How often have you heard companies extol to their employees the virtues of being honest, open, committed, and up-front in their business dealings? Yet, how few companies mean what they say! I few weeks back I wrote a piece titled “The Successful Buyer’s Guide”, which truthfully listed the very real instructions and guidelines of this mega retailer to its buyers. Words like open, honest, and up-front where conspicuous only by their absence. The only exhortation was to systematically hammer suppliers into submission. There seems to be only one goal – make money at any cost. Social factors and considerations are not for the brave. They are only for the timid.
I received responses which included suggestions like putting together a forum for sales executives and their companies who sell to such companies, so as to join hands and discuss ways to combat this evil. One reader even identified the offender! The responses raised a lot of questions in my mind.
What is the purpose of an organization? Can it be only money? Is money a sustainable purpose for organizational longevity? Well, let us consider why we need money. Money in its isolated self has no meaning. It has meaning only as long as it can meet certain human needs. Money by itself is not a need. Human beings cannot eat money or wear money. Humans lived happily and well before money was invented. They can only have it, count it, lose it, and so forth. Just imagine, what use would a million dollars be if you couldn’t think freely, or express your feelings freely? What use would it be if you had all the money in the world but were not free to love the person you want, breathe the air that surrounds you, or quench your thirst from the water that is within your reach?
Just think? What use is money if you buy a house but have to take someone else’s permission to live in it, sell it, lease it, or make changes to it? What use is the money with which you bought a piece of property, if you have to take someone else’s permission to let your parents live there?
Money enables us to have the things we need and value. Money by itself has little value. Which begs the question – why do we measure organizational success in terms of financial performance? In other words, why de we measure performance only on profits? Don’t get me wrong. I write this to raise a serious debate. As far as we know, financial performance is something we can measure, so we have all hitched our corporate thoughts to that bandwagon. That is hardly sufficient reason to make that measure meaningful or right.
Just look at our institutions today. There are so many millions of them. And so many of them make lots of money. Yet, why are so few people happy and satisfied? If capitalism the way we understand and practice it were really all that great a blessing, would it not stand to reason that companies that make lots of profit must also have lots of happy employees. After all, these are the employees who are making it happen. Why is it quite the opposite in the majority of corporations?
So, what is the problem? Where is the disconnect? Could it be the way we define value? Could it be because what organizations want is not what people who work in them want? Could it be because those who own organizations are so greedy that they cannot digest the thought of sharing wealth with those who helped them create it? Could it be that the way we have built organizations, the only way to create tons of money is to make tons of people unhappy?
Why do companies that make lots of money not necessarily have lots of happiness amongst their people? Because money and happiness or satisfaction are not the same thing. If an organization cannot help its employees lead better lives themselves and with their families, that organization is missing a very important point. And it is very likely that such an organization cannot sustain its premier position, nor can it remain profitable indefinitely.
Man has made so much progress in so many areas. Alas, he has fallen quite far behind when it comes to organizational transformation. People at the top continue to set strategy that only a handful know about or comprehend, they rarely make their intentions known to the troops, they fear all forms of upward feedback, they fail to create a climate where people will come up and voice their fears. Only a privileged few know the real financial health of the enterprise, and others are left to speculate. The gap between the guys at the top and the rest is so great, it is little wonder that the organization’s goals have little in common with the goals of its rank and file.
The climate for openness is a true rarity. Leaders often feel that they are nice guys, and ask for feedback all the while, so why would people not come and tell them what they feel. In reality, it takes a lot more than that to get people in organizations to speak up freely. The command and control structures of organizations during the last two hundred years are responsible for this. History stands testimony to the fact that organizations and their leaders like to crush dissent and dispense with dissenters. If your boss wishes to harm you, he can. Should the boss interpret your actions adversely, you had it. How can people then gather the to make meaningful contributions by speaking out?
How can so many years of history go away? It can, provided the leadership demonstrates again and again its true intentions and preferences to run a truly democratic outfit. It can, provided the measures of organizational success are recalibrated and defined in terms of stakeholder relevance and return of happiness, instead of mere return on financial investment.
Even the ways in which corporations and their chiefs are punished is fundamentally flawed. Some time back, Philip Morris International had to pay $1 billion to the European Union in a deal to avoid lawsuits over allegations the company had colluded in the smuggling of cigarettes into the EU. Josef Ackermann, the CEO of Deutsche Bank faces accusation of illegally granting $72 million of directors’ bonuses four years ago at Mannesmann. Parmalat’s top executives along with Deloitte Italy were able to remove a local auditor in Brazil for raising many embarrassing questions about Parmalat’s accounting practices. No one knows if Deloitte will really get whacked.
These actions go to show that money is a means to buy your way out of trouble. Behave badly, then, if you get caught, cough up some cash, and all is forgotten. This is silly. If you have to use money as a deterrent, use it more wisely. The Norwegian government fines drunken drivers in a clever way. You pay a month’s gross salary. This way, it pinches everyone. If you have to punish corporations with monetary fines, the amounts probably ought to equal their quarterly revenues or more.
As for individuals, asking them to pay a portion of their ill-gotten wealth is nonsense. Corporate chiefs get their kicks from the power they wield. They ought to be punished for wrongdoing in a manner that strips them of their power, denies them the opportunity to get back to positions of power, and by changing their financial circumstances so significantly that they cannot continue their current lifestyles. They ought to face public disgrace that affects them and their families. They must be made to publicly serve those who they hurt, and the millions stashed away by them must be given back to the clerks and front-line people who worked their butts off to help them have it in the first place.
Our current definitions of organizational success and the associated mechanisms for large-scale wrongdoing at the corporate and individual levels need serious reexamination. They simply aren’t working to make this world a better place. We must figure better ways to reward those who do right, and punish those who do wrong. The meaning of money needs serious review.
Written by Sam Swaminathan
