THE VALUES OF BUSINESS FOR THE COMMON GOOD
What are these time-honoured values on the back of which we can build business for the common good?
Let me mention a number, and no doubt many more can be added.
Some of them are so obvious one may wonder why they need to be mentioned. But as we pause and reflect on where we have been over the last 10 years, we will quickly realise how far we drifted away from them – and the size of the challenge we now face in returning to them.
It may be helpful as we consider the list to evaluate how far we put these into practice ourselves, in our own business lives, how far they are adhered to by the organisations for which we work, and how far they are adopted by the businesses in which we invest.
The following provides some detail, but the crucial values can be summarised under the following six headings:
[Further broken down these equate to]
• Service before self
• Long-term value before short-term share price
• Real economy before fınancial economy
• Substance before sales
• Mutuality not individuality
• Stewardship not exploitation
• Profıt not plunder
• Fulfılling duties before limiting liabilities
• Responsible conduct not over-trading
• Accept responsibility not avoiding consequences
• Investment before speculation
• Relationships before rights
• Rhythm of success not ratchet of demand
• Honesty not conformity
• Respect for individuals not utilitarian human resource
• Effort before reward
• Loyalty before mobility
• Reward aligned with risk
• Humility not over-confıdence
• Business for the common good
• Thrift before ostentation
• Consistency between private and public lives
• Probity before philanthropy
• Integrity not legalism
• Saving before spending
• Equity before debt
• Maturity before growth
• Competition not aggression
• Support for recovery not profıting from misfortune
• Community before conflict
• Fair reward not inflated demand
• Truth not equivocation
• Clarity as well as transparency
• Perspective not immediacy
• Collegiate wisdom not ego satisfaction
• Courage not passivity
• Restraint not greed
• Shrewdness not naivety
• Character before ambition
When a business is too big to be managed on the basis of these and similar values it is time for a demerger.
This is not just soft-focus idealism. Abandoning these values produces very real and hard-edged costs. And, in the long run, it is no kindness to the individual, to his or her employer or to the tax payer to ignore them.
The following provides some examples.
It was the drive to produce immediate yield, in order to boost share prices, that drove many banks to prioritise short-term revenue generation over long-term asset value. And it was their desire to extract profıts, rather than serve their customers, that has destroyed the trust that we previously placed in their hands.
A business that looks fırst to serve its own interests will not endure, and a business that imagines it operates in a vacuum, separated from the wellbeing of its customers, will sooner or later meet its nemesis. Commerce that seeks to extract maximum advantage, leaving no profıt for others, eventually becomes self-defeating. It neither serves nor promotes the advancement of those upon whom, in the end, it depends.
So let us set aside any fınancial services business model that uses the real economy merely as a source of funds for its own endeavours, and let us recreate an industry that serves the creation of wealth in the real economy.
The strong individualistic culture within our fınancial institutions, in place of a culture of mutuality, contributed signifıcantly to their troubles. Traders traded against their employer, rather than just the market, in order to earn bonuses. Their motivation was individual, not mutual. We need to redress the balance of interests between the individual and the group and give up our faith in targets as the only appropriate way to motivate and encourage.
We need to place a high value on individuals, not stoop to utilitarian human resource management. For a while one of the top European banks had as its strap line 'Success demands more'. That produced a relentless and aggressive management culture. A culture that could not learn from mistakes, because mistakes could not be discussed, a culture that had no judgement because it was too over-confıdent that it could model the future, and a culture that had no perspective because it was simply exhausted.
Having a high value of people must be the overriding value that determines relationships between us. We must deal with each other, even in the tough times, with respect and kindness and with a real regard to the advancement and happiness of individuals, their family and their communities.
If we reduce these relationships down merely to the commercial bargain of wages for labour we treat each other merely as machines. If men and women see themselves as used but not appreciated, employed but not encouraged, required but not wanted neither they nor their employer will in the end flourish or contribute to the common good.
We must maintain the critical distinction between resources and employees. Resources may be assets but employees are fellow human beings, brothers and sisters for a while on this earth who have a claim on the best of our attention.
Not all business is good business, and it is not only unjust but also in the end costly for investors to demand profıts delivered by murderous hours.
There is a price to pay for ignoring values.
This paper was orgianlly published by the LICC in 2009. You can access the whole paper here