We write a lot about individual growth and self-inquiry. But it doesn't hurt to do some collective soul searching, whether as a family, a school or an organization. Today we look in particular at business. After all, the notion that a company exists to do more than generate a return for its shareholders is not new. But by and large it has failed to take root in any significant way.
Nonetheless, many businesses and managers will protest. They earnestly believe that they create value for society at large, that they care about social issues, the environment, about their employees. But the proof, as they say, is not just in the pudding but in the eating of it. That is, some companies can be prone to lip service, and even when there is action, it is more often symbolic than substantive.
In 2019, the Business Roundtable, which is composed of the CEOs of some of the largest and best-known American corporations published a policy statement that, for the first time, declared that corporations did not exist simply to generate profits but also to "deliver value to their customers, invest in employees, deal fairly with suppliers and support the communities in which they operate."
This time they seem to be serious about making specific investments in the wake of social movements such as Black Lives Matter and a global health crisis. But it may be wise to wait before drawing any conclusions about whether or not this is anything more than good public relations.
Corporate actions during the covid-19 pandemic have not been encouraging—an analysis by the Washington Post found that 45 of the 50 biggest U.S. corporations laid off staff while continuing to make money and pay out profits to investors. And as talk about a recession heats up, so do the spate of announcements about layoffs.
Companies, like people, are creatures of evolution by natural selection and as such subject to all kinds of cognitive bugs that often lead to poor decisions. Many of these bugs have been highlighted by the pioneering work of psychologists like Daniel Kahneman and Amos Tversky, who pointed out our distorted view of costs and risks, as well as the tendency to base decisions on the most recent information we can access or that which is most available.
Such bugs in the human operating system create a lot of problems with our perception and judgement. But what is relevant in the context of businesses claiming to have evolved beyond profit, is a particular bug that sociologists call the "attitudinal fallacy." This says that there is often discord between our stated values or beliefs and our actions. That is, we don't walk the talk. And organizations, too, are prone to such human foibles. Many companies aren't exactly living up to their lofty commitments. And there are invariably contradictory actions that go against the very beliefs these companies espouse. For instance, denouncing inequality in the world while perpetuating it through hiring practices, promotions, and board appointments.
It's possible that sometimes the values are espoused in a cynical way, to seem virtuous and to gain good will with little intention of following through. How else can we explain the speed with which major companies abandon their celebrity ambassadors or charitable "partners" at the mere whiff of scandal? Was it ever about what those people or organizations were doing or was it more about riding their coattails when the going was good?
Other times promises may have been sincere, but nonetheless there is no action. The result is the same. Promises made. Promises broken. And nothing much changes. With this in mind, perhaps we can all reflect on what part each of us can play in all this. Can we take a more active role in encouraging organizations to look deeply and commit to substance over profit and perception?
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