Summary for Week 11

As with last week, we are asked to answer specific questions this week regarding an article we read, What’s a Business For?, by Charles Handy. I’ll address those questions first.

Based on what you read in the first two pages (pages 3 and 4), why are virtue and integrity so vital to an economy?

Mr. Handy says this, “Markets rely on rules and laws, but those rules and laws in turn depend on truth and trust. Conceal truth or erode trust, and the game becomes so unreliable that no one will want to play.” (emphasis mine). Virtue and integrity are the bases of trust. We cannot trust the man or woman who lacks morals or is unwilling to live up to the morals he or she claims to espouse. Interestingly, Handy says that markets rely on rules and laws that depend on truth and trust; I would argue that if all men and women had virtue and integrity, rules and laws would be unnecessary. Trust, in particular, is important to a free market. I am more likely to spend if I trust a merchant; I am more likely to spend if I feel secure; I am more likely to embark on an endeavor if I trust I will not be cheated. Without virtue and integrity, that trust diminishes, money stops moving, and the economy freezes.

According to Charles Handy, what is the “real justification” for the existence of businesses?

“The purpose of a business, in other words, is not to make a profit, full stop. It is to make a profit so that the business can do something more or better. That ‘something’ becomes the real justification for the business.” So says Handy. A business is a means to an end and that end is not profit, yet it is profit-making and profit-taking that has become the central virtue of business. A business’s success is measured by the value it provides to its shareholders. Handy’s contention, though, and I agree, is that it is what a business does with that profit that matters; it’s what the business does with that profit that justifies its existence.

What are two solutions proposed by Handy that you agree with? Why?

I came away with three solutions, but I will share two:

  1. Treat employees, not financiers, as the owners of the company; see the company as a community.
  2. Recognize that the business exists for a higher purpose; profits are a byproduct, and shareholder needs spur the company on, but the business of the business is (or can be) something greater, and something of meaning.

With regard to the first, I’m perhaps biased by the fact that I am an employee of a company. It has always bothered me that employees are treated as cogs in the gear of business, and replaceable ones at that.

A friend of mine worked at a company for 18 years; the knowledge that he had built up in that time was valuable. He was a hard worker and contributed a tool that is widely used throughout the company. He was laid off a few weeks ago.

That sort of action diminishes trust. How can you dedicate your time and energy to a company that will discard you so easily? When employees do not feel that their company cares about them and sees them only as a replaceable commodity, then those employees will spend at least part of their time with a foot out the door. They will feel no loyalty to their employer.

Companies that value their employees, seek guidance from them and treat them as the owners will find their employees are dedicated. The business becomes a means through which the employee can express themselves in addressing causes about which they care. They will see their business as a way through which they can amplify their efforts to make the world better. They will put their heart into the work, and the business will make an impact for good in the world.

This leads directly to the second solution. Businesses that value their employees and treat them as the business’s owner will find themselves steered in the direction of contributing positively to the world. Financiers seek only a return on their investment. Employees, who contribute so much of their time to their work, seek fulfillment in their work. Fulfillment comes through doing good work in the world. Ergo, employees treated as owners will steer their business in the direction of doing good work in the world.

In answering those questions, I’ve filled the bulk of my post for this week. I just want to close by saying that this week has inspired me to take a second and deeper look at what I’m trying to do. My first purpose ought to be helping my fellow man. My labor and my business should exist to that end. Profits are secondary. They help, but they are not the raison d’etre of my work.


Summary for Week 11

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