Another CEO for Golden Rule Management

Another vote for really, truly treating employees like teammates — for managing by the Golden and Silver Rules and thereby building a successful business — from Richard Teerlink, the retired chairman of Harley-Davidson. I recommend his recent comments, as reported by my friend Anne Ciesla Bancroft in her very substantive blog on managing workforce reductions.  Anne is an employment lawyer with Fox Rothschild.  She reports that:

During his 18 years with Harley-Davidson, Teerlink led the successful cultural transformation of the company based on the premise that “people are an organization’s only sustainable competitive advantage.”

Here here! And unlike some former leaders of major American manufacturers, I don’t think Teerlink has come to this conclusion recently.

Is Employment a Corporate Social Responsibility?

I heard some interesting reactions to and interpretations of the comments on April 29 by Dr Margaret Chan, the Director-General of the World Health Organization. She said:

“I have reached out to companies manufacturing antiviral drugs to assess capacity and all options for ramping up production.

“I have also reached out to influenza vaccine manufacturers that can contribute to the production of a pandemic vaccine.

….

“Above all, this is an opportunity for global solidarity as we look for responses and solutions that benefit all countries, all of humanity. After all, it really is all of humanity that is under threat during a pandemic.”

In on-air chat the next morning, these comments led the CNN anchors into a discussion of corporate social responsibility in the broad sense, of pharma companies as rich citizens of the world, etc. Their explicit point: hey, drug companies — you’re making billions off of us, so don’t be greedy when the world needs your Tamiflu.

If that is a fair point, then how come we never heard it applied to the economy? According to the CDC there are, as of now, 226 cases of 2009 H1N1* in the US. By contrast, the Labor Department says some 1.9 Million Americans have lost their jobs since December 2007. A more widespread pandemic, don’t you think?

But we never heard a public outcry, or a governmental shout-out, to this effect.  What if someone with a bully pulpit said this:

“The Economic Meltdown of 2008-2009 is a pandemic, fueled by the contagion of uncertainty. People are afraid they are going to lose their livelihoods, so they stop spending, that causes losses in the companies that produce our goods and services, and those companies go on to lay more people off.

“To stop the spread of this pandemic, we need to contain the layoffs and the fear of layoffs. So we are calling on the companies that have profited from the American consumer to now do their part, to live up to their social responsibility, by striving to the greatest extent commercially possible NOT to put more people out of work.”

And saying that wouldn’t have cost the taxpayers a dime.

I have run companies. When my company’s survival or fundamental profitability was at stake, I laid people off. I really had no choice. And for many companies this year, that sad reality is behind their RIFs.

But seriously, and I would like to hear from my fellow corporate ethicists out there, do you think is it patriotic, is it ethical in this kind of economy for a profitable company to lay people off just to increase its profit margin?

I’m just asking.

But even Jack Welch might say that kind of layoff is unethical AND bad for business. At least, I think he’s saying that these days, now that he has repudiated the idea of “shareholder value” as a prime objective of business. As Jack told the Financial Times:

“Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products.”

* I like bacon way, way too much to call it “swine flu.”

“Shareholder Value” and short-term thinking

Can short-term thinking in a business leader be ethical… at least when the survival of the business is not at stake?  Isn’t there something intrinsically wrong about sacrificing the future for the sake of the present?

Valuing the long-term over the short-term is at the heart of a lot of messages that company management gives to employees about ethics.  When we say, “Don’t approve a shipment of peanut paste that you know is tainted,” we are really saying, “We don’t want you to sacrifice the company’s future reputation and sales for the sake of filling this one, immediate order.”

So not being hypocritical about that message in the top-level business decisions we make adds a bit of a challenge in maintaining our “tone at the top,” eh?

And so it seemed ethically obvious when Jack Welch told the Financial Times on March 12, that the “obsession with short-term profits and share price gains that has dominated the corporate world for over 20 years was ‘a dumb idea.’ Welch says now that the concept of “shareholder value” that he championed was never supposed to be a be-all-and-end-all.

According to the Financial Times:

Mr Welch said last week he never meant to suggest that setting, and meeting, profit expectations quarter after quarter in an effort to boost a company’s share price should be the main goal of corporate executives.

On the face of it, shareholder value is the dumbest idea in the world,” he said. “Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products.”

At least, that’s what he says now.