My latest journalistic acquisition is titled “Masters of Management,” written by Adrian Wooldridge. I am throughly enjoying his perspective on the futuristic path of management theory. My reading this morning reviewed the 1980’s phenomenon of reengineering, and placed it in juxtaposition with the Corporate Social Responsibility (CSR) of today. It was a great discussion, and has motivated my pondering on the subject.
There were several nuggets within this section that I would like to share with you and then give my pontification. The first comment was a quote from C. Montgomery Burns. His approach towards business was short and sweet. “Family. Religion. Friendship. These are three demons you must slay if you wish to succeed in business.” His argument, along with others who believe that business is in place for one reason only, is to make money within the law of the land. Milton Friedman would whole heartedly agree with him.
This philosophy, and the downsizing rightsizing of the 80’s and 90’s, has led many to take a dim view of business. It is very similar to what Schumpeter said so many years ago. “The public mind has by now so thoroughly grown out of humor with business, as to make condemnation of capitalism and all its works almost a requirement of the etiquette of the discussion.” This belief has been reinforced by current fiascos such as Enron, Lehman Brothers, and BP.
However, CSR is alive and well at most large companies. Some would call it “Corporate Candy Floss,” but I would call it good business. To me there is no conflict between the desires of society and the needs of business. Sir Richard Branson, Michael Porter, and Jed Emerson would agree with me. A triple bottom-line business model makes sense. It does not mean that all corporations must be “philanthrocapitalists.” Nor does this mean that all corporations must be social businesses. However, the antithesis is just as true, all businesses don’t need to be heartless entities destroying everything it is path.
Why does a triple bottom-line business model make sense? The triple bottom-line is concerned with people, planet and profit, therefore it represents a holistic manner in which to run your business. Obviously a company needs to be concerned with profit. The economics of a company is critical to its sustainability. If a company does not make money it will not be around very long. To make money the company needs to be run well.
What about the planet? How we treat the planet has a sustainable impact too. If we pollute and destroy the planet for short-term gain, we act imprudently. The irresponsibility demonstrated by this type of behavior is criminal. We are acting in a manner that steals from our grand children to make our lives easier now. If I lived on an island I would be very concerned about global warming. Fifty years from now would my island still be in existence.
How we treat people will determine our ability to hire employees in the future. Who are the companies that people want to work for? Obviously it is a company that treats its people well. SAS is a large software company in North Carolina. It has a company provided daycare for children, a huge recreation center on site, and medical care. The working conditions and benefits are so good, that people don’t want to leave. The company has a very low employee turnover. The worst company to work for in the United States is Charter Communication. I could not find a resulting turnover number for it, but did find as an industry there was a 17% employee turnover. If I were constantly changing my workforce by 17% I would be spending an incredible amount of money for nothing.
As much as we want to complain about reengineering, and as much as we think CSR is corporate candy floss, the fact is we need both. We need to run effective and efficient organizations. However, we cannot forget the other two elements of the triple bottom-line. The planet and people need to be a part of a good strategy. If we take each of these elements seriously we will create a long-term sustainable business plan that will take us all the way to the bank.
And that is my thought for the day!