week 12 What is business for?

Discussion questions:

• Based on what you read in the first two pages (pages 3 and 4), why are virtue and integrity so vital to an economy?
• According to Charles Handy, what is the “real justification” for the existence of businesses?
• What are two solutions proposed by Handy that you agree with? Why?

According to the article "What's a Business For?" by Charles Handy, the rules and laws that govern the stock market are built on trust and truth. If trust and truth are not the foundation upon which it is built, people take their money and invest it in other places. Unfortunately, it has become common practice for companies to inflate their net worth and claim that their shares are worth more than they actually are. In 2001, John May pointed out that many of the top 100 fortune companies overstated their audited profits by 100 billion, making their shares seem more valuable than they actually were. Hamdy likens broken trust to broken china - though it may be repaired, it is never quite the same again and states that peoples' trust in business is cracking.

Handy states this about the justification of business: "The purpose of a business, in other words, is not to make a profit, full stop. It is to make a profit so that the business can do something more or better. That “something” becomes the real justification for the business."

Handy says, "Business needs to take the lead in areas such as environmental and social sustainability...If the contemporary business, with its foundation of human assets, is to survive, it will have to find better ways to protect people from the demands of the jobs it gives them...Here, again, it would help for companies to see themselves as communities whose members have individual needs as well as individual skills and talents. They are not anonymous human resources." I agree with this. I think that this way of doing business, with a focus on social sustainability would build a community within the company, and foster loyalty, creativity, and innovation while recognizing human value. This type of environment would allow people to thrive, which then helps the business to thrive. Nobody likes to feel like they are dispensable or disposable like they are just a number. I think of the recent hostile takeover of Twitter by Elon Musk, the thousands who were laid off in an email, and the other employees who remained employed and received emails detailing the expectations of long hours and required work hours in the office. Within a week, enough people had been fired and/or quit that Musk had to walk back some of his previous statements and was asking people to come back to work. He certainly didn't treat his employees as human assets. I wonder how much more success he would have if he did. 

I think that the justification of business and the solutions proposed by Handy go hand in hand. They both look toward the idea of improvement by looking contributing to the improvement and sustainability of employees and society by viewing themselves as having a social responsibility beyond the bottom line, or worth of market shares. I rather like the way most European companies build upon the success of the past while feeling a responsibility for the success of the long-term, rather than the quarterly report.