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

Entitlement Cultures

Having recently been in Washington D.C., I was once again struck by the ever more extreme polarization of the political landscape in the United States. Everybody seems to be convinced of being “right” and “in the right” and deeply suspicious of the intentions and moral rectitude of the “others”.

Now, it is an inherent, most likely evolutionarily selected for human quality that we excel at “rationalizing” our morals, conduct and life-style. After all, fundamental self-critique hurts, and self-loathing and depression make for very poor survival strategies in the mating or professional marketplaces. Our brains are thus hard-wired and biased to avoid truths that are too uncomfortable (as long as they are not imminently life-threatening), thus keeping us feeling good about ourselves most of the time.

However, this lack of objectivity with respect to ourselves – if left unchecked - has various unsavory social, economic and political side-effects. One of these is that it engenders a culture entitlement, of which I will focus on entitlements in the form of money.

Now monetary entitlement comes in many guises: from benefiting from the modern welfare state – be it in form of assistance to families with children, the unemployed, disabled or elderly - to agricultural, defense industry and tertiary educational subsidies. Alternatively, entitlements can be in the form of generous tax breaks for home owners and investors, to simply the expected, lavish remunerations found in many professions, made possible by professional accreditation monopolies, lax economic regulations and “free market dynamics”. Now, it is hardly surprising that in all of these instances, the overwhelming majority of beneficiaries naturally feel that they are rightfully the recipients of such largesse: our incessant, narrowly targeted, interest driven political squabbling reflects this pervasive sense of having a legitimate claim upon them.

The rationalization, if we are among the losers of the current economic system, is that we were wronged by the lottery of life and/or society and are thus rightfully entitled to state support, especially in view of the great wealth amassed by the top percentiles of the socio-economic spectrum. Alternatively, if we are among the middle classes, we may consider ourselves as the “good citizen” par excellence and the hard working, solid backbone of the economy and thus reasonably entitled to various subsidies such as mortgage interest deductions, medical care benefits, early retirement and higher education. Lastly, if we are among the winners of the system and garnered considerable wealth, we are likely to attributing our success to our superior work ethic, risk taking or intelligence and thus naturally – oft also rationalized along the lines of Social Darwinism - entitled to have garnered this great wealth and consequently, for example, free to adroitly exploit the full panoply of tax loopholes.

The unfortunate corollaries of these self-assessments are however increasing suspicion towards the groups one does not belong to, resulting in rather dim views of the righteousness and fairness of their specific entitlements.

Now as long as the overall pie of wealth increased rapidly enough to sustain such entitlements, these diverse recipients – some political squabbling aside - can be kept largely quiet. Today, however, with increasing pressure on these entitlements, rising discontent and self-righteous polemics find their way into public discourse, political deliberations and increasingly also social unrest.

The question of the day now becomes as to how to best manage a social and political discourse that remains constructive, in spite of a pie that is no longer growing fast enough to sustain the status quo and keep everybody happy.

I think that a first step is the recognition that we are all recipients and that “privileges” should always be also connected with “duties”. It is to recognize and accept the fact that at the end of the day, we are not only participants, but stakeholders in a society and world that must be managed not just for our own short term benefit, but also for our collective long-term well being. It is, perhaps above all, to be willing and able to endure candid self-reflection and critique and to regain the humbleness incarnated by the expression of “privilege oblige”: of whatever sort this privilege may be. We need to recognize that we are all privileged today to have been born in an epoch in human history and a part of the world that has seen unprecedented material wealth. And that is not the doing of any one of us, but rather a historical luck of the straw.

Woody Allen, in a recent interview, impressed me with reflecting on his “successful life” with sincere modesty, highlighting not his superiority or even achievements, but his good fortune and thankfulness.

Manuel Heer Dawson