Abraham Lincoln: a leader inspired by literature

By Mark Wakefield

Abraham Lincoln
Abraham Lincoln – profound moral purpose, but no saint.

I’ve just recently returned from holidaying in the United States on the coast of Maine. While there I happened to meet Professor Fred Kaplan, who is a distinguished author of literary biographies. His most recent, Lincoln, the Biography of a Writer, is a book that I found fascinating, not least for its insights on leadership. In Lincoln’s case – and many in the US believe him to have been the greatest ever President – there can be no doubt that his love of literature played a pivotal role in shaping and sustaining him as a leader. This seems to me a point worth pondering given that we now live in a culture that values the explicit and measurable over the implicit and inherently unmeasurable.

Continue reading “Abraham Lincoln: a leader inspired by literature”

The shadow side of values

By Martin Vogel

shadow

Only about a decade ago, corporate values were all the rage. We lived in a world in which business was largely viewed as a force for good and corporations identified their success with the general wellbeing. Now, as we labour to fund the bailouts of the banks, we have a more nuanced view of business and the statements of values seem hollow.

But values remain potent. The public cares about them: not the values of PR spin but the actual lived values of organisations. Most of the corporate scandals of recent years became scandals precisely because they generated perceptions of values betrayed.

Continue reading “The shadow side of values”

The science of happiness at work

By Martin Vogel

Google canteen
An enticing display at the Google canteen

Compare and contrast.

At Google, social science researchers have been engaged to advise on the optimal conditions in staff canteens:

“Researchers found that the ideal lunch line should be about three or four minutes long—that’s short enough that people don’t waste time but long enough that they can meet new people. The tables should be long, so workers who don’t know each other are forced to chat. And, after running an experiment, Google found that stocking cafeterias with 8-inch plates alongside 12-inch plates encouraged people to eat smaller, healthier portions.”

Meanwhile, at the recently completed corporate headquarters of a large media organisation, staff complain that their catering facilities are not fit for purpose:

Continue reading “The science of happiness at work”

Who will get us out of this mess?

By Martin Vogel

jarrow

Two recent articles bring home – if you still doubt it – the redundancy of the shareholder value model of capitalism. It’s not just that it has proved an ineffective way to run companies. It’s actually undermined the long-term viability of the economy by creating inequality of such depth that the markets for the products of business are weakened.

Continue reading “Who will get us out of this mess?”

Two questions and a good answer: a simple proposal for an ethical renewal of business

By Mark Wakefield

Rodin's 'The Thinker'
Thinking about why as well as how.

You’d think that the more protracted the after-effects of the 2008 financial crisis become the more willing we would be to ask searching questions about its root causes. Sadly, this seems not to be so. In much public discourse, there is an often unspoken assumption that if only we could sort out the banks, fix the Euro and correct global trading imbalances we could all happily return to the days of uninterrupted growth.

It’s therefore welcome to find – in the shape of Will Morris, current chairman of the CBI’s taxation policy committee and Global Director of Tax Policy at GE – one senior business figure who acknowledges that things have gone wrong at a pretty fundamental level. And it’s even more welcome that he’s come up with a solution that is both simple and elegant. Sadly, his paper Not Just How but Why – which was published by Reform earlier this summer – has received precious little attention, which rather underlines my point.

Continue reading “Two questions and a good answer: a simple proposal for an ethical renewal of business”

The value of culture lies in its capacity to enrich lives

By Martin Vogel

The National Gallery drew large crowds during the Second World War for recitals by Myra Hess
The National Gallery drew large crowds during the Second World War for recitals by Myra Hess

Organisations of all kinds face a new challenge: to demonstrate that they create value for society and not just for themselves.

A reckoning has been a long time coming after the financial collapse of 2008. But it’s arrival is unmistakable – not just in the mood music of the party leaders as they compete to compose the best tune on moral capitalism. It’s evident in the furore around the aborted bonus of the RBS chief executive, Stephen Hester, the broadly sympathetic hearing given to the Occupy protestors at St. Paul’s, and the public revulsion over the phone hacking scandal which brought about the Leveson Inquiry into the role of the press.

Continue reading “The value of culture lies in its capacity to enrich lives”

The role of business schools in society

By Martin Vogel

business school
Business school lecture: a force for good or harm?

Book review: Confronting Managerialism: How the Business Elite and Their Schools Threw Our Lives Out of Balance by Robert R. Locke and J.-C. Spender

One of the striking characteristics of the debate about the economic crisis is the ease with which the epithet “anti-capitalist” is used to describe even the mildest critique of the status quo. Even David Cameron (a fleeting champion of “moral capitalism”) was at it last week, condemning as “anti-business” people who argue that the bosses of large corporations should restrain themselves from accepting obscene pay awards when the performance of their companies has been poor.

Continue reading “The role of business schools in society”

How social media support social value

By Martin Vogel

Eurostar: slow to board the social media bandwagon
Eurostar: slow to board the social media bandwagon

Book review: Who Cares Wins: Why Good Business is Better Business by David Jones.

Who Cares Wins by David Jones is the latest contribution to an increasingly crowded publishing niche focussed on how business can do well by doing good.  Jones, who is chief executive of the advertising agency Havas, shares the view of us here at Vogel Wakefield that the rise of social media is an important driver of social responsibility in business. He points to a tweeter using the name @BPGlobalPR who outpaced the official BP Twitter account in the wake of the Deepwater Horizon spill.

Continue reading “How social media support social value”

Ethics are rising up the business agenda

By Martin Vogel

About to become a mainstream subject?

Two different articles highlight the importance of ethics and integrity as corporate considerations.

Anthony D’Angelo, writing in Business Week, analyses the curious lack of attention paid to reputation management in business schools:

An analysis of highly ranked MBA programs by the Public Relations Society of America showed that only 16 percent offer a single course in crisis and conflict management, strategic communications, public relations, or whatever label one chooses to describe management of a precious organizational asset: reputation. Even that course is likely to be an elective. So glaring is this omission that it’s typical for MBA-holding executives to assume “reputation management” or “public relations” is the black art of spinning an alternative version of reality, as though that works in today’s wide-open, relentlessly scrutinized, electron-speed information environment.

Continue reading “Ethics are rising up the business agenda”

More to business than shareholder value

By Martin Vogel

Andrew Hill writes in the FT about the way opinion is turning against the idea that businesses should focus primarily on maximising shareholder value.

He is reviewing a book by a Canadian academic, Roger Martin, which appears to be a polemic against linking CEO pay to company share price.  But it’s interesting also for the background on how the tide has turned on the shareholder value movement:

Prof Martin’s central concern is that the pursuit of shareholder value “simply fails as a unifying theory to produce value in business”

Given that even Jack Welch, the high priest of shareholder value creation while chief executive of General Electric, has since dismissed its strategic primacy as “the dumbest idea in the world”, this argument sounds a little out of date. But Prof Martin is right that the theory continues to distort corporate strategy and that chief executives need to step off the consensus earnings treadmill. “I do think there’s room for leaders to lead, not to be led by the nose-ring by analysts,” he told me recently.

The idea that companies’ principal aim should be to maximise profits for owners came from Michael Jensen and William Meckling’s 1976 paper on the “principal-agent problem”, caused by chief executives allegedly enriching themselves at shareholders’ expense. But Prof Martin’s own research has shown that in the 20 years before 1980, when the shareholder value movement took root, CEO compensation per dollar of income earned at the biggest US companies actually fell. Between 1980 and 1990, it doubled and between 1990 and 2000, when Mr Welch and others were in their pomp, it quadrupled. Returns for shareholders, meanwhile, were better before 1980.

Hill highlights some interesting recommendations from Martin on improving the role of directors:

Recast board directors (who are as susceptible to the principal-agent problem as chief executives) as public servants. Encourage companies to rebuild the civil foundations of business for the mutual benefit of society. Readjust priorities to focus on customers over shareholders.

Cynics may roll their eyes at such prescriptions. But one of the insidious effects of the quest to hit quarterly targets is that it distances executives from the real reasons they are in business. In Prof Martin’s words, it makes them “indifferent to their communities”.