Sales trend 2 of Barrett’s 12 Sales Trends Report for 2023 presents the moral case for putting humans at the centre of businesses.
Adam Smith, often referred to as the father of capitalism, was, in fact, a moral philosopher and said, “Markets could not flourish without a strong underlying moral culture, animated by empathy and fellow-feeling, by our ability to understand our common bond as human beings and to recognize the needs of others.” Smith recognised the moral aspects of humans and the importance of supporting the common good when it came to creating healthy and prosperous societies. He saw business through the lens of individuals, communities, government, and society, not just economics, pure self-interest, and greed. He highlighted the need to achieve alignment between individuals and businesses where both can help the other to develop and grow.
Peter Drucker, the father of modern management science, said in his work The Age of Discontinuity, 1953, “The purpose of business is NOT to make profit but to satisfy the needs and expectations of customers. The consequence of satisfied customers is incremental profit.”
Drucker revolutionised the approach to business management by suggesting that successful leaders should put people and ethics first rather than focusing entirely on profits and rigid rules and work structures. The pillars of Drucker’s theory of management are decentralisation, prioritisation of knowledge work, management by objectives, and SMART goals. By implementing Drucker’s approach, managers can empower their employees, improve the company’s culture, encourage innovation, increase efficiency, create a nurturing and ethical work environment, and ultimately boost the business’s success.
Smith and Drucker’s work put humans at the centre of business success and align with the concept of Corporate Social Responsibility (CSR) which is a type of business self-regulation to be socially accountable and contribute to the well-being of communities and society as a whole.
Adopting a human-centred ethos and approach to business and economies is not new. The evidence is clear that being human-centred is essential if we want to have viable, prosperous, and flourishing individuals, teams, businesses, economies, communities, and societies.
However, for the last 40-50 years, vested interests have been actively promoting and implementing the doctrine of American economist Milton Friedman, who developed a theory of business ethics (I used the term ethics advisedly here) stating that “an entity’s greatest responsibility lies in the satisfaction of the shareholders. Therefore, the business should always endeavor to maximize its revenues and profits to increase returns for the shareholders.”
Friedman advocated for free-market capitalism and his doctrine has been adopted by many corporations and their business leaders since then. Taught in business schools and MBA programs around the world, this has been an effective, yet immoral, way for some corporations, their stakeholders and leaders, to enrich themselves at the expense of many others and the environment.
Findings by the Economic Policy Institute[1] in 2021 reported that CEO salaries have skyrocketed by 1,322% since 1978. CEOs were paid 351 times as much as a typical worker in 2020. Top CEO compensation grew roughly 60% faster than stock market growth during this period and far eclipsed the slow 18.0% growth in a typical worker’s annual compensation. They go on to say, “We know that exorbitant CEO pay is a major contributor to rising inequality that we could safely do away with. CEOs are getting more because of their power to set pay and because so much of their pay (more than 80%) is stock-related, not because they are increasing their productivity or possess specific, high-demand skills.
“This escalation of CEO compensation, and of executive compensation more generally, has fuelled the growth of top 1.0% and top 0.1% incomes, leaving less of the fruits of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90%. The economy would suffer no harm if CEOs were paid less (or were taxed more).”
Then there’s the matter of corporate tax avoidance; a major issue plaguing governments around the world as they lose valuable revenue to fund common good infrastructure everyone relies upon to survive and thrive, including how to tackle climate change, inequality, basic human rights such as affordable housing, healthcare and education, and environmental degradation.
The scourge of moral disengagement
If you’ve not come across the term Moral Disengagement before, you’ve certainly felt, most likely suffered, its impact. Moral disengagement is a term from social psychology describing the process of convincing the self that ethical standards do not apply to oneself in a particular context. This is done by separating moral reactions from inhumane conduct and disabling the mechanism of self-condemnation. Sound familiar?
Moral disengagement involves a process of cognitive re-constructing or
re-framing of destructive behaviour as being morally acceptable without
changing the behaviour or the moral standards.
Deploying moral disengagement as a business or political strategy results in the perpetration of inhumanities through moral justification, euphemistic labelling, advantageous comparison, displacing or diffusing responsibility, disregarding or misrepresenting injurious consequences, and dehumanising the victim.
We know that where there’s moral disengagement there’s corruption which leads to poor or no governance, lack of transparency, nepotism, poor work conditions that exploit the vulnerable, high staff turnover, tax avoidance, unethical leaders, and profit maximisation and cost stripping at the expense of sustainability underpinned by vested interests at the helm of enterprises looking for self-enrichment at the expense of the community and the planet.
Tragically, moral disengagement has become the norm in too many boardrooms and C-suites. Take the fossil fuel industry as a prime example as it continues to spread lies, propaganda and disinformation around the world to further boost its profits while the planet burns and people and nature suffer.
Moral disengagement can be seen in certain governments and their public service heads; in Australia think about the illegal and immoral decisions that precipitated Robodebt and the tragic consequences of its cruel agenda for many people and their families including over 2,000 suicides.
Greenwashing and performative acts
Moral disengagement manifests through greenwashing and performative acts often using very persuasive spin, marketing tactics, hype, and delusion to hide broken promises, lies, and corruption.
When businesses promise to be sustainable, to cut greenhouse emissions, etc. they make big announcements in mainstream media and social media, but how many of those deliver on those promises?
A report from the New Climate Institute shows that some of the world’s biggest companies are not on track to meet their targets for tackling climate change. The study concluded that even if all actions promised by these companies were implemented, the emissions reduction would be 40% and not 100% -which is what’s needed to achieve net zero-. The same report found that the language companies use in the sustainability headlines lacks substance and “exaggerates their actions”.
Out of all the Fortune 500 companies that have adopted emission targets, only 20% have science-based targets.
And be wary of when you hear the term ‘Being Human-centred’ thrown around in lots of boardrooms as the way to run a respectable business because you’ll soon see their true characters revealed when the pressure builds to make more money with the focus quickly shifting to short-term profits at the expense of retaining satisfied and engaged employees.
In short, when it comes to ‘from promise to progress’ there’s a gap between these performative acts and real traction and action.
Many salespeople will tell you they don’t want to sell spin and lies. They want their word to be their bond. It’s very distressing and morally confronting for many client facing people – salespeople- to ‘greenwash’ and (effectively) lie to their clients. Many just resign and go elsewhere or don’t speak for fear of being caught up in the difficult world of whistle-blowing.
Where to from here?
You could be forgiven if you feel overwhelmed and depressed at the state of things as they stand. Yes, we are up against some very powerful forces, however, we can never underestimate the power of people. I know. I’ve been there on the ground leading and participating in social and political change in my work on March4Justice and representative democracy.
Humans are born with an innate sense of fairness, amongst other things, and as they experience and see the stark effects of inequality, greed, and moral disengagement, they realise something is amiss. While too many are being hoodwinked and deceived by divisive and destructive marketing and political slogans, many others, especially the younger, more educated generations are clocking the propaganda and calling out the unethical and immoral business models that are destroying their future.
The jig is up.
Women and young people are leading the way to more human-centred, transparent and ethical ways of working and living.
As Per Saxegaard, Founder and CEO of Business for Peace Foundation, said recently, “Purpose is the language of the millennial generation. Young talent seeks both meaning and money and will rather work for the benefit of billions of people than for the benefit of billionaires.
“Firms will need to be extremely data savvy, but technology is always easily copied. I believe key competitive differentiators will be human dimensions and culture. It’s a twist of irony of technological progress.”
The World Bank Group (WBG) defines the human-centred model for business as follows: “The Human-Centred Business Model (HCBM) is an innovative sustainable business ecosystem that provides the tools and inputs to the private sector, public authorities and consumers when developing new businesses. At the center of the model are economic, social, environmental sustainability and ethical/integrity values that can lead to more sustainable business practices.”
We are at a significant crossroads and the tide is turning
In an open letter to corporate business by Richard Merrick in November 2022, he states, “In 2008, we had the outpouring of money into “too big to fail” and the creation of corporate hegemony. Bigger than business, bigger than politics and when married to technology, we have ourselves a monster. A Wetiko – the mythical beast of North American folklore whose hunger increases in proportion to what it consumes, making it continually ravenous for more. And so, we come to, for me, a second parting. Corporate business has lost its autonomy and is in a singular thrall to money to the exclusion of all else. I still believe in business, but we have to reimagine it for society’s good. To make it a partner, not a malign master. It is a challenge, but we have to start somewhere.”
The WBG is one of 3 participants of the Global Forum on Law, Justice and Development (GFLJD). The GFLJD highlights that “many entrepreneurs are voluntarily moving towards a more sustainable way of doing business, as an answer to a growing market of buyers, consumers and responsible investors more and more sensitive to the impact of business on the social and natural environment in which they operate.”
So, we can either carry on dehumanising business for the benefit of the few at the expense of the majority -employees, customers, suppliers, communities, and the environment- OR we can create and transform businesses to become human-centred just as Adam Smith and Peter Drucker and many others have since and promote ethical and moral business practices for the betterment of our collective future.
Those organisations that take a human-centred approach to business via their purpose, strategy, and systems see the benefits of committed and engaged employees and customers as highlighted in Sales Trend 1 – The Economic Case.
Once you truly reject the notion that profit maximisation in a free-market economy qualifies as a moral system, then the only alternative becomes crystal clear and that is to create a real moral system, with elements that are already familiar to us at the scale of small groups, but expanded to include whole organisations, societies, and the planet.
As Per Saxegaard says “The construction of a moral system for the whole earth is where corporations as giant people and information technology will play an essential role. This is the essence the Business for Peace Foundation. In a transparent, interdependent world, businesses wanting to sustain successfully will increasingly find it both natural and smart to behave ethically and responsibly.”
Barrett has always stood for and endorsed human-centred, ethical, fair, and sustainable sales and business practices because it is good for people, good for sales and business, and good for our economy and flourishing societies.
As business, political, and community leaders, we have the moral responsibility and duty to change the course of widening inequality and help democratise access to capital for social good and the future viability of species and our planet.
[1] https://www.epi.org/publication/ceo-pay-in-2020/
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