If you ask a business man what is the purpose of business, 90% of the chances you will get the answer “maximizing shareholder value.” Something is wrong.
I believe that the primary purpose of the firm is to maximize the overall return to all stakeholders. I am in the camp of stakeholder capitalism with John Mackey, despite the criticisms from economists as Michael Jensen. I tend to think that a firm takes many inputs to generate the output of its products or services. These inputs include the employees’ sweat (often producing more profits than the salary they get), investors’ money, the environment with its resources, the community where the firm sources its raw materials, and its customers who bring in sales and thus profits to be reinvested into the business. Investors’ money is just a type of the inputs necessary for the successful production of the output by the firm. It is only fair to the other stakeholders if a firm takes a holistic view of its required inputs and therefore purposes itself in maximizing the overall return to stakeholders.
Based on the above belief in the purpose of the business, I also believe that businesses do not necessarily prioritize individual well-being, given that they have a responsibility to make sure of the well-being of their other stakeholders. I tend to believe that achieving individual well-being is “a” means to achieving a firm’s purpose, which is in the general direction of maximizing stakeholders’ return and determined by the entrepreneur of the organization, but not necessarily the only means. Profit is like blood in the body without which the body cannot function, but it is not what one lives for. More and more organizations begin to realize that and have started integrating “social responsibility” into the core business, rather than keep it as an attached nice-to-have function outside of the firm’s core business. On the “Sourcing from BOP Markets” panel that I organized for the Social Enterprise Conference last year, we had executives from Mars Chocolate and Green Mountain Coffee talk about how their organizations helped the communities where they sourced Cocoa or coffee. Starbucks is another organization that is actively helping the coffee farmers by investing in loan programs and working onsite with them to improve coffee quality. On the panel we also had an entrepreneur whose flip-flop business (www.commonsoles.com) is explicitly purposed on the well-being of the community. I believe that a business can and should play an active role in the well-being of the community and the above businesses are good examples of both the possibility and the trend of organizations setting their purpose on, in other words prioritize, the well-being of the community.
All that is to say that I believe in the power of businesses. I am reluctant to call it market capitalism since we are here to reimagine it. And that effort perhaps starts from changing the language. Klein’s charge reveals her concerns that markets work in a way that perpetuates injustice. M. Friedman would respond to her that ensuring justice is not the task of the for-profit businesses. Businesses make money, pay taxes to the government and the government spends the tax money on ensuring justice. Hayek would respond similarly that a democratic political system with proper legislative, judicial and executive infrastructure will take care of ensuring justice, not the markets. B. Friedman would say that let’s grow the economy and injustice will be eliminated when we reach prosperity. I personally think that businesses have responsibility to care for the community and therefore should take its share in helping ease the global climate crisis. It may take a long time for the business world to accept this belief, which means that before then coercion is probably necessary.
One cannot deny that his / her worldview, the lens through which he / she looks at everything, is inevitably influenced by various spiritual traditions that have had formative impact on the society he / she lives in. These traditions, commonly labeled as “religion,” are the invisible hand behind all our public policies, law making, and foreign policies. We cannot debate the above things without drawing considerations from religious forces that impact our own values and principles. Therefore religion has an undeniable role in our public life.
Now, one may think that although religion plays a role in the public sector, it does not have a role in the private sector since the; and that in fact, it is inappropriate to bring religion to the private sector. People holding this view unfortunately fail to see that the private sector as well as the public sector is run by human beings. As a manager, in order to improve management efficacy, he / she needs to understand the religious forces that impact many of employees’ thoughts and behavior. Effective management in the workplace calls for awareness of the sources behind these worldviews.
Place for religion in leadership. Kegan and Lahey’s work reveals there are three stages of adult mental development – socialized mind, self-authoring mind and self-transforming mind. The complexity in today’s world calls for the latter two stages. I would like to call your attention to the role of religion in developing both:
Religion’s role in developing self-authoring mind
A self-authoring mind has its own value compass and is able to stand convicted to what it thinks is the right thing to do, without surrendering to the groupthink. What forms one’s value compass is one’s religion, be it worship of power and wealth, relentless self-belief, or worship of (a) God. Without reflecting on one’s religion and value compass, it is difficult to overcome the norms and subcultures of the group one belongs to and make the call to do the right thing when necessary.
- Religion’s role in developing self-transforming mind
- Foster mindfulness. A religious/spiritual mind is aware of other spiritual forces. It allows the individual to go levels deeper in seeing the reality without being confined by the tactical and technical frames of oneself or one’s group. Such insights will help the individual move beyond the Expert and Achiever level to the Individualist, Strategist and Alchemist levels.
- Granted with the humility to self-examine. Religion often grants one with the humility that is necessary to critically examine the limitations of one’s own frames and progress to a more adapted or refined one.
- Help from spiritual accountability groups. Rooke and Torbert’s discussed how Quaker meetings helped a manager to evolve her own leadership style by helping her realize her own perceptions and assumptions and challenge her to self-examine.
Importance of recognizing the place of religion in work place.
Professor Michael Sandel and Professor Jean B Elshtain spoke at the Veritas Forum last night on the topic of “Under God: The Role of Religion in Public Life.” Both criticized the exclusion of religion in public life, which was an influential thought developed by the late Harvard political philosopher John Rawls. Unlike Rawls, Sandel argued that the public debate should include arguments developed from religious traditions. Similarly, spirituality is inseparable from one’s thoughts and behavior in workplace. Stripping the spirituality and fundamental values off will only make the work meaningless. It is an unhealthy culture if workers feel pressured to check their spirituality at the door.
There are two distinguished types of challenges that an organization may face – technical challenges and adaptive challenges – according to Heifetz. Failure to recognize the invisible hand of spirituality and in turn react to it can hinder the organization’s ability to implement changes that are necessary for overcoming adaptive challenges. I would argue that fostering the awareness of the role of spirituality and developing spirituality itself within an organization are indispensable in forming a high-commitment organization, for spirituality plays an essential role in developing the following characteristics of a high-commitment organization:
- Spirituality helps build a purpose-driven organization
- Spirituality helps form solidarity
- Spirituality helps build trust
How can an organization recognize and react to spirituality?
Finally, I’d like to suggest a few ways that an organization can recognize and react to spirituality –
- Beware and stop the distorted mentality of professionalism. Treating clients and colleagues with professionalism should not mean checking emotions and spirits at the door. One may draw from spiritual strengths to have the conviction to insist on the right thing, or the humility to serve clients and colleagues well with respect.
- Talk explicitly about the spirituality and religion behind one’s position or behavior.
- Make sure that everybody understands and connects with the purpose of the organization.
Tags: Food Safety
February 28th, 2012 · 4 Comments
As part of the HBS required curriculum, we had an ethical case today (the parable of the sadhu). It left me thinking about how far we should go to do good things.
Some people argue in the class that we cannot go farther than our capability limits. While I appreciate the logic of the argument and agree that we should completely acknowledge human limits, I also believe that our ability to do the right thing is limited by the strength of our moral muscle, not by our skillset. I agree that part of Dr. King’s effective leadership is due to his valuable skillset. However, the Sadhu case did not require as much a skillset. The choice was more between saving a life and having a “once-in-a-lifetime experience.” I am not saying that I would have definitely done the right thing to save the sadhu if I were in the same situation. Human beings’ inability to act even if they know it is the right thing to do has been proven under many historical situations. I should have spoken up in class many more times than I did. But that doesn’t mean that I should not do anything now so that it is more likely for me to act rightfully in the future. Isn’t that the purpose of the LCA class? Dr. King was able to make the call for action against injustice, because his values, upon which he draws for reasoning and decision-making, are steadfastly anchored in the “moral law” he believed in. How much must he have practiced actions on small things prior to being famous to build up that moral muscle, to the point where he could make the call on a big issue like segregationism. The reason we are not “haunted” by our “small” decisions of not giving money to a beggar, or not donating blood, is perhaps because we don’t have a Christian anthropologist friend that has challenged us hard enough. The question to me is, then, since I am challenged today, how can I take advantage of this opportunity and take small actions to strengthen my moral muscle.
We as future leaders of the world should hold ourselves to a higher standard than conforming to the laws of the society. Being a Christian in China, I would not have the courage to practice my belief had I not had a different “reference point” than the ones the Chinese society has given me. The “higher standard” could be different for everybody, as long as it gives you the ability to have a clear sight of the “higher purpose” when no one else has, and the ability to actively change the world to the way you want it to be.
Tags: Ethics · HBS