The Place of Organizations in Society
The five separate fingers are five independent units. Close them and the fist multiplies strength. This is organization.
—James Cash Penney
In the last 30 years something has happened where profit has been placed upon the altar at which we worship and become the only purpose that organizations wish to pursue. Doing well for ourselves and pursuing a bettering of our situation does not make us bad people. But the capitalist pursuit of a profit-first agenda becomes bad when it is distorted and the pursuit of wealth is chosen above doing good.
In the UK, privatization during the 1980s transferred the power and role of government to organizations that are now responsible for the provision of essential services, particularly in the utility sector. These organizations, such as energy, water, transport, and telecommunications companies, cannot claim to be immune from the societal obligations once covered by the government of the day. The services that they provide are costly in terms of infrastructure investment, but more importantly are essential services to the smooth running of modern civilization. Their citizenship role is perhaps greater than their singular economic role as a private corporation. As these organizations have globalized so too have their obligations and responsibilities beyond country borders, and perhaps more so in regard to the contribution they can make to the economic development of third world countries. It is here, where organizations are in the front line of providing services and products that are necessary for social civilization, that we discover the greatest level of convergence between private and public interest, where the face of capitalism must be most aligned to CSR, corporate citizenship, and sustainability.
Failure in the utility sector is divisive and harmful to public health. Power cuts, water shortages, and failure in transport and telecommunications disrupt society and the economy to such a degree that it can, and does, lead to social unrest and public outrage. Organizations in this sector are at the forefront of demonstrating the true identity and place of the organization in our society. The challenge, of course, is how capitalist self-interest can be redirected to align with doing good. Redefining the role of organizations in regard to their accountability to society and humanity in the wider context will create and give a framework to a Temperatist marketplace. At the core of this framework is the concept of sustainability, in regard to not only the environmental impacts of an organizations operations, the creation of the growth needed to alleviate poverty, and the delivery of basic goods in the third world, but also how organizations substitute drivers for consumption with the creation of products and services that contribute to the doing good agenda.
It may be possible to re-orientate Western economies to focus on commercial activities that deliver improvements in areas such as transportation, healthcare, science, art, research, training, and development. Organizations could develop commercial activities, which impact political, cultural, and behavioral changes for the long-term betterment of humanity. Organizations can contribute to the development of basic utilities, such as energy, healthcare, sanitation, and housing that are required in third world countries for the effective delivery of basic goods. But all these changes require a societal shift in economic values. Reshaping purpose in what the wealth created by our endeavors should be used for is one step on the road toward a Temperatist framework, but there also needs to be a redirection of what products and services will provide the greatest return on investment by their very production.
Humans Can’t Help but Organize
Organizations are a key player in the Temperatist movement for the very reason that they are inevitable in human society. Organizations are not only more than a convenient social construction to facilitate the means of production, but a scientific reality of the human spirit and probably a universal truth. Stick humans together and we will form cooperatives and organize ourselves. Whether in primitive or advanced forms, we organize. Regardless of politics or a public or private agenda, organizations exist. From the day we are conceived to the day we die, we interact continually with organizations. From the pharmaceutical companies that produce the pregnancy test to confirm our mothers are pregnant to the funeral companies that bury us, our day-to-day lives are surrounded by organizations. Ryan Avent contends that “businesses provide an environment where particular cultures thrive . . . The more complicated technology and the economy become, the more important those cultures are, and the more important the companies themselves become, as a result” (2017). The issue today is not that we organize but that organizations are determined to maintain the status quo, insisting that different adds no value and only pursuing the same course of action will deliver different results. Reform is necessary and organizations must realize that their continuation relies on increasing equality and taking ownership of the obligations that they have toward society.
The UK government mantra of we are all in this together applies, and the increasing noise from the consumer and taxpayer in regard to organizations doing their bit, paying their fair share, and addressing the pay gap between CEOs and employees is unlikely to subside. It is perhaps ironic that the primary source of personal income and the purveyor of economic opportunity have become the greatest source of inequality within our society. Arko-Achemfuor and Dzansi (2015) note that “until quite recently, businesses the world over simply focused on profit maximization without really caring about the impact of their activities on society . . . atrocities such as child labor and environmental degradation could easily pass as normal practice.” As employees we are placed in a hierarchy of division and graduation of our worth. Regardless of our intrinsic value, we find ourselves placed in an organizational pecking order whereby we are given the status of superior or inferior and where wealth is distributed according to power relations rather than the value that you contribute. Organizations have a huge impact on the society in which they operate and cannot remain in a situation where they insist that their operation is separate from society. Donaldson (1982) proposed “that corporations, like natural persons, have moral and ethical responsibilities” (Blair, 2015). If they continue to operate as if they do not, then the public outrage against organizations will no doubt lead to greater levels of exposure, reputational damage, and unwanted government intervention.
But it is more than the fact that humans organize that makes organizations a key player in the Temperatist ideology. Organizations and entrepreneurs have the capacity to challenge and change society. This is demonstrated time and again by innovative products or services that change the way we perceive things should be done. Whether that is the introduction of domestic appliances that rang the death knell of domestic service as a societal norm to the introduction of digital books and music that we download onto devices. It is in this context that the organizations and their control of the process of production use of knowledge and utilization of skills make an organization’s operation a political and social action with all actions reproducing values and beliefs and maintaining societal norms. Organizations are dependent on the environment in which they operate. Social institutions, government policies, legal and regulatory framework, and the culture of the country all contribute to the technological, knowledge, skill, and natural resources available for the organization to use for their operations. In addition, cultural norms impact the willingness of society to contribute to and receive outputs from the organization’s operations. The noise that is surrounding capitalism and Western corporatism suggests that there is a growing body of society and government that no longer tolerates the inputs that organizations are demanding or the cost of the outputs that organizations are placing on our world, our communities, or indeed on our individual lives. The domination of the market and the aggressiveness with which it protects its autonomy have begun to replicate the military-led governments that use power and threats to maintain position.
The Problem Is the Solution
It is therefore probably ironic that in a book proposing new thinking about business that Temperatism would promote organizations as the best solution available to deliver the goal of doing good and that the proposal in this book supports a belief that organizations provide the answers to tackling many of the pressing issues that remain in our society. To focus attention on the purveyor of societal destruction as the mechanism by which innovation and creativity will abound may seem flippant at best. However, it is the ability of organizations to solve problems efficiently that makes them an attractive proposition for developing methods by which basic goods can be provided throughout the world. But for that to occur, the leadership demonstrated by those socially responsible organizations that are doing things differently needs to become the rule rather than the exception.
Organizations want to avoid the position of responsibility that regulation and bureaucracy wish to bestow upon them, despite their position of creator and distributor of the wealth in society. Even the words bureaucracy and regulation have negative connotations, with organizations calling for a removal of red tape that implies they are being tied up and prevented from being able to be effective. Regulation has become a cage that organizations wish to avoid or escape, a limitation on their autonomy and a trap to be avoided at all costs. Many changes that forward-thinking organizations are putting in place today are occurring because they realize that additional regulation is on its way. They are proactively pursuing courses of action to ensure that when regulation comes into place, they will be ahead of the curve and able to deliver to regulatory standards while maintaining their levels of efficiency. Many capitalist thinkers advocate a limited role for government and regulators, espousing a laissez-faire doctrine, promoted by Thatcher, of small government leaving the economic engine of society alone to do it, business uninterrupted. Capitalist markets magnify the problem of imperfection because organizations are not forced into a position where they will have to innovate to be efficient and manage the costs of delivering a service or product to a particular standard while simultaneously delivering wealth creation.
The belief that there is no need for government intervention to provide the foundation for doing good, is steeped in decades of muscular entrepreneurialism and the pursuit of self-interest being aligned with public interest. To try and escape the wider responsibilities not just of our individual actions, but also of the actions we take within an organizational setting prevents our ability to act and think humanely. The more rational we pretend our actions are, the more irrational we become in our attempts to hide our humanity and in sociological terms in threatening our very ability to function as social beings. Temperatism isn’t an advocate of big government and tough regulation if it interferes with organizations doing what they do best, which is to innovate and deliver. However, after decades of volunteerism it is apparent that greater levels of regulation are needed if organizations are to contribute positively to the doing good agenda, address the external costs created by their operations, and ensure that the wealth created contributes to greater equality in society. For this reason, Temperatism rejects the notion of the “socialization of investment” (Whyman, 2007), or the social ownership of the means of production that, though radical, prompts the question of who would be best suited to manage the investment and means of production on behalf of society. The capitalist markets have demonstrated an ability to increase wealth and deliver a return on capital investment. The problem with capitalism is to whom the wealth is distributed and the proportionality of the wealth distributed. But Temperatism does promote a more active and deliberate role of both civil society and the state in regulation and the radicalization of corporate social responsibility within the boardrooms of organizations. Whether power and wealth redistribution and doing good increases economic efficiency requires a combination of both regulatory intervention and markets and organizations working to make things work better. For Temperatism, regulation is useful only if it helps provide a framework of moral purpose for an organization, increasing the role of the organization as corporate citizen and enabling employees to find and release their full talent potential. This is more deliberate that traditional trade union wage negotiation. Instead, the focus is on recognition of the value that employees represent to an organization and an obligation toward doing good in regard to remuneration and benefits provided.
Developing People Potential
Very often organizations will state that people are their most important asset, but many writers share anecdotes about leaders of a business who nod their heads when discussing how “people are our most important asset” while making decisions that show that people aren’t their most important asset. In fact, in many organizations, people only factor as a resource to be used or reduced and leaders are concerned only with the numbers on the spreadsheet. This numerical belittling of human creativity, inventiveness, and a sense of self is at the very heart of the problem with capitalism. Human beings are more than a number and we are greater than the sum total of our skills, knowledge, and experience that can be documented in a performance review meeting. Instead, it is that which can’t be measured, our passion, our thinking range, and our talent potential that changes and develops as we interact with the world around us that is the true measure of our value. For a long time, the accepted wisdom was that the reason why inequality exists in society is that individuals lack the skills or knowledge to take advantage of the opportunities available. Organizations complain of the lack of basic skills and knowledge that they need for the jobs available, the blame being laid at the doors of the education system that is “failing” to provide the skills businesses need. However, as training in the UK and the United States is done on a voluntarist basis, the amount of training and support has declined dramatically, especially in regard to those who are joining the workforce, with the majority of training expenditure being focused on future leaders. With a rapidly changing business environment, it is increasingly difficult to predict what skills and knowledge will be valued by organizations and result in employment. The transition of the Western economy from a manufacturing base to a knowledge base demonstrates that it is difficult for the government to be the architect of the training that needs to be provided. Education and training in the twenty-first century have “become a kind of lottery, whose winners and losers are determined, ex post, by the behaviour of the economy” (Galbraith, 2012).
The war on talent that was instigated by McKinsey in 1997 has done little to increase the investment that organizations provide in skill and knowledge development. Rather, the result of the talent war has been an increase in executive pay as talent is head hunted and taken from the market. Some organizations attempt to “grow their own” talent, but often find that the talent is poached by organizations who are willing to pay to buy the talent they want. Once again, the monetization of talent has led the economy away from producing to trading. But is the government of the day best placed to say what organizations will need in 10 or 20 years’ time, when many organizations themselves struggle with workforce planning in a 12-month planning horizon?
There is a place for public education, in regard to ensuring that basic skills are taught and it is essential that state schools provide an education that is on a par with the private school education, providing equality of opportunity at the early stages of a person’s development. An agenda must be developed that goes beyond mere qualification standards and a curriculum based on traditional teaching theory. Doing good becomes a foundation for developing attitudes and behaviors that should be built alongside skills and knowledge capabilities. But more importantly, early education should move away from the testing basis, as experienced in UK classrooms today, where children stop learning just to pass tests and instead develop thinking and learning mind-sets. Teaching our children to question, explore, and be curious is far more important than measuring whether they can pass a test that is put in front of them. Universities have struggled to keep up with a changing world and rather worryingly the real value that they contributed in regard to providing an environment for questioning, and research has been replaced with a production line for qualifications that add little value to the employment opportunities of students or meeting the skill and knowledge requirements that organizations are looking for.
It is organizations that are best placed to provide workplace skills and knowledge development. Not only is learning most likely to be effective if it is practiced, but also organizations can develop relevant and timely learning and development opportunities when they are needed. The modern apprenticeship scheme in the UK has struggled because the very organizations that complain of a lack of, for example, engineering skills, don’t want the responsibility or the cost of training and developing their own staff. This oxymoron between what the organization needs and what they are willing to invest in is a continuing theme when it comes to development of employees. Government support in regard to skills development grants is useful in encouraging investment, but organizations should not rely on the taxpayer to fund or provide the resources they require for competitive advantage.
Instead, regulation is required to put learning and development at the center stage, possibly with the development of a percentage of capital employed being dedicated to employee development. Interesting, this idea is not as absurd as it sounds. In April 2017, the UK government began charging organizations with annual pay bills in excess of £3 million a 0.5 percent training levy aimed at boosting productivity and forcing investment in human capital. However, inequality of opportunity for employees in the area of learning and development continues the theme of disparity apparent in the wider capitalist context. Those who have educational qualifications are more likely to receive investment in their personal learning and development than those who have lower levels of educational attainment. Therefore, a focus of taxpayer support should be geared toward the increase in educational standards, skills, and knowledge development and professional development schemes for those who lack or have few qualifications. It may come as a surprise to many that education isn’t included in the basic goods proposed by Temperatism, and its absence to the debate so far has been deliberate, because of the author’s belief of where personal development falls in regard to the individual and society.
Personal development, in regard to skills and knowledge and education, are directly related to the areas of personality. Talent, as it is commonly accepted in an organizational setting, is restricted to the elite, but Temperatism widens the net of talent to the whole population, linked to our own preference and disposition. To declare everyone as talented goes against the norm, and clearly not everyone is talented in the same way or necessarily possessing a talent that is useful to the organization for which they work. But for each individual our talent is an expression of who we are and yet too often we do not get to use or develop our talent, especially not in the workplace. Organizations today do not invest in people. Human resources are predominately treated as a capital resource with no more value than a fleet vehicle or office space, and they are reported as a number with no consideration of what value they truly possess. It is easy to talk about human potential, but neither our education system nor our workplaces are equipped to find what talent means for each individual or to help them to release it.
The individual themselves have a responsibility, which has become abdicated in an era of rights to discover and develop their own talent potential, but it is in organizational life that our true potential is most able to be released. Changes are necessary in early education to help develop thinking individuals who have the awareness of some potential predispositions of talent, but for many of us our talent doesn’t become apparent until we are given experience, and this is something organizations can offer and is the reason why it is proposed that education and development should be concentrated in the organizational sphere. Focusing on developing individual strengths, rather than trying to fix weaknesses, is important if talent development is to be taken seriously.
In this area, it may be necessary to switch from a voluntarist to a compulsory commitment for organizations to develop all their employees, not least to ensure that all organizations take their responsibility toward skill and knowledge development seriously. In removing the ability of organizations to choose whether or not they develop their employees, taxpayer support should be given to organizations, because of the acknowledgment of the social value that organizations are adding in giving that support. This partnership between the individual, organization, and society is a cornerstone of skills and educational development, and the role that it plays in the economic wellbeing of a nation.
Taking Responsibility
Organizations talk about ethical business while outsourcing parts of the operation for economic reasons to other organizations that run sweatshops or get involved in abhorrent work practices. This ability to abdicate responsibility for employee practices because of multiple and complex value chains must be addressed if an organization’s obligations to employee development are to be realized. On joining an organization, new employees are told about the importance to the organization of developing its people until the economic environment gets too tough and the learning and development budgets get cut as well as employee numbers. The organization should refrain from short-term thinking, but instead take a long-term perspective. Fast capitalism means that even profitable businesses are lambasted because the profit isn’t enough in the short term. This thinking and attitude has to change. The focus should be on maintaining a steady level of sustainable performance and organizational effectiveness to ensure the long-term healthy future of the organization. In doing so the organization is able to provide a positive role model to the society at large, by having a culture where doing good is more important than the drive for short-term larger profits. This means investing in employee growth and training and demonstrating a concern for their life outside of work in supporting an organizational culture that promotes work–life balance, family values, flexible working, and wellbeing. Outside of the individual employee, organizations should be a positive influence in the wider community in which they reside. Whether that be through investing in community projects, allowing employees time and resources to invest in the larger community, or simply being a positive part of the community in which the organization resides.
This includes the idea that organizations must ensure that the external costs of their operations are aligned to sustainable business practices. This means that organizations should care about the environmental impact of their business practices and should work toward ensuring that they have a positive not a negative impact on the environment in which they operate. This should include everything from the supply of raw materials, innovation in business processes to reduce environmental impact, or seeking to achieve ever-higher standards in regard to business processes and practices. In the pursuit of their purpose, organizations should act with moral integrity in its dealings with their employees, shareholders, suppliers, and customers. This means paying suppliers on time, or even before time, honoring the spirit of a contract as well as the letter of the contract, treating employees and customers with respect and concern, always going beyond what is expected, and finally not just seeing shareholders as a stream of money, but partners. In all business practices, the organization should seek to act beyond reproach. Policies and practices, health and safety, quality and business dealings should reflect the honor, honesty, and moral standards to which the organization holds itself. Wrongdoing should be rooted out and malpractice dealt with immediately and without trying to cover it up.
What ties all these obligations and responsibilities together is the contribution organizations can make to society as the purveyors of innovation and creativity. The leaders and managers within the organization should work to create an environment where employees are allowed to dream, create, and innovate beyond that which might seem logical and rational. The use of both rational and creative thinking should be encouraged, and individuals should be encouraged to discover and develop their talent in order to release their full potential. Capitalism would have us believe that invention and innovation occur only where there is a self-interested pursuit of personal financial incentives. Research, however, suggests that the opposite is true. The more equal a society, the more creative it is.
There is a tendency for more patents to be granted per head of population in more equal societies than in less equal ones. Whether this is because talent goes undeveloped or wasted in more unequal societies, or whether hierarchy breed conformity, is anyone’s guess. But it does suggest that great equality will not make societies less adaptable. (Wilkinson and Pickett, 2010)
Organizations should not put restrictions on what is possible but rather demand that barriers are broken, new ways of doing things explored, and the pursuit of the impossible made possible used to widen horizons and continuously grow, build, and expand its endeavor. Temperatism argues for a level-headed approach to change and the interaction between the organization and the external environment, curbing the requirement for fast reaction with a more stable and cool appraisal is required. This requires an adaptive and flexible design to organizational and governmental structure and planning, focus on self-control, self-restraint, and responsibility in employment relations and citizenship as opposed to rules and rights and in regard to employees and a talent-liberated rather than talent management approach to human potential. Good management practices are still required if Temperatism is to be successful and efficiency, coupled with effectiveness are still necessary.
The Temperatist marketplace will also require organizations to consider what potential area of growth and innovation are available, scan for trends, manage waste and ensure that resources are used at the right time, for the right things. The difference is that the legal minimum, the things that an organization ought to do is expanded beyond regulation and statute, and become a cultural moral obligation and responsibility for all organizations. The stakeholders of the business extend beyond simply shareholders, employees, customers, and suppliers, widening to include the societal and environmental dimensions as a minimum of acceptable organizational behavior. The very problems that capitalist organizations dismiss as being issues for society and government to deal with, become part of the objective of organizations that will develop systems and processes to ensure they are part of the solution not part of the problem. Continual dialogue and debate will be necessary to ensure sensible and timely solutions are found to help fix both a broken economy and a broken society. There will be many with opinions about what economic, social or environmental problems are, most pressing and only compromise and cooperation between all the dissenting voices can ensure progress can be made and real change can occur.
Temperatism recognizes that organizations need to make a profit in order to continue doing good, provide employment, pay taxes, and pursue a purpose that is worthwhile. It’s time organizations stopped pursuing profit and begin to fulfill their true purpose on earth, to be a vehicle for growth and caretakers of the earth’s natural resources in a sustainable manner for the good of humanity. Organizations shouldn’t need to be told to do the right thing, and it shouldn’t be radical to expect organizations to take responsibility for being part of the solution to the challenges that face humanity. It is a sad reality that we need regulation for organizations to act in a way that was morally the right thing to do. Temperatism challenges all players whether political, social, or economic to take their place in being the change required in order to achieve a more equal, more harmonious, and more humane world. Organizations are special because in order to operate successfully they depend upon and cross the divide between the social, economic, and political realms. This places organizations at the heart of a Temperatist society.