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

The Separation of Work and Life

To illustrate complex issues, I frequently draw on the work-life balance as a relevant and timely problem affecting virtually everybody. Usually, conversations are about how to find effective private strategies and good public policies to facilitate an individual and sustainable balance between the two parts of how people spend their time: work and life. There are many different practices applied or perspectives taken, and, for the sake of complexity, I would like to add another question: Is a separation of work and life always meaning- or purposeful (another more logical question would be, if comparing work and life is somewhat similar to make a distinction between apples and fruits…)?

By using the expression "work-life balance", we are implicitly relying on the idea that work and life are something different, something separated from each other. Aside from the logical fact that life includes work, I think it is a worthwhile exercise to question this tacit assumption of a dichotomy between those domains. Quite often, the separation of work and life is regarded as healthy or generally good in an imperative and moral manner. "You should enjoy your leisure time!" or "Could you please stop talking about work during your recreational activities?" are common expressions in this context. I hope that the pressure to enjoy one’s leisure time is not as high as the pressure to separate work and life…

My point is that life and work cannot easily be separated. Do you think that activities like working, living, loving, being a soccer fan, having your friends’ messages on your mobile, chatting privately during work time, having a swim during lunchtime, and so on, are easily separated into the work-life dichotomy? The domains of work and life influence each other and we are not machines being able to throw a lever to shut off life while working.

If the domains of work and life interact, why do we always assume that work negatively affects life? Could it not be that work is positively affecting life, for example by giving meaning and sense through purposeful actions? Many persons define themselves through their professions, while having their personal identities at stake when talking about work.

I think the best way to think about the relationship between work and life is to perceive these two domains as mutually supportive. Bringing in parts of one’s personal skills and knowledge, personalities, even problems, into the work domain enriches the professional environment. On the other hand, there is also a transfer of professional benefits to worker’s private lives. Competencies learned during working time can be used quite effectively in different settings related to the private domain.

Therefore, a separation between life and work does not further the search for a meaningful balance between the two domains. In my opinion, the two domains have to be integrated into a holistic perspective that brings in the best of both worlds under a common purpose. Life will be much easier and more meaningful if we do not have to separate work and leisure time obsessively. 

How to measure well-being? OECD’s Better Life Index

In recent years increasing concerns emerged regarding the issue of how to measure people’s well-being and, ultimately, how satisfied people are with their life in general. The traditional economic approach to get to grips with this issue is to use statistics related to a country’s Gross Domestic Product (GDP). In this regard, GDP per capita is a widely used indicator to measure people’s actual economic well-being and its change over time. I would like to highlight just two out of many shortcomings regarding this approach of measuring people’s well-being. First, GDP per capita is calculated as a proxy for the average economic well-being of people living in a specific country. This is problematic, because if inequality in a country increases enough relative to GDP per capita, it is possible that most people can be worse off, although the average income is increasing. Second, statistics related to a country’s GDP are a very distal indicator for people’s well-being, as GDP mainly measures market production in monetary units. This is problematic, because on the one hand, many services relevant for people’s well-being do not have a market price, and on the other hand, individuals assess the different aspects of their well-being by drawing on their subjective values and norms.

During the last years, a lot of work has been conducted to face the challenges of measuring people’s well-being. One out of many promising approaches are the recommendations made by the Commission on the Measurement of Economic Performance and Social Progress (CMEPSP) set up by Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi. These recommendations include, among others, two important basic principles. First, indices should focus on the well-being of people in each country, rather than on the macro-economic conditions of economies. Second, both objective and subjective aspects of living conditions and their appreciation by individuals should be integrated to understand people’s well-being.

By drawing upon those recommendations of the CMEPSP, the OECD has identified 11 dimensions as being essential to people’s well-being and included them in a first attempt to provide a comparable and comprehensive set of indicators at an international level. These indicators include both the people’s material living conditions but also their quality of life. The OECD Better Life Index is available online (www.oecdbetterlifeindex.org) in a sophisticated and fancy tool to compare the different dimensions across countries but also to create one’s own Better Life Index. Give it a try!

Despite my enthusiasm to complement the GDP-based indices for economic wealth by drawing on objective and subjective indices of well-being, the latter are in an early stage of development. They still need to prove that they are a reliable, but also valid measure for people’s quality of life and, finally, could provide policymakers with the information they need to make improved decisions for people’s well-being.

Tom Schneider