Читать книгу Fair Management - Heinz Siebenbrock - Страница 11

2 Questionable values in business studies

What values characterise business studies? The view originating with Max Weber16 that the economy and the science of economics are value-free has had such a patent effect that such fundamental questions are rarely asked. Günter Wöhe, in his widely used foundational work, Einführung in die allgemeine Betriebswirtschaftslehre [General Introduction to Business Studies], nevertheless points out that in business studies, where values and problems of evaluation play an important role, critical consideration is particularly needed17. However, he undertakes no more than a brief comparison of the experts in the field who advocate ‘value-freedom’ and those who have an ‘evaluating conscience’, and does not go into any more detail on the content of the values and guidelines that underpin business studies.

Ever since business studies moved away from viewing reality descriptively and into normative territory by turning to system theory and to developing decision theory, we have no longer been able to refer to it as a value-free scientific discipline. Today, uncovering the implicit values of business studies and discussing their effects seems even more important than ever. In the following we will analyse conceptions of value, conceptions which are considered a natural part of the teaching of business studies and of everyday business – or even to define them, but which are seldom reflected on, let alone questioned.

The practice of business

Thus on closer inspection, the ‘natural’ principles of business studies – frugality, profit maximisation, growth and competition – seem to be constructs which have had a long-lasting impact on practice, even though they have a questionable and destructive influence on managers and their employees.

2.1 Frugality

‘Frugality is the favourite rule

of all those who are half alive.’

Henry Ford18 (1863–1947), American entrepreneur

Like its sister discipline economics, business studies also assumes that goods are scarce and therefore require ‘economical’, i.e., frugal, handling. At first glance this basic assumption seems to make sense: there is nothing objectionable about the ethical sounding requirement of wanting to avoid waste, since frugality leaves room for alternative kinds of use. But this ethical demand is actually only fulfilled when these kinds of use are actually realised or at least intended. Frugality for frugality’s sake can be interpreted as stinginess or avarice and is anything but a virtue. In the Middle Ages avarice was rightly considered one of the mortal sins.

While the classical doctrine of business studies still counts on frugality, such as ever more sophisticated methods of cost control or the Japanese concept of muda19 that targets waste, Wolf Lotter makes a convincing counter-argument in his book Verschwendung – Wirtschaft braucht Überfluss [Waste – The Economy needs Excess], one that seems plausible and at the same time makes us stop and think. ‘Waste is good – it’s productive; it’s inventive and it’s natural. Evolution has been acting wastefully for billions of years. We are the product of that natural diversity. Markets have always functioned on the basis of wasteful supply and diverse demand.’20

Excessive frugality ultimately gets in the way of an extremely successful virtue: generosity. Generosity is letting others have something without any obligation or constraint, including giving them space to create alternative kinds of use with it. Of course, generous souls should also be warned not to go overboard and not live beyond their means.

Thus, as a basic value in business studies, frugality needs to be complemented by at least two things. Firstly, it cannot be taken to an extreme; the best person is by no means the most frugal one. Secondly, in order to meet ethical demands, it needs something that corresponds to it or that is related to it. Despite the apparent contradiction, generosity seems to be quite a fitting counterpart to frugality where, for example, this relationship can be established in helping the needy or the environment. This thought can easily be transferred to everyday business: treating resources frugally creates other kinds of use, such as more generous considerations of the company’s future by expanding research and development activities or by granting staff more leisure time, or by recompensing suppliers, employees and/or owners more generously. In short, when a company aspires for frugality, the question ‘What for?’ needs to be answered in a way that is reasonable and appropriate for all involved.

Treating resources frugally creates other kinds of use.

Besides frugality three other constructs stand out that greatly characterise business studies in a questionable and destructive way: profit maximisation, focusing on competition and growth. These are categories that have become taken for granted and are hardly questioned either in academia or in practice.

Fig. 1: The implicit values of business

At first glance, these constructs, too, appear perfectly reasonable. Companies have to turn a profit in order to survive. Heeding this goal is necessary in order to offer products and/or services. Keeping an eye on actual and even potential competitors at the same time requires not over-estimating, staying innovative and constantly developing. Against this backdrop, growth can almost be interpreted as a result of profit and focusing on competition.

Nevertheless, these three constructs conceal considerable risks. Unnoticed by many, they become part of their identity through upbringing and education. These values are already subliminally implanted in children at a young age through piggy banks and World Savings Days; school increasingly appears to be a place where profits are to be made in competition with other students in the form of good marks, whilst the goal of ‘learning for life’ is now only dismissed with a wry smile; by the end of induction week at the latest business students realise that profit maximisation is the greatest goal on earth.

The effects of these constructs

The constructs of profit maximisation, focusing on competition and growth also have considerable negative aspects by hampering working together while at the same time encouraging working against one another. These values subtly contribute to an inhumane way of acting for the very reason that they are adopted without thinking. Furthermore, we can also presume that in this respect these constructs even provide a basis of justification for improper conduct by managers.

2.2 Profit maximisation

‘Making a profit is as important as the air we breathe.

It would be sad if we were only here to breathe air.

It would be just as bad

if we only ran companies to make a profit.’21

Hermann Josef Abs (1901–1994),

Chairman of the board of Deutsche Bank

In the 1970s, lecturers at St. Gallen were already drawing attention to the fact that the call for profit maximisation needed to be defined more specifically. It had been observed that some managers had been making large short-term profits at the expense of the future. Maximising short-term profits at the future’s expense puts that company at risk. Typical measures include lengthening maintenance periods, reducing the budget for research and development, and scrapping training programmes. In order to combat this, the lecturers recommended that profit targets be given a long-term and thus a sustainable perspective. Even if this view is certainly correct, it still needs more thorough consideration.

What students are taught

Business students have only one answer to the question about what a company’s main goal is: profit maximisation. Whether it be students in their first term or those taking their final exams, research assistants or PhD. students, whether early in the morning, in the afternoon, or when they are jolted slightly inebriated out of their deepest sleep at night, these budding managers and economists only have one answer: profit maximisation. From the very outset, the goal, or task, of ‘profit maximisation’ burns itself into business students’ brains in such a way that it becomes part of them and goes unquestioned. And so profit maximisation becomes an implicit guideline that characterises almost the entire world of management.

This chief goal of profit maximisation, which plants itself in their heads and moulds their psyche for the long term, is graphically explained in the very first semester using a model: profit is the difference between revenue and costs, and the goal is to find the point where revenue and costs are as far apart as possible. This point of maximum profit can be determined as a measurement in a system of coordinates.

The assumption with revenue is that initially it will increase rapidly as quantity output increases, and then flatten out to reach what is known as maximum revenue. From there, revenue will fall as the output quantity increases. If revenue is plotted on the y-axis and quantity on the x-axis, the curve resembles a bell. The actual background to this bell is the falling price-sales function, which assumes that more products will be sold when the price is reduced. Multiplying the prices given by the relevant quantities necessarily produces the revenue bell curve mentioned.

Costs are assumed to be a bloc that is still incurred even when nothing is produced. These fixed costs, as they are known, start on the y-axis and increase with output quantity. In some models this occurs as a line; in more complicated models they usually diminish in order to be able to depict economies of scale or the effects of learning.

Then the output quantity is sought at the point where the two curves are the furthest apart, or a new curve is drawn which depicts the difference between the two curves, from which the maximum is determined. This can be done using geometry or by using algorithms from the curve sketching.

Fig. 2: Graph of maximum profit calculation

What is astounding here is the complete absence of any relation to real life: managers who keep these two curves on their desks in order to refer to them in practice do not exist. But even more astoundingly, profit maximisation is not even measurable even though measurability is one of the main requirements for operational targets! In retrospect it cannot be said whether the measures taken actually led to maximum profit or not; maybe a little more profit could have been made after all.

The mathematical underpinnings of the basic thesis that profit maximisation should be a company’s main goal contribute decisively to its lodging itself almost indelibly in people’s brains and becoming part of their identity. After all, whatever can be expressed by mathematical models and be (apparently) calculated surely cannot be wrong! This would not be quite so bad if profit maximisation were a goal worth aspiring to from an ethical point of view.

To illustrate how dangerous profit maximisation is, it first has to be divided up analytically: profit maximisation is nothing other than maximising revenue whilst simultaneously minimising costs.

Revenue maximisation requires making as much revenue as possible. Behind it is the invitation, ‘Get as much money out of your customers as you can!’ and ‘Set prices as high as they’ll go!’ To put it clearly, the principle of profit maximisation contains a clear invitation to rip people off – without doubt an ethically questionable way to act.

Revenue maximisation involves ripping people off.

Ripping people off involves demanding an unjustifiably high price. Even if no crime is committed in the legal sense, such as intending to commit unlawful enrichment under false pretences, let alone profiteering, the offers made by many companies against this backdrop do appear questionable. Planned wear and tear22, i.e., intentionally reducing the lifespan of products, and subscription traps are just the tip of the ugly iceberg of business reality. What is more, even responsible companies do not shy away from ripping their customers off with overly expensive service hotlines or barely affordable offers of services (e.g., surcharges on flights for luggage over the weight limit).

Cost minimisation is often exploitation.

The requirement to minimise costs is also not without its problems: cost minimisation requires spending as little as possible on resources, paying the lowest possible price, pushing suppliers’ prices under the company’s own (at least for a while), and putting economic standards before social ones. To put it clearly, the principle of cost minimisation, and with it of profit maximisation, involves an unmistakable invitation to exploit – which is no less ethically questionable.

The neutral definition of exploitation primarily denotes any kind of use or consumption. However, by Karl Marx’s time the term referred to employing people oppressively in production processes. Today exploitation is understood to mean particularly abhorrent forms of labour such as slavery or child labour. Tellingly, this term, which is clearly negatively loaded, is used quite unthinkingly in several standard works on business studies in connection with the utilisation of production factors, although we should give the authors credit for the fact that they do not refer to the production factor of labour, but rather to materials or capital goods.

Ripping people off, exploitation and therefore profit maximisation require taking advantage of the plight of others.

As has already been mentioned, the job of companies is nonetheless to make profit. We may therefore suggest not saddling this important goal of business with the inoperative, radical suffix ‘maximisation’. The goal of ‘profit maximisation’ could be replaced with the terms ‘intention to make profit’ or ‘making an appropriate profit’.

2.3 Focusing on competition

‘In order to win you do not need to beat others.

Only simple souls define themselves solely and directly

by the fight, the desire to beat others.’23

Michael ‘The Albatross’ Gross,

swimming world and Olympic champion

Economics works on the basic assumption that competition produces the best supply of services. A lack of competition leads to higher prices, worse services and, in the worst-case scenario, to a lack of provision for people.

The basic assumption of economics

Derived from this basic assumption is the requirement in business studies that companies must be competitive to survive. In order to survive in the economic ‘survival of the fittest’, a company has to be better than the competition over the long term otherwise it will need to close its doors.

If we follow this thought to its logical conclusion, holding your own against the competition actually means beating your competitors. ‘The winner takes it all!’

Alongside profit maximisation, this thought, too, has ripened into a guiding principle of management. ‘Competitiveness has become an article of faith, the new gospel of those sections of the population that rule today’s world.’24 In speeches, management reports and whenever reorganisation is needed, many directors and politicians chant the same old mantra of focusing on competition. The Italian sociologist, Riccardo Petrella, who made a name for himself opposing the privatisation of drinking water, notes that the cult of focusing on competition loosed itself from the context of business long ago and has already reached large sections of society. ’The imperative of competition between companies and nations has strongly moulded the thinking, strategies and decisions of education ministers, university chancellors, union leaders, members of parliament and mayors, TV producers and journalists, and continues to do so.’25

The guiding principle of focusing on competition is no doubt also the reason why the vocabulary of managers and even economists very often resembles language originally designed to describe particularly brutal events such as war and crime. In German, the struggle for a market share (‘der Kampf um Marktanteile’) sounds relatively harmless, while the English saying ‘Business is war’ is considered a dictum that describes the nature of business.26 When scouting for gifted young professionals, companies find themselves engaged in a ‘battle for talent’. In German business language, too, completely innocent sounding terms like ‘strategy’, ‘tactics’ and ‘logistics’ have crept in, which Prussian general Carl von Clausewitz (1780–1831) originally used to describe the conflicts of war.

Bruno Wagner even gives many examples of how not only the choice of words, but also managers’ actions are reminiscent of warfare.27 The book by Matthias Weik and Marc Friedrich, in which they lambast the conduct of politics and the world of finance, bears the telling title ‘The Greatest Plundering in History’ (Der größte Raubzug der Geschichte28).

In any case, competition is combat; competition pits one party against another. The actual job of companies, however, is to do business with each other and with consumers. Companies have customers, so they do not primarily work against others, but for someone or for something. They only work against competitors secondarily. It is therefore quite astounding that focusing on competition is so highly regarded, while focusing on the customers themselves is very frequently treated with disdain, even by responsible companies. The lack of service culture in Germany is lamented on a regular basis and demonstrated by various studies, but there seem to be no long-term improvements on the horizon.

Competition is combat.

With a nod to sport, managers are fond of describing themselves as a team. There is a massive difference between a sports team and a company, however. Unlike companies, most sports teams are actually fundamentally competitive: football or handball or hockey teams are out to beat their opponents. They need an opponent for their sport to make sense.

Only a few sports, such as sailing or mountain climbing, don’t require any opponent at all, even if the occasional competition gives them an extra kick. In these sports, as in individualistic sports like running and swimming, there is a goal which has to be reached by effort. The first priority is to work towards this goal. If you are a runner or part of a sailing crew, constantly keeping an eye on your opponent requires too much energy, which could be more usefully utilised elsewhere. It’s the goal alone that matters; the opponents become a focus of attention at most only once the goal has been reached.

A company’s central goal is not to defeat others or knock them out of the race. If a runner were to knock someone out of the race in the literal sense of the word, they would be disqualified for unsporting conduct. Against this backdrop, it seems compelling to consider the fighting and attacking of competitors that is considered necessary and still widespread in many companies today as dubious. The idea of using aggressive competitive behaviour as a tactical or strategic alternative should in my opinion be consigned to the junkpile of management literature.

Above all, business activities should be characterised by the central goal of satisfying the customer.

An exaggerated focus on competition ties up resources which could be used more appropriately. Furthermore, an excessive focus on competition also blinds us to the needs of the customer.

The fact that competition turns out to be an unsuitable guiding principle for business is ultimately backed up by the findings of psychology. Psychologist and Nobel Prize winner Daniel Kahnemann refers to an interesting experiment in which two groups of test subjects played a game. The first group was told it was a ‘team game’; the second, that it was a ‘game of competition’. In the first case, the players were ready to help each other; in the second, they were selfish – even though both times they played the same game.29

2.4 Growth

‘Pure monetary growth is questionable.

This kind of growth is paid for by a crack through society.’

Friedhelm Hengsbach30, German Jesuit and social ethicist

The Limits to Growth is a much respected study, published in 1972, on the future of the world economy. The study was commissioned by the Club of Rome. Donella and Dennis Meadows and their collaborators at Jay Forrester’s institute for system dynamics conducted investigations and computer simulations using various scenarios.

The limits to growth

The central conclusion of the study is that if the present growth in the world population, industrialisation, environmental pollution, food production and exploitation of natural raw materials continues at its current rate, the absolute limits to growth on earth will be reached within the next hundred years.

The study was published nearly 50 years ago. Its central conclusion is still widely controversial today. The Meadows’ book has sold over 30 million copies and been translated into 30 languages. In 1973, the Club of Rome was awarded the Friedenspreis des Deutschen Buchhandels (the peace prize of the German publishing association) for its study.

So it is indeed surprising that business and politics today, too, are still counting on unbounded, even exponential, growth today. The ambition to grow has been taken for granted to such an extent that it is often futile to look for reasons for growth. But, there again, a reason for the ‘growth addiction’ could be hidden in the contents and structure of business studies. Business studies provides a number of ‘strategic instruments’ with which a company’s direction can be set and controlled. Hardly any of these instruments can do without the aspect of growth. Whether it is the SWOT analysis or the portfolio matrix, the balanced scorecard or the life cycle analysis, a company’s future success is predicted quite lopsidedly on the basis of quantitative potentials for growth. The result is that the company, together with purported experts who know how to skillfully visualise the ‘strategic instruments’ with colourful charts, is streamlined for the growth in volume.

The alternatives to this, on the other hand, such as consolidating or even consciously contracting, are given a passing mention in the business literature at most; in practical consulting, these alternatives often do not even crop up. These topics are obviously not ‘sexy’ enough to warrant mentioning. It is precisely these topics, however, that future managers increasingly need to think about. Recognising the limits to growth especially means making companies manoeuvrable and agile. This depends particularly on recognising – together with your employees – what opportunities are open to you, instead of following the opinions of so-called experts which always sound the same.

Alternatives to growth

With regard to growth, it is also worth bearing in mind that not every business graduate will be able to work in companies that grow. Even if the economy is growing or has to grow, as many politicians would have us believe, there will always be companies with above-average growth, companies with below-average growth and even contracting companies, that nevertheless still desire to provide quality services to their customers. If business studies with its contents and case studies lopsidedly counts on growing companies, it will produce ‘fair-weather sailors’ at best. In view of the difficult periods which companies are seen to pass through repeatedly and which affect the entire economy from time to time, educating managers in crisis management seems to be virtually indispensable. It is no coincidence that, in practice, this field tends to be left to the lawyers rather than to economists. For example, most insolvency administrators started off as lawyers.

The desire for growth is absolutely understandable if it means making higher profits or that employees can even be given a pay rise. The state profits not least from the additional tax revenue with which it can cover its continually increasing spending.

In accord with this, the demand for growth is generally and unthinkingly seen by politicians, economists, managers and businesspeople as a positive development. The limits to growth are consciously ignored and there is no regard given to the risks of growth. We already know from medicine, however, that accelerated growth usually results in death: that’s the definition of cancer.

Unlimited growth is usually fatal.

Nature cannot be used as a justification for unbounded growth either. Plants and living creatures only grow until they are full-grown. The excessive growth of individuals or individual populations eventually ends in chaos because it destroys the ecological balance. Daniel Goeudevert gives a wonderful example of this in his description of the water lily, ‘From antiquity until modern times the water lily has been considered a symbol of innocence, purity and chastity…its fragrant flowers with their petals arranged in a spiral cover everything beneath them with a wonderful mantle…; however, botanists correctly point out that the water lily has heavy nutritional requirements and draws nutrients from the subsoil in such quantities that it threatens to destroy its own habitat.’31

The water lily principle

Hence, the all too widespread belief in growth is not a solution for the problems that lie ahead. Rather, it suppresses them in the naive hope that ‘ploughing on’ will be the right course of action.

The demand for more growth blinds us to the need for drastic change.

2.5 How questionable values affect managers’ attitudes

The questionable values of business are not without an impact on managers in all sectors. We can assume that these values even permanently mould the personal attitudes of many managers and businesspeople.

In this respect, the dubious implicit values of business studies create a questionable framework for managers, one which is characterised by an extremely negative view of humanity.

‘Dark management’

The results of this kind of dark management can be widely seen. The German magazine Focus puts it this way: ‘The figures are frightening. Almost 87 percent of Germans are dissatisfied with their job. Figure of hate number one is their own boss.’32 The magazine Der Spiegel also pays a lot of attention especially to the consequences these figures have, featuring topics such as bullying at work and burnout, and dedicating title pages and lead stories to them.33

Almost 30 years ago in his book Nieten in Nadelstreifen [Lame Ducks in Pinstripes], Günter Ogger was one of the first to point out how widespread dark management in Germany is and the negative effects it has.34 Well-known authors then followed suit: the former car industry manager Daniel Goeudevert and television journalist Ulrich Wickert, who confirmed Ogger’s findings.35 In their book for the American market, Snakes in Suits, When Psychopaths go to Work36, Paul Babiak and Robert Hare demonstrate that this phenomenon is not limited to Germany. It is indeed not surprising that advice books with serious sounding titles have since come out discussing issues such as how to deal with braggers, back-stabbers and tyrants in the office37.

Lame ducks and tyrants as managers

Although I have also had countless experiences in my own career38 similar to those of the authors mentioned above, and can confirm that there are significantly more bad managers around than good ones, the following is not intended to be ‘score-settling’ or to expound more advice for workers who are subject to lousy management.

Sharpening awareness

Following the conviction that many managers are not even aware of how badly they treat their workers, we have shed some light on the backdrop of dark management through our discussion of the dubious values of business and the negative attitudes that are based on it. Now that our eyes have been opened, it is naturally up to the reader to decide whether he or she would like to draw any conclusions from it. If you would prefer – no longer unconsciously, but consciously – to continue down the path of dark management with all its negative attitudes and consequences, be my guest! This book will not help you any further.

To all my other readers I would suggest jettisoning all the negative attitudes we have described and replacing them with positive attitudes.

Anselm Grün, the German Benedictine monk many managers value for his advice, emphasises that management should not spread disquiet and hectic activity, but peace, clarity, calm and pleasure in working.39 If at this point you say, ‘Right, you’ve convinced me. That’s exactly what I do!’, you have understood the message of this book and do not actually need to read any further.

Nevertheless, what you are trying to do is not easy! Striving for a positive attitude seems to me personally to be a very substantial, ongoing challenge. As I said as the outset, the world is full of people who do not care for others’ welfare, who tyrannise and torment them, create anxiety and spread fear. In our personal lives, too, there are people who breed a negative atmosphere and disappoint us. That gets us down! And sometimes we are the ones who trip ourselves up – it’s not always someone else’s fault. Viewed in this way, it would seem sensible to seek out help on the path to a positive attitude, and with it to solidifying a positive view of humanity.

A substantial, ongoing challenge

In my view, the most important exercise here is to identify the constituents of a positive attitude more closely. Of course, every reader needs to carry out this exercise for themselves since attitude is something that is connected to individual personality.

It might be helpful to change levels here: the concept of ‘attitude’, which refers to the personal, individual or even psychological level, corresponds to the concept of ‘value’ on the sociological level. On the one hand, values are more or less attitudes that are ‘shared’ with others; on the other, values shape our attitudes.

In the following list I have attempted to name the values that, in my view, are in harmony with a positive view of humanity. The reader will notice that the ‘greater’ values, such as love, peace and happiness, are not present, yet they are certainly a constant presence in the background.40 As an economist, I do not feel called to take a stance of epic proportions here. With regard to our topic of management and our focus on companies, it seems justified and appropriate to me to limit the range a little more.

Positive values

Fairness	Reliability	Forward-Lookingness	Trust
Honesty	Satisfaction	Sustainability	Passion
Appreciation	Connectedness	Fulfilment
Steadiness	Justice	Meaning(fulness)

On the one hand, this code of values could be expanded further; on the other, the values listed are not free from overlaps. This short list may thus inspire and encourage the reader to add further values. The next step involves making a selection in order to remove subjective overlaps so that only a few values remain, which form a solid and what will now be a consciously chosen basis for your own attitude. Concentrating on a few consciously selected values makes striving for a positive attitude more manageable.

Focusing

After thorough consideration I have decided to make the values of sustainability, appreciation, fulfilment and trust the basis of my own personal attitude. The concept of fairness, which gives this book its subtitle, permeates these four values equally. This is, after all, a matter of fairness with regard to the future, to resources, to oneself and to the relationships we form. I would like to share with you my personal justification for the choice of my four values as follows:

• Justice and honesty are essentially already included in appreciation, which in my view is more wide-reaching. This can create a link to the ‘greater’ values which are mentioned in the context of a positive view of humanity: love can be interpreted as a value that includes appreciation.

• I believe steadiness and forward-lookingness with a view to qualitative growth are expressed clearly by the value of sustainability.

• In the value of trust, which from my perspective very much emphasises corporateness, I see the values of connectedness and reliability. Here again, a relation to ‘greater’ values is discernible: trust can be interpreted as a pre-requisite for peace.

• The concept of fulfilment, which at first glance seems quite fusty, includes, as I see it, the values of meaning(fulness), passion and

• satisfaction. Fulfilment in one’s career or work seems to me to be a mini-version of the concept of happiness, as far as this relates to a happy life.

Even if you, dear reader, choose differently, in the next chapter you will see how my restricting myself to appreciation, sustainability, fulfilment and trust build a strong core for humane management which offers you a viable pattern for developing your own ethical core. To be precise, it is not a limitation but a focus. In the next chapter, the values that were not selected, as well as some further values, will by no means be ignored but will be picked up again at the appropriate juncture.

An ethical core

The most important exercise is developing an ethical core to solidify your positive view of humanity and then making this the basis of management. The improvement in the way you manage will be a result that will come about by itself.

This ethical core will of its own accord fill the way you manage with life.