My Five-Step Ethical Process: Citizens Bank and the Paid Sabbatical for Charitable Work

My five-step method is designed to help businesses conduct themselves ethically and profitably. Being ethical is easy: Be nice to everyone. Being ethical and profitable: that is not so easy. A business that is ethical but not profitable probably will not be in business long, although some businesses manage to do it.

Previously in this blog, we focused on questions 1, 2, and 3 of my 5-question, or 5-step, method for making ethical, profitable business decisions. Questions 1, 2, and 3 help us decide if our contemplated action is ethical. If we conclude that our contemplated action is ethical, we still have another decision to make: Should we do it? Giving money to good causes is ethical, but should we do it? Do our shareholders, or whoever owns our company, want us to do it? How do we decide which causes to give to? How do we decide how much to give to each good cause? My 5-step method helps us answer these questions.

Citizens Bank is a $126 billion commercial bank holding company headquartered in Providence, Rhode Island. It has branches in 12 states and non-branch retail and commercial offices in more than 30 states. On July 7, 2013, I read in the New Haven Register (the online version) a story entitled, “Bank program pays off for New Haven’s Columbus House.” The bank is Citizens Bank.

According to the article, Citizens Bank has 12 markets. Whether those are geographical markets or other type of markets, I cannot tell from the article. In any event, each year since 1994, Citizens Bank has allowed one employee from each of its 12 markets to go on a paid sabbatical to do volunteer work. On June 1, 2013, a longtime employee of Citizens Bank in Bridgeport, CT, began a 90-day paid sabbatical (paid by Citizens Bank) to do volunteer work at Columbus House in New Haven, CT. The article does not indicate what Columbus House is, but Columbus House has a website indicating that Columbus House’s mission is “To serve people who are homeless or at risk of becoming homeless, by providing shelter and by fostering their personal growth and independence.”

How and why did Citizens Bank decide to do this? I don’t know for certain, but my guess is that one or more Citizens Bank executives went through a thought process similar to my 5-step process. Here is my five-step process.

Question 1. Is it illegal? What do I mean by “it”? I mean giving an employee a 90-day paid sabbatical to do volunteer work at a shelter for the homeless. Is that illegal for the bank to do? The answer is no, or at least I assume that the answer is no. Except perhaps in some highly unusual circumstances, it is legal, not illegal, for an employer to give an employee a 90-day paid sabbatical to do volunteer work at a shelter for the homeless. My guess (I am not a banker; I don’t know much about banking law; I am just guessing) is that there are laws that require banks to keep depositors’ money safe and that prohibit the bank from giving so much money to charity that the depositors’ money is not safe. I assume for the purpose of this blog that Citizens Bank is not violating those laws by giving this employee a paid 90-day sabbatical. In other words, I assume that the answer to Question 1 is no. We go to Question 2 

Question 2. Is it a tort, breach of contract, or other activity that might cause someone to sue you in court and win? In this case, I assume that the answer to Question 2 is no. As I said in regard to Question 1, unless the bank is giving away so much money to charitable causes that someone (the government, a stockholder, a depositor, an employee, or someone else) sues the bank for mismanagement, I doubt that anyone is going to successfully sue (that is, sue and win the suit) a bank for giving an employee a 90-day paid sabbatical. I don’t have all the facts, and I don’t know much about banking law, but that is my guess. I am guessing, based on my knowledge of labor law and employment law, that when choosing which employees to give paid sabbaticals to, the bank should do so without regard to an employee’s race, gender, religion, or other such discriminatory classification. My guess is that many, many Citizens Bank employees would like to be given a paid sabbatical to do volunteer work, so Citizens Bank should make sure not to violate the employment discrimination laws when choosing which employees to give a paid sabbatical to. Assuming the answer to Question 2 is no, we go to Question 3.

Question 3. Will it offend people, and if so, will it offend enough people so that the amount of money you lose by doing it is greater than the amount of money you gain by doing it? In this case, the answer to Question 3 is almost certainly no. I doubt very much that anyone will be offended by the bank’s giving a 90-day paid sabbatical to an employee. Almost everyone will applaud the bank for it. It is possible that a depositor who is receiving a very low interest rate on his money, as most depositors at most banks are receiving in early July 2013, will be offended. A depositor might think the bank should pay higher interest rates to the depositor and be less generous to bank employees and community charities. In any event, even if the answer to the question “Will it offend people?” is yes (one person or a few people will be offended), I doubt very much that enough people will be offended so that the bank loses money as a result of offending these people. Assuming the answer to Question 3 is no, we go to Question 4. We go to question 4 when we (our company, which in this case is Citizens Bank) are contemplating doing a good deed (such as giving an employee a paid 90-day sabbatical to do volunteer work at a shelter for the homeless) but we do not know whether the good deed will increase or, rather, decrease Citizens Bank’s profit.

Question 4. Is there a substantial likelihood that it (the good deed, namely, giving the employee a paid sabbatical to do volunteer work at a shelter for the homeless) will eventually increase your (Citizens Bank’s) profit? In this case, Question 4 is difficult to answer. First, let us try to calculate the cost of this good deed. The cost is the employee’s salary for 90 days. Or perhaps the cost is whatever it costs to have another employee do the work at the bank that the employee on sabbatical would have done. I have no idea what the salary is, or what the salary is of the employee who is filling in for that employee. Let us suppose, hypothetically, that a bank gives a paid 90-day sabbatical to an employee who makes $48,000 per year. The cost to the bank of this good deed is approximately $12,000 (90 days is approximately one-fourth of 365 days). Is that the only cost? It is possibly the only cost, but my guess (perhaps I am mistaken) is that there are one or two other costs. What are those costs? I’m not certain, but there is something I am wondering about: How did the article get in the New Haven Register? How did the New Haven Register learn that Citizens Bank is giving an employee a 90-day paid sabbatical to do volunteer work at a charity and is also giving 11 other Citizens Bank employees (one in each of Citizens Bank’s 12 markets) a paid sabbatical? Just reading the article, my guess (perhaps I’m mistaken) is that Citizens Bank wrote or helped write a press release about it. My guess is that Citizens Bank wants the public to know the good, charitable work that the bank and its employees are doing. This is, I am guessing, part of the bank’s marketing strategy. It is one of the ways Citizens Bank tries to get people to choose Citizens Bank rather than competing banks. So, I am guessing, an additional cost of this good deed is the cost of having a public relations person write the press release and do the work that is necessary to get news organizations such as the New Haven Register to publicize what the bank and its employees on sabbatical are doing.

Will this good publicity result in enough additional business for Citizens Bank so that the bank recoups the $12,000 and any other costs associated with the good deed? I don’t know, but if the answer is yes, then the bank made a good business decision by giving the employee the paid sabbatical. If the answer is no, go to Question 5.  

Question 5. Is the good deed so good that it will make you and others at your company feel good, and is this good feeling sufficient compensation so that your company doesn’t care if your company lost some money on it? In this case, I don’t know the answer to Question 5. Your guess is as good as mine. But I think you now understand the five-step process for making ethical profitable business decisions. Although I call it my (David Robinson’s) five-step process for making ethical, profitable business decisions, it is really just my description of how most successful, ethical managers think. It is, in my opinion, how the ethical managerial mind should work.

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