According to a popularly quoted article printed in the The New York Times Magazine

The Social Responsibility of Business is to Increase its Profits

This may seem like a sensible statement from the vantage of the company’s investors, however thinking this all day long would probably be a depressing proposition for the company’s employees. In fact it is likely that internalising this corporate raison d’être would very quickly lead to the motivational collapse of even the most hardened company woman or man.

Subsequently people have the need to believe in a higher purpose in their daily tasks other than financially rewarding the company’s shareholders.

In response to this existential need, companies deliberately or unwittingly create an internal mind-space which incorporates all of the abilities and the motivational drives that its staff must possess and feel in order to progress the company’s success.

Within this corporate mind-space

  • The staff must believe that what they are doing is fundamentally “good”. That is, they must believe that they are involved in something of intrinsic worth and of fundamental value.

And

  • The staff must believe that what they are doing is “important”. That is, they must believe that they are involved in doing something which if not done will have a deleterious effect.

Once company staff believe that what they are doing is both “good” and also “important” they can become passionate about their work. If a “good” result is achieved this may bring them happiness so that they will strive towards this outcome. If a negative event transpires they may take this to heart and anxiously work to prevent such an occurrence.

Activity Value Importance
Mining coal Power factories and trains If not done, factories will lose power and trains will be unable to run
Providing drinking water The townspeople will have drinking water If not done, the townspeople will go thirsty
Securing a website against cyber-attacks Customers will have an enjoyable online shopping experience If not done, customers will not be able to shop online

 

Dichotomy and leadership

We are therefore confronted with a dichotomy between the purpose of the company as viewed by its shareholders (which is to increase profits), and the purpose of the company as it professes to its employees (which is to improve society).

In other words, we encounter a contradiction between the external face of the corporation, whose purpose is to offer goods and / or services in the most lucrative manner possible, and the internal “let’s pretend we don’t get paid for working here and are here for the universal good” feeling that must pervade the office space in order to motivate the company’s staff and coalesce them into a working unit.

Furthermore, because every company exists in the external commercial world and also contains its own internal world of personal endeavour, there must be at least one person or possibly a group of people within the company who are able to view everything within the company from both perspectives. Without this ability it would be impossible to translate external commercial pressures into direction within the company’s internal life. Conversely, it would be impossible to align the internal staff motive with the external commercial reality.

Formally the CEO is tasked with the ability to simultaneously maintain this dual paradigm and juggle both viewpoints in their mind, whereby to find the sweet-spot that maximises  the interaction between external commercial pressure and personal striving within the company. In reality however, the CEO may be part of a group of people who jointly translate the different functional areas of the business between the external and the internal paradigms. The CEO will have the “speaking part” within this group, however.

(The further staff are from the upper echelons of management the less they need be aware of the external commercial reality that the company faces. Successive layers of management may be tasked with the gradual transformation of external pressures into internal emotional drivers.)

Hence it would seem that

  • The fate of the entire corporate balance-sheet is in the hands of the individual or group that translates the real-world “commercial speak” into the internal company motivational parlance.
  •  Any misalignment of these contradictory but interdependent viewpoints will spell disaster for the company’s investors or for the morale of the company staff.

Is it reasonable to expect that senior management can maintain this razor-edge balance indefinitely, especially when the technological, socio-demographic and market environment in which companies operate today can change so rapidly?

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s