Are Customer relations friendships?

Customers in a shop or guests in a restaurant usually very much appreciate it when the employees are friendly, understanding or even empathic. It contributes to the fulfillment of their desires and needs with full satisfaction. Therefore, customer focus rightly is an important requirement in customer relations – the customer as a human being should always be in the center.

However, the human relationship between the customer and the company is being abused more and more as a sales gimmick. At Starbucks, you’re the barista’s best friend; you belong to the IKEA family or the salesperson at the high end Ralph Lauren store trusts you with her very own preferences.

The staff in shops or restaurants is instructed to create a feeling of closeness through simulating a strong friendship. Customers get the feeling that you really like them. But in reality it is only about encouraging them to buy more. It’s not about the individual and understanding and considering his or her personality and needs, but about hard selling and sale success. So customer focus ultimately only serves the purely financial success of a company and doesn’t add to the perceived quality of life of a particular customer.

 However, in a humanistic perspective, human beings are considered as ends, not as means. Each human being is a unique person with specific interests and values. Already in the 1970s, Erich Fromm called for recognizing the “oneness” of people in a capitalist society, instead of considering them only in anonymous customer group categories in terms of “sameness”. Pretend friendships exploit our human peculiarities.

The employees of companies with such sales strategies are exposed to an emotional dilemma. They are asked and usually also trained to put their human abilities in the service of financial ratios. As a customer you also face a dilemma: How should you interpret the kindness of the salesperson? If it is authentic, you don’t want to reject it, but if it’s only manipulative, you can’t and don’t want to trust their advice.

 However, recent empirical 1) evidence confirms that the trustful treatment of people and their recognition is crucial to the perceived quality of life. I hope that in 2014 you will have the opportunity in your professional life to contribute to the quality of human life. 

 

1)      Anderson, C., Kraus, M. W., Galinsky, A. D., & Keltner, D. (2012). The Local-Ladder Effect: Social Status and Subjective Well-Being. Psychological Science, 23, 764-771.

On the Pope’s criticism of today’s economic thinking

Last week the Pope published his text “Evangelii Gaudium”, in which he is giving different inputs for reorienting the Catholic Church. Although I am not Catholic, I was interested in his statements about the challenges of today’s world and especially in his criticism of our current economy.

In quite a positive way, he recognizes the improvement the economic system brought to “people’s welfare in areas such as healthcare, education and communication”. Yet he blames this economy of “exclusion and inequality”. He thus asks critically, “how can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?” And he continues: “Today everything comes under the law of competition and the survival of the fittest, where the powerful feed upon the powerless.”

I was especially amazed by his criticism of issues that have also been discussed by the stakeholder theory for the past few years. One example is his critique of the free market. 

However, he makes no specific suggestions as to how extreme competitiveness could be limited. In contrast, the stakeholder theory proposes, for example, to focus more on the potential of cooperation among stakeholders, based on the resource based view of strategy, instead of pure competition: Through the cooperative pooling of resources, innovative solutions to issues, products and processes can be found, according to the stakeholder theory, which a single stakeholder who considers others only as competitors could not find. It would have been interesting to learn whether the Pope could in addition to this instrumental perspective on cooperation also offer a normative view, in his case based on the Catholic faith.

The same could be said about his criticism of the concept of human beings that prevails in economy. Certainly, many economists would agree with the Pope’s analysis that “the denial of the primacy of the human person” predominating classic economic theory is questionable or wrong. A growing number of publications are increasingly critical of the basic concepts of economic theory, in particular of the hypothesis of human self-interest. In this sense, the Pope states, “the socioeconomic system is unjust at its root.”

This criticism also calls for the question of which normative concept could form an adequate basis for a more realistic image of human nature. The Pope refers only summarily to the need for ethics: “Ethics – a non-ideological ethics – could make it possible to bring about balance and more human social order.” One can assume that he refers to Catholic social ethics. One can add here that there are also ethical approaches not tied to a specific denomination or religion, which are therefore also acceptable to non-Catholics.

Our reflections on stakeholder theory refer to a humanistic approach based on Kant. This approach considers human beings always as ends, not means, also in economic interactions. In this view, the different values, norms, interests and capabilities have to always be considered and taken into account in economic and business activities. Such a general humanistic approach not only addresses believers of a particular denomination, but its non-denominational claim makes it a fundamental norm also for economic activity.

Edwin Rühli

A viral spot reconsidered: What does language tell us about a business’ acceptance?

A viral spot (that has however not yet taken off) advocating sustainable investment as being the investment strategy of the present and future caught my attention yesterday. The video clip, initiated by an investment management group headquartered not far away from our institute in Zurich, both thrilled and puzzled me at the same time.

The clip busts several myths regarding sustainable investments in order to propagate the initiator’s investment strategy. The underlying proposition suggests that you can earn more money when your investment manager assesses the stocks’ potential of your portfolio in the most complete manner available. The approach applied by the initiator enlarges the financial analysis of firm’s performance by adding an analysis of the social and ecological performances of the firm. Apart from its rather instrumentalist application, the concept behind it—called the triple bottom line—excites me. It demands of firms to take into account their responsibilities to all stakeholders (e.g. employees or customers), not only stockholders. The result suggested in the clip may seem paradoxical: The less a firm tries to solely meet the demands of its stockholders, the merrier is the stock’s potential in the future.

However, the puzzling aspect of the clip unfolded just as I tried to connect it with my (current) research interest: the diffusion of business practices. The question arises as to how widespread the above business is. As I am eager to learn more about rhetoric theories that highlight the potency of language in shaping organizational life and behaviour, the language used in the clip awakened my interest.

From a rhetorical perspective, the way a particular practice is accompanied by language tells you a lot about its state of acceptance. The relationship between the rhetoric used by people and their social practice is theorized about in many complicated ways. A catchy—and thus highly persuading, as rhetorical theorists would say—framework was, however, introduced by the management scholar Sandy Green. As evidence of a practice’s acceptance, he proposes the lack of a need to justify it, for example in legitimating it by rationalizing the matter of subject. And what is the video clip actually doing? It’s not a typical commercial trying to persuade the audience that the initiator is better at doing its business than its counterparts. In the core, however, this clip is purely a justification of the initiator’s business practice at all. Even though it repeatedly refers to the triple bottom line as being common sense, this clip can be taken as a testimony of the rather weak penetration of this business practice even without knowing much about this business (as I definitely do not).

My puzzling to me is, therefore, the weak state of diffusion of business practice that corresponds to my very own idea of how business ought to work. However, the theory of rhetoric gives us a master plan about institutional change. Among the factors impacting whether a business practice is adopted or not, the most powerful ones are not those seeming the most efficient or the most effective, but rather the ones that make sense to the people. From a rhetorical viewpoint, you just have to talk about it long enough until a critical mass of people is persuaded. 

Christian Stutz

Critical thinking

I recently taught a class in scientific research. One of the exercises included giving constructive feedback, pointing out that talking about strengths instead of just weaknesses can help people improve as well as negative points can help to make progress. Even though I had heard and spoken these rules a dozen times, it hit me, that I was really bad in seeing the good elements, especially in research. I am not generally a negative person, so I thought about where this was coming from. I then realized that in my entire studies in psychology I hardly ever learned to see the positive aspects. The goal was to learn to think critically. The usual task was to read a paper and then list all the shortcomings. The fact that someone was actually able to publish this writing, giving it a high quality stamp and that it probably was important for the progression of knowledge in that area somehow got lost in all the criticism. Further the point was to find a little gap that could be filled with new research, based on the shortcomings of others. My perception was that it was about finding mistakes and not doing them ourselves. Whenever I tried writing something myself, I got stuck immediately, because I couldn’t finish a thought before the alarm bells of inner criticism went off.

In business strategy class I can remember learning to deconstruct a market situation and look at shortcomings or gaps and then use this gap as a competitive advantage. Deconstructing some topic into its parts with analytical thinking is very important and of course it has to be thought in schools and universities. But creative thinking, “constructing thinking” was not trained. If we want to solve long lasting societal, environmental and business problems, it is not enough to deconstruct the situation and look at gaps. Analytical thinking can help us find the problems, but creative thinking can help us solve them. So we need creative thinking for innovative solutions. We need to see the positive aspects of what has been done, honor those and build on them. This does not only address education, it also addresses business. If we can train and attain this creative and positive mindset, we can also start to see more win-win situations in daily business life.

Watch Ken Robinson talk on a facet of this topic: (http://www.ted.com/talks/ken_robinson_says_schools_kill_creativity.html)

Vanessa McSorley

Video Games and Society: A Short Reflection

By generating more than $800 million in the first day of sales, the recently released video game Grand Theft Auto V (GTA V) is highly successful commercially. This comes as no surprise as the game series’ predecessors also generated high revenues and GTA V was extensively marketed through media campaigns.

 

People playing GTA V have to fulfill different missions in the fictional City of Los Santos. Thereby, these missions are most often only accomplishable through violent actions like stealing cars, shooting police officers or getting information by torturing other people. The overwhelming graphics and the huge open and interactive world of Los Santos add to the video game’s realistic environment.

Since a couple of years, I fulfill my duty as a military psychologist assisting military personnel (mainly recruits) in need of psychological counseling. In this context, it occurs to me that video games play an increasing part in the life of twenty-year old males and are co-occurring with social or psychological problems. During conversations, the recruits frequently tell me of spending three or more hours a day on video gaming. A small proportion also shows addictive behavior and the corresponding withdrawal symptoms related to excessive video gaming.  At the same time, most of these recruits report reduced participation in real world social activities (e.g., being members of a clubs, political participation). Taking into account the very selective population my observations are based on, and the risk of over-interpretation, I would like to reflect shortly on the consequences of video gaming for society.

Starting with the consequences for real world contact due to an extensive consumption of video games, people may have reduced social experiences. Research related to social psychology consistently showed that social contact is a powerful mechanism to reduce stereotypes, prejudice and discrimination among different individuals, groups and organizations in society. Therefore, diminished social contact and a societal tendency for individualism and self-realization may are related to video games confronting people with increasingly realistic open world scenarios. Additionally, there still exists an unsolved debate about the causes and effects of violent contents in video games.

However, there are also positive aspects of video games. People who experience difficulties in real world interactions can be offered a less stressful and demanding online alternative. Many video games are designed exactly to address these integrative aspects of online interactions, as the game’s challenges can only be solved cooperatively. Further, realistic video games combined with integrative online features are the result of an interconnected and globalized society. Hence, video gaming may develop skills and capabilities required for being successful in such an environment.

I am surprised by how silent research in various disciplines is when it comes to the analysis of societal consequences related to video gaming. In this context, a public discourse among the various stakeholders (e.g., families, clubs, organizations, game developers, employers, researchers) and their responsibilities related to video games is needed.

Fortress or kindhearted Europe?

The Italian Island Lampedusa is again in the news around the world. Once again it is because of human tragedies that took place before its coast: several hundreds of African refugees died during the attempt to cross the Mediterranean Sea in vessels. As reported in the press, between 1992 and 2012 17’000 humans already died in such attempts.

In Europe in all sorts of media there are brisk discussions, comments and reports about the topic. Two basic view points and recommendations for the future dominate in discussions: one says that to prevent such tragedies in the future Europe needs to provide the refugees more support for their plans. An example is that potential refugees should have the possibility to make a request for asylum directly in Western embassies in African states. Proponents of this view moreover think that development aid is an important part to solve the issue. They denounce also exogenous reasons for poverty like the narrowly self-interested and exploitative activities of Western (natural resources) corporations in Africa. The second fraction wants to prevent such tragedies, but by taking measures that are aimed to stop influxes of refugees over the Mediterranean Sea. This shall be achieved, for example through strengthening boarder controls on the sea massively and through establishing refugee camps already in Northern Africa. Proponents of this view primarily condemn endogenous reasons for poverty like highly corrupt and kleptocratic elites in the African states.

Overall, proponents of both views present certain constructive suggestions for solving the issue. But one main problem is that it seems like the proponents of both sides do not listen to each other. If they would do so they probably would come to the conclusion that a combination of their suggestions would be the way to come to an effective solution. The suggestions are generally not mutually exclusive (e.g. stronger boarder controls and the possibility to make a request for asylum in embassies directly). In the existing consequent separation of the view-points we possibly also can recognize that one part of Europeans act consistent to one view while the other part does so with the other. The result of quasi two parallel policies are not only uncoordinated, often there are diametrically opposed actions (e.g. Western aid trying to provide access to clean water vs. a Western corporation nearby looting resources and thereby discharging polluted water in the river).

Coordinated and coherent actions among proponents of both views and thus of different stakeholders of the issue would arguably be expedient. It would also prevent from overturning in non-expedient actions from one fraction which the other is likely to see as too extreme. Without more coordination the status quo will be kept.

A second problem is that the root causes of the issue are not really discussed. But European stakeholders should focus more on these root causes. There are, for example potentials to connect activities of corporations looting natural resources and development aid organizations. Although it is at a first glance not easy to connect such different stakeholders it is a necessity: cooperation on root causes would tame both of them and thus lead to less non-reflected or only one-side-reflected activities. In this way real opportunities could be created in Africa.

In sum, cooperation between stakeholders concerning root causes is essential. In a presentation from early 2010 at the University of Zurich an invited Historian of the University of Oxford mentioned that the European activities in North Africa were not considering the full context there. Important realities were ignored and hence a forward-looking engagement was not possible. A year later the Arab spring took place. This brought hope in the beginning, but lastly not positive perspectives for the future of young people. Instead it brought new problems and new refugees.

 

Claude Meier

 

The Squander of a Reputation

The adage that it takes a lifetime to create a good reputation, but only a second to squander it is by now rather a platitude than a clever insight. And yet, it seems that we all too often forget this truism, especially if under the influence of short-term profitability.

At a recent conference of the Swiss Association for Quality there was much talk about the reputation of Switzerland – especially “Swissness” - as it relates to the quality of the products and services offered by Swiss companies and organizations. The problem Switzerland faces is that it’s “brand” – the Swiss Cross and the wording “Swiss” -  is increasingly misused by foreign companies for financial gain. It is estimated that customers are willing to pay an average premium of roughly 20% for goods with a “Swiss” brand, although the gamut ranges from 1-2% for the machine industry to 50% for luxury goods such as watches. As these percentages make evident, the favorable reputation of Switzerland translates into very concrete economic returns.

According to a world-wide assessment by the Nation Brand Index, however, the brand “Swiss” lost quite precipitously in value these past years, from being the number 2 in the world in 2005, to coming in only at number 9 in 2001. Part of the reason for the image damage has to do with the fact that a number of firms have taken advantage of the above elucidated value premium even though they have absolutely nothing to do with Switzerland, or then only in a limited fashion. The most egregious example of this is the BelSwissBank (http://www.bsb.by/en/) which features both the Swiss cross as part of its logo and its name, even though it is headquartered and operated entirely in Belarus!

 

Such examples of misuse of the Swiss brand are, however, only part of the reason for a steady erosion of the Swiss brand. It was interesting to note that several exponents of the Swiss industrial and added-value manufacturing sector, as well as the deputy head of the Swiss Federal Institute of Intellectual Property, clearly pointed to the continuous negative publicity that Switzerland receives abroad in conjunction with its taxation practices and banking sector. Instead of thinking about perfectionist watch-makers or hi-tech machine manufacturers, Switzerland is increasingly perceived abroad first and foremost through the prism of having long played a smooth zero-sum game of hiding the money of foreign tax evaders and creating tax havens for high net-worth individuals and multinational corporations. That, clearly, is not a particularly good way to cultivate your friendships with other nations, nor is it conducive to the “brand” of Switzerland.

 

Having lived and worked in a number of different countries, it is my experience that “Swiss quality” – although hardly perfect and de facto necessarily always the best – does nevertheless have some reality to it. The Swiss virtues of reliability, conscientiousness, attention to detail, perfectionism and superb organizational and planning skills, do translate into a merited good reputation in its products and services. This hard earned good reputation, however, stands to be squandered today, due both to free-loaders of the brand “Swiss” and the persistent negative media attention Switzerland gets abroad in conjunction to its banking and taxation schemes.

Manuel Dawson

History matters

Three months ago I took up a post as a research assistant in a business school. Nothing unusual—despite the fact of my uncommon academic background in this field of research. I am a historian who specialised in medieval times by writing my thesis about sociocultural dimensions of eating in and out in late medieval towns. As my new job was repeatedly subject to discussions among friends with academic or non-academic background, I carry out in this blog how a historian could contribute to the business research.

First of all, business is all but a main subject of today's historiography. The already ten year old lamentation of the German business historian Hartmut Berghoff who stated a de-economisation of the recent historiography was met with almost no responses. As an illustration you can look at the recent list of the 24 (!) introductory seminars at the history department of my home university: Neither attracts the freshmen with a catchphrase which is in any relation to "economy". Topics like the history of human bodies appear to be more in vogue—is it surprising that nobody apart of us historians is knowing what we are actually doing?

Instead of regretting the loss of any influence of a historian's voice on public debates, I demand that historiography should inquire the past with questions relevant to today's problems. From my point of view, I am convinced that no topic has such a demand of reflections as e.g. the apparently irresistible marketization of all spheres of our lives. But what could a historian contribute to such a discussion?

Ironically, straight the specific culture-based perspective which can be trained by studying such topics like the history of the transformation of the perception of human bodies. As long as the mainstream economics are regarding the economy as a separated "realm" in which rules and dynamics are considered like physical principles that tries to make our actions ex ante predictable like the falling of an apple from a tree due to the force of gravity; that long voices other than economists' are needed on the topic of economy.

In contrast to a purely economic approach, a historian's perspective embeds the economy in its sociocultural environment. Institutions as e.g. markets can be deciphered as social constructions and are persistently subject to change; their rules are characterised by mostly unrecognized norms and conventions. Regarding the behaviour of human beings on markets, you can go so far that a postulated rationality of human behaviour itself is a socially constructed concept which was invented by scholars during the times of Enlightenment.

That even mainstream economists turn away from the axiom of rational behaviour by reason of its limited empirical explanatory power is no surprise from a culturalistic point of view: The rational mode of thinking is only one empowering concept among others which all influence the behaviour of business men.

In this respect, however, I understand the work of scholars as contributors to the design of the concepts and institutions of our lives. The question in the middle for business researcher has to be: What is a “good” firm? As a historian I have not only some knowledge about the path dependencies of all conditions but also the consciousness about its alterability. I am happy to help working on it.

Contributions to society’s well-being

I recently spent some time in the US to attend a conference. I was reading the daily newspaper and an article caught my attention. It reported on a representative study by the Pew Research Center asking adults about which profession they thought was the one contributing the most to society’s well being and the least respectively.

 

On the top of the list were the military (78%), teachers (72%) and then medical doctors (66%). This makes sense due to the fact that since 9/11 the Americans have a higher need for security and hold the importance of the military very high. Also, the average citizen can experience the positive impact of education and health firsthand. As a lecturer on strategic management I found the low ranking of business executives (24%) who made it second to last on the list, just behind journalists (28%) and above lawyers (18%) quite worrisome. Therefore teachers were rated three times higher than managers. But they are not paid three times as much as managers, but rather 30 times less! Once again, this study shows that the reputation of business leaders has dropped to a very low level. The survey confirms the outcome of a plebiscite in Switzerland (a sample survey of a special kind). It was a proposal that translates into “the fat cat initiative” which was widely accepted, showing that many managers were in fact not.

 

Many causes for this negative sentiment toward managers can be discussed. For example the double reward for strategic misperformance of top managers: Before 2007 managers of major Swiss banks were rewarded with big bonuses for risky growth (investment banking) and acquisitions of financial institutions of all kinds. Today these bankers are rewarded even more for reversing the strategy of their predecessors, selling supposedly unprofitable and risky parts of business. Despite the fact that either the one or the other strategy must be wrong, high “performance” bonuses where paid in both cases. It could also be discussed that citizens increasingly tend to disapprove of valuating firms on the grounds of their short-term success. It doesn’t seem to impress them that speculators at the stock market think otherwise.

 

As a lecturer of strategic management I think about what I could do to improve the standing of leaders in business. I think that on the one hand educators should regularly draw attention to the issue (e.g. in case studies) that when decisions in business are made not to solely consider monetary results but to also assess the effects the decision has on society. Value creation for all stakeholders is the issue! Further, in my opinion educators in management studies should apply this socially responsible strategy to their research projects and particularly to the evaluation of research results.

 

It should be noted that the renowned Academy of Management aspires “to inspire and enable a better world” in their vision statement (and not a higher income for managers!). This undoubtedly means not to propagate the short-term shareholder value thinking in research and teaching but to rise to the challenge to “contribute to society’s well-being”. If business leaders perform convincingly in this aspect their reputation in society ought to improve in the future.

Edwin Rühli

Long-term care in Thailand: A Swiss Perspective

In Thailand, private investors from Switzerland are funding a resort for older people in need of long-term care. This pilot Project offers 50 places in a nursing home focused exclusively on Swiss patients and their spouses. According to the investors, the resort’s services include twenty-four-seven assistance, comparable to the standards applied in Switzerland. Due to an overwhelming public and private demand for the limited number of places, follow-on resorts are planned not only for persons in need of long-term care, but also for patients suffering from burnout or addiction.

In Switzerland, more than one hundred thousand older people are in need of permanent medical assistance and experts estimate that this number will triple until 2050. Research revealed that there would be an additional demand of one hundred thousand places in nursing homes in the next 15 years. The problem is that the average monthly costs related to long-term care is about CHF 11’000 (USD 10’000) per person, what cannot be funded sustainably neither by the current Swiss health-care system nor by private contributions. From this perspective, the resort in Thailand is both an attempt to approach the demographic problems of modern societies, but also a profitable business model. Because the monthly costs for long-term care in Thailand are less than half of those in Switzerland, the private investors are calculating with a financial return of more than five percent for their resort.

I have a somewhat uneasy feeling regarding long-term care resorts for Swiss older people in Thailand due to two reasons. First, I dislike the imagination of living in one of the richest countries in the world, which society is not able or willing to find sustainable approaches or solutions for its demographic issues. In my opinion, purely economic considerations fall short of taking into account the complex problem of increasing health-care costs in most of modern societies. In short, sending persons in need of long-term care to Thailand because of economic reasons is the failure of a whole society to take over responsibility and to show solidarity with its older people.

Second, sending older people to Thailand because of the financial costs related to long-term care is a striking example of the economic primacy in many of today’s social-political considerations. For example, a leading Swiss expert in the field of gerontology recently stated that if a dement person does not recognize the own apartment anymore, it would not make any difference if he or she lives in Switzerland or Thailand. This statement completely neglects an older person as being embedded in a family or a broader social context. To find sustainable and integrative solutions for the complex problem of the rising health-care costs, economic considerations have to serve the needs of a society and the people it is made of.

Tom Schneider

Mindsets

A few days ago I watched a news contribution on a manipulated scientific medical study about a pill. It turns out that several employees of a pharmaceutical company where involved in the construction and completion of this study without disclosing this fact. The manipulation of the data led to positive outcomes of the study, helping to make this pill very popular and thus very lucrative. In this particular study some criminal intention was clearly at play. But many of these medical studies are financed by pharmaceutical companies, says the expert on the news report. This got me thinking about the influence of conflict of interest on the outcome of studies.

In a documentary on fracking I recently watched, I found a similar pattern. The people involved in making money or allowing this technique of oil production, conducted studies showing that this way of flowing oil is harmless to humans and nature. The NGOs concerned with the destruction of the environment found converse results. How can this be? Both parties have a big motivation to prove their arguments. Both parties have a specific mindset when constructing their study. This leads to a frame of thinking and a way of perceiving the world. I think every scientist should have a look at their basic motivation of research and their underlying assumptions of how the world works or ought to work in their eyes. It is very hard to fight one’s own frame of thinking, but by making these implicit assumptions explicit and communicating them, others can better understand your where you are coming from. If obvious conflict of interest is given as is the case in the example of the manipulated study and in my opinion also in the case of financing, I think it will prevent a scientist from performing rigorous research and should be excluded from the carrying out the study.

This is my mind frame and my motivation for this article: I am a psychologist and stakeholder theory enthusiast and think that explicating and communicating thoughts and assumptions helps to find common grounds. Further, I think the world is not black or white but should be looked at nuanced. Further we are working on a paper on mindsets and basic assumptions of different theories, which got me to pay more attention on this issue. So in this sense: Q.E.D.
 

Vanessa McSorley

 

 

Purpose matters

This weekend I was visiting my father who is spending four weeks in a little village in the Swiss mountains for recovery. When I entered the hotel I was pleased with the warmth of the receptionist. She gave me the feeling that I was really welcome and that she cares for me. It was not the usual customer orientation we experience in many hotels from employees who are trained to be customer oriented. It was an encounter between human beings. During the entire stay in this hotel I met various people who love their work because they like caring for others.

The hotel belongs to a foundation, which aims at providing services to human beings in all phases of life. Besides hotels they are engaged in child and elderly care.

In doing business we often have a weak connection to why we are doing this work. Rendering a good service is much easier when we know why we are doing it and what we stand for when providing these services.

This hotel stands for doing good to people. Whether we base this on Christian values or on a humanistic commitment in a philosophical sense does not matter that much. What matters is that we know with which purpose we are serving whom. Customer orientation in this perspective is not a mere technical term but a humanistic commitment in the broader sense.

Sybille Sachs

Changing from economic to political primacy: Why this is necessary

Recently many publications of economists and philosophers were released which question and want to contain the dominant role of the economy and the market in our societies of today (e.g. R. and E. Skidelsky, T. Sedlacek, L. Herzog, M. Sandel). They demand that the role of the economy has to be debated publicly. This corresponds basically to the demand for a primacy of politics over economy. But why is it important to contrast the primacy of politics with the one of economy?

 

First of all it is decisive to see that among all political views of a society also such exist according to which the economy and its material fruits indeed are not seen as an end in itself. In a society living the primacy of real democratic politics institutional conditions are in place which enable to include all (non-radical) political views and matters of a society. Of course, and this is fully clear, also in such case economy will play an important role simply because people want sustenance and wealth.

 

In a society in which the primacy of economy rules economic issues are basically considered as the most important ones. Principles like the market, growth or profit maximization become to end purposes of all existence. All forces which potentially constrain the forces of the pure market as the only regulative force will be fought. Factually (and although democratic institutions may still exist) this model of society shows fundamental and even totalitarian traits: everybody has to subjugate herself to the primacy of economy and its principles, if she wants or not.

 

Once established, to depart from this model is difficult: each concept of economy other than the one of a neoliberal economy acknowledges also other matters than pure economic ones to have a meaning or value on their own (e.g. stakeholders, society, environment). This of course endangers the economic primacy. But a society with e.g. a primacy of religion has similar problems: all its members have to subordinate themselves to religious principles if they want or not.

 

Only the primacy of politics which is committed to a democratic order can provide remedy: only in this way the full colourfulness of views of a society can be integrated. Despite this also caution has to be exercised: material power asymmetries between political actors e.g. can influence the formation of majorities. Moreover, it has to be acknowledged that politicians like R. Reagan or M. Thatcher which have contributed significantly to the primacy of economy were democratically elected.

 

Because today we know to what such primacy is able to do critic at it has become good form even in economic circles. But the voyage has not ended yet: the actual requirement is the return to the primacy of politics and also to stay there. To stay there it is also necessary to debate in Aristotelian manner what is good and hence moral. To think about the good helps preserving before leaving the primacy of politics: nobody will then voluntarily leave this primacy for a fundamental-totalitarian system, be it of religious, economic or of other character.

 

Claude Meier

Dare to be ethical?

Reading the book “Giving Voice to Values” by Mary Gentile corroborated a longstanding assumption of mine that acting out our sense of right and wrong is something that can be directly promoted by rehearsal. Her observation is that most “business ethics” courses tend to focus either on abstract ethical theory or then the analysis of specific cases, but neglect any sort of concrete training as to how, precisely, we would like to behave and what we should say in a specific situation where we intuitively feel that something is amiss. Knowing does not automatically lead to doing, much less to effective doing. And knowing without conviction can even lead to misuse and skillful self-justification. Indeed, she gives examples where managers whom she had interviewed expertly elaborated and adroitly rationalized their morally questionable behavior on the basis of ethical theories that they had previously been taught at University. Thus they simply picked and chose the ethical theory that best supported their particular behavior and prerogatives at that time and context, no matter how self-serving or cynical.

By rehearsing just how we would – in words and deeds – respond to something amiss, we simply do what any athlete does when training for the time when it really matters: flex the muscles and hone in their coordination in such a way so as to make their execution all but automatic during an athletic event. As to how to convince highly competitive individuals of the merits of revisiting their basic moral assumptions, she proposes that even they can be brought into the fold by a re-framing of their objectives as being “daring to be ethical”.

I am inspired by Ms. Gentile’s approach because I have personally witnessed with myself that I have on a good number of occasions failed to uphold my own deeper convictions when it mattered. Looking back, my failures had their root less in my believing myself to be powerless to change things on my own, than in having to decide on the spot and being unable to come up with a suitable alternative fast enough or being so caught up by my own social and cultural conditioning, that it was very difficult to change my “bad habits”. As individuals, organization and as a civilization we are all captive to some extent to the ingrained routines, traditions and culture we have been part of since childhood. Consequently, even if we rebelled on a number of occasions, we often find ourselves back in our previous, familiar path-dependent behavioral track, especially when we are intricately embedded in this social status-quo with all its rules, assumptions and subtle (or not so subtle!) peer pressure. We yearn for our place in this social context and thus we often inadvertently undermine our own best efforts at reform.

Concretely, what is to be done then? Whereas there is certainly some validity to the bromides that one can only change oneself or that all change begins with ourselves, the above analysis makes it clear that more is required. Individuals need to be supported in their efforts for change and this support includes creating concrete training grounds to hone in our abilities to deal with the wider social challenges we all face. Business Schools, as the premier forging grounds for future leaders in our economic institutions, are clearly indispensible in this respect.

Manuel Heer Dawson

Sustainability Reporting Today

Sustainability Reporting Today:

 With the advent of sustainability reporting, various indicators and standards have been developed to measure and evaluate sustainability and to anchor it in corporate reporting on value creation. A sustainable commitment to stakeholder relations on an economic, social and ecological level has a proven positive impact on value creation and ultimately also on the strategic success of a company. To make this transparent, the following principles for an integrated sustainability reporting - which are to a certain degree also part of standards such as the Global Reporting Initiative, Integrated Reporting and the European Foundation for Quality Management (EFQM) - can lead the way:

 

-         Strategic Focus: Sustainability should be embedded in a company’s purpose, in its derived vision and in its strategic objectives. This forms an essential basis for a periodic corporate sustainability reporting at a strategic level.

-         Embeddedness: Not only singular projects, but the entire strategy development and revision should be communicated comprehensively to make the company’s attractiveness visible for current and future partners. It is deliberately not about retaining information to calm down stakeholders and to secure competitive advantages over competitors, but about gaining strategic stakeholders for a mutual corporate value creation process.

-         Inclusion: When different stakeholders contribute to value creation, it is crucial to also recognize these stakeholders as owners of their contributed values. This is based on an extended understanding of ownership. Here, the concept of ownership refers not only to material goods or financial resources, but also to intangible issues such as knowledge and experience. With their knowledge and experience, stakeholders provide property for a company in a broader sense. Like the financial owners, they have therefore the right to be adequately involved in processes regarding their property and to be informed accordingly.

-         Commitment: In a purely economic view, profit distribution (residual profit) primarily targets shareholders. This is also predominantly reported on. Especially because the management has to make discretionary decisions about the shareholders’ compensations, e.g. how much of the profit is being distributed and how much is being retained (pay-out-ratio). When other stakeholders, in the sense of a broader concept of ownership, contribute significantly to the corporate value creation process, these stakeholders should also be a compulsory part of the distribution of tangible and intangible values as well as receive information accordingly.

 A sustainability reporting based on these principles suggests that companies can create more values with and for stakeholders.

 Sybille Sachs