In the book, Managing by Values, which I co-authored with Michael O'Connor, we contend that organizations which are going to survive in the future have a balance focus among their key stakeholders: Customers, Employees, Owners (stockholders) and Significant Others (community, suppliers, competition, etc.). In other words, their CEOS are in good shape.
If you followed much of the advice from Wall Street, you would think that only one group of stakeholders was important -- the stockholders. I often get the impression that some people think that the only reason to be in business is to make money. That would certainly be the conclusion if we accepted the advice of people like Al Dunlap.
Dunlap, the former chairman and CEO of Scott Paper Co., is presently head of Sunbeam and author of Mean Business. In all the articles I have read about him, he argues that there is only one group of stakeholders that really takes a risk, and that is the stockholders. They are the only group he focuses on.
I take issue with his thinking. In fact, the best definition I have heard for profit is "the applause you get for satisfying your customers and creating a motivating environment for your people." There needs to be a balance with the key stakeholders.
I was very impressed recently with a book by William Pollard titled Soul of the Firm. As chairman and CEO of ServiceMaster, a $4 billion public company, he has taken a risk with a very different outlook on the purpose of his business. Through Pollard's leadership, ServiceMaster has two end goals and two means goals. The first end goal is to honor God in everything they do. If you don't like the spiritual connotation of that, you can translate it into "Doing good work." The second end goal at ServiceMaster is to help people develop.
ServiceMaster's two means goals are to pursue excellence and to grow profitably. Pollard and his ServiceMaster colleagues argue that excellence and profit are very important, but they are only a means to an end. In fact, the only reason you would want to have an excellent company that is also profitable is so you can do more good work that honors the Lord and have more opportunities to help people develop.
I applaud this approach. We must take a stand against those who contend that the only reason to be in business is to make money. Being profitable and financially successful is important, but it is only a means to an end.
O'Connor and I contend that a company can only manage by values if it has financial success in perspective. It is our experience that behind closed doors, every management team across the United States, when asked, will not name profit as their No. 1 value. They know in their hearts that there is something more important. I pray for the Al Dunlaps of the world; they seem to be on a course that will end up with an epitaph on their tombstone that either lists their net worth or the stock price of the last company they ran.
Rabbi Harold Kushner, who wrote When Bad Things Happen to Good People, really made this point well one time when we were on a program together. He said that in all his years as a rabbi, he had never heard anyone on their deathbed say they wished they had gone to the office more. They all said they wished they had loved and cared for others more.
Rabbi Kushner often talks about two acts in life: achieve and connect. A lot of people suggest that these acts are sequential -- you first work hard to achieve in life, and then, when a mid-life crisis occurs, you start thinking about connecting -- that is, connecting spiritually with loved ones, your environment and the like. Rather than thinking about these acts sequentially, we can do both acts at the same time.
Michael O'Connor and I suggest a third act -- integrate -- which brings both together. We feel that unless this integration takes place, both personally as well as organizationally, people in organizations will get things out of order and become unbalanced. That will not bring out the best in people or make for a long-term, profitable organization. Balance is the key.
About the author
Ken Blanchard is chairman of Blanchard Training and Development Inc. in San Diego. He is co-author of the best-selling One Minute Manager series of books.
Blanchard has written and co-authored many best-selling books. His latest book, co-authored with Michael O'Connor, is Managing by Values (Berrett-Koehler, 1996).
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