The Indirect Way to conduct Good Business

Mr J.F.X Zahra's article appears weekly on Newsbook

For the second year running the Archbishop of Westminster, Vincent Nichols organised a conference in London on “Business Success through Serving Society.”This is the second conference in what is becoming a series of conferences and seminars under the general banner of a “Blueprint for Better Business”. I made it a point to attend the conference again this year – last year I reported on it in my blog under the title “A Blueprint for Better Business?” The speaker invitees of Archbishop Vincent included amongst others, John Kay, the leading British economist, Rev.  Justin Welby, Archbishop of Canterbury, James McPherson, Managing Director of Blackrock, Sir Richard Lambert, now responsible for the reforms of banking regulations and Frances O’Grady, General Secretary of TUC.

Archbishop Vincent set the tone of the conference by stating that the market is not a value-free zone, and that values play an important part in business decision making. A working group was set up last year to follow up on the ideas which came out from the first conference and the results of these discussions centred primarily on the purpose behind the business which has a direct influence on its performance. The main perils to society do not lie in business practice per se, but in the moral context within which business operates. The working group set out a number of themes of “purpose driven organisations” which include a responsible approach to employees and suppliers, business that deals fairly with customers and suppliers; business that behaves as a good corporate citizen in the communities in which it operates, and one that behaves with conscience as a guardian of future generations.

John Kay was highly critical of what we call the “Anglo Saxon” business model where performance and results are solely measured by the return on capital employed. We are today disappointed by where the culture of “highest returns on investment” and performance bonuses has led us into. The “rationalist” model that prevails in the UK and the USA has been the main cause of the 2008 financial crisis, where results are primarily measured inanimately and statistically. An “indirect” manner of achieving results lies in working on the business enablers– people, customers and other stakeholders, and in developing long lasting and sustainable relationships with these various economic agents. High morale in staff and customers and good relationships with stakeholders ensure positive outcomes.

Archbishop Justin Welby spoke on the inability of business to handle the “risks of failure”, and this fear of losses (marked strongly today by the regulators’ push to increase provisions for losses by banks) is contributing to the halt in innovation and business start-ups. We are in a vicious circle that will take us nowhere new. This points towards the failure in regulation where what matters is the writing of more rules and regulations that are creating a culture where “what is legal” takes priority over “what is right”.

The other speakers provided more insight into this situation – on the need to listen to the employees, to listen to customers, to be fair in the allocation of outsourcing agreements and to contribute towards the communities where the business takes place.

It is interesting that what is being developed through the “Blueprint for Better Business” (www.blueprintforbusiness.org) initiative goes further than Corporate Social Responsibility. It delves deeper into the decision making process of directors on boards and their executives. Education and training in ethics for business becomes therefore even more relevant.

Joseph FX Zahra

Economist

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