The founding vision of a corporation is not easy to sustain, especially unto the third and fourth generation.
Take, for example, the Norstan Corporation. Thirty-two years ago, Paul Baszucki and Sid Cohen gathered resources and ambitions in a garage and launched a business that now employs 1,400 people and serves 18,000 customers. A key to success, Baszucki now says, has been their commitment to managing by values.
The business can be run in an ethical way, he asserts, and still make money.
Baszucki refers for inspiration to the book by Kenneth Blanchard, The Power of Ethical Management. The foreword written by the famous minister Norman Vincent Peale.
Baszucki makes a compelling case for leading by conviction: sharing wealth, protecting environment, respecting employees, and the like.
But he also confesses to a problem: how to transfer his commitment to moral discernment in the marketplace to a successor. It is the problem of social legacy.
At the Ethical Leadership Institute in Lexington, Ky., (sponsored by the Peer Exchange Network and Georgetown College) journalist Marjorie Kelly presented the facts: only 7 percent of companies sustain their legacy of social and moral responsibility beyond the third generation.
She quoted the book by Jack Quarter of the University of Toronto: Beyond the Bottom Line: Socially Innovative Business Owners.
Quarter studied 11 companies in six countries which had been founded by people committed to integrating social responsibility and ethical management into their corporate culture. In every single case, the companies eventually resorted to traditional profit-driven management.
She presented the case of Kay Whitmore, CEO for Eastman Kodak. This company had a policy, dating to Kodak himself, of managing costs through early retirement rather than employee layoffs.
A decade ago the company suffered the ill effects of transformation in their industry. Investors demanded Whitmore improve the bottom line by laying off 10,000 employees. She refused, citing company tradition of social responsibility. She was fired; two weeks later the layoffs were announced.
The problem, Kelly asserted, is not the lack of business leaders with moral convictions; it is the entire business system driven by investor interests.
In her book The Divine Right of Capital Kelly challenges the notion that a 15 percent return for investors (stockholders) is more important than paying employees a living wage or protecting the environment.
Congress also has gotten involved.
They were prompted by congressional hearings into the collapse of the Enron Corporation. The riveting testimony of accountant Sharron Watkins detailed the shenanigans that enriched executives at the expense of company health.
At a recent speech at Samford University, Watkins quoted the words of the famous minister Martin Luther King, Jr. printed on an Enron company notepad: “Our lives begin to end the day we become silent about things that matter.”
In 2002 Watkins was named Person of the Year by Time magazine.
Sen. Paul Sarbanes of Maryland and Rep. Michael Oxley of Ohio co-authored the federal legislation that introduces new regulations for corporate decision-making.
Chief among its provisions are the level of autonomy granted to auditors and the requirement that corporate boards of directors establish their independence from those who manage the company.
Less visible but working toward the same end of social responsibility and ethical management is Ron James. He is president of the Center for Ethical Business Cultures.
James proposes replacing the exclusive orientation toward shareholders—those owning shares of company stock—with the more inclusive orientation toward stakeholders—those affected by company actions: employees, communities, customers, vendors, and even competitors, as well as investors.
Out of his experience teaching business ethics to college students, Professor Roger Ward drew attention to the ideals and aspirations of the young. It has to do with vocation or calling, he said, which he defined as that “which appears to us and demands our commitment.” Too many people, he said, find that they must leave the business culture in order to pursue this type of calling.
This much is true: creating a more ethical culture both within the corporation and throughout the country will not only inspire the young with the very highest of ideals but also allow financially successful and socially committed entrepreneurs to hand down their legacy well past the third and fourth generation.
Dwight Moody is a writer, preacher and theologian living in Lexington, Ky.