Thursday, December 29, 2011

Responsibility towards the Stakeholders

Globalization has made the boundaries between politics and economy blurred, thereby making the world more interdependent. In the last decades, the labor separation between politics and the economy underwent considerable change. Due to this internationalization, governmental constraints on firms may be less effective often resulting in a “race to the bottom” that pits state against state. A so called laissez-faire mentality was a common practice. 

But the current financial crisis challenged this way of thinking. The private sector expected the governments to take responsibility for the functioning of the economy and the welfare of the nation. 

Unfortunately governments are made up of politicians who want to be reelected. Politicians aren’t saints. They are part of a party, have got a network and act in their self or partisan-interest. One example was this summer’s debt debate in the United States of America. The months of partisan fighting resulted in the downgrading of the US’s AAA credit rating ( ) by the rating agency Standard & Poor. 

There are top managers who want government to also consider the concerns of the country, in a way that they themselves consider the concerns of the company’s mutual stakeholders. Indeed, the gridlock and partisanship in Washington D.C. provoked some top managers to formulate clear expectations towards government. A well known example is Warren Buffet’s statement “Stop Coddling the Super-Rich” in a New York Times opinion page. He concludes with the words: “My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.” ( ) Or take the CEO of Starbucks, Howard Schultz, who called for a boycott on campaign contributions to either party until the elected leaders of the United States of America put aside their political posturing and find some common ground on long-term fiscal issues ( ). 

This kind of debate, however, doesn’t only exist in America. Also in Europe managers have clearly expressed their expectations of politicians. Diego Della Valle for example, CEO of Tod’s, published an article with the title “Politici ora basta” (Politicians, now it’s enough). He states in Italian newspapers that the politicians’ selfish behavior disregards the concerns of the country and damages the reputation of Italy ( ).

These examples show that some top managers realized that an organization can’t be sustainably successful in today’s world without the inclusion of all the stakeholders. No company and no market economy can be sustained without heeding the needs of employees or citizens (Swissquote Magazin Nov/11, 67). 

Instead of concentrating on short term goals like increasing the shareholder value or winning elections, decisions should be made based on sustainable thinking and by including all relevant stakeholders.

Sabrina Stucki

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