased costs of Court action?

Another civil society behaviour is where perpetrators of crime ask to be excused from their criminal behaviour because of a lack of self-discipline and, "It was always somebody else's fault!" Again, we see a similar problem from debtors who, after receiving the supplier's goods and services, advise, "Sorry, we cannot pay you until our customers pay us!"

From another perspective altogether, the value of good business behaviour and acting according to civil society values cannot be underestimated. Almost daily for example, we see another "pillar of the business community" or a business considered to operate ethically, being exposed by the media as not operating to society's expectations. Once your customers and associates believe you lack integrity, they often look elsewhere for other organisations and people to satisfy their requirements.

In each of the aforementioned situations, you will observe how it appears management has not yet noticed on the impact of civil society behaviour has on their business. When such factors are ignored, it is not surprising that management may be unable to see the potential liabilities and costs to their business.

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