Socially Responsible Theories That Lead to Profit
Socially Responsible Theories That Lead to Profit
Adstract
This paper will explore the following leadership models: servant leadership, trait approach, and transformational leadership by critiquing three corporate leaders, Goodnight of SAS Analytics, Kelleher of Southwest Airlines, and Price of Gravity Payments. These leaders demonstrate that the old adage which stems from words of Milton Friedman, that the main purpose of business is to make a profit, is not the whole truth in that the full quote goes on to speak of ethical and moral dimensions which are often not quoted. There are methods of leadership used in sustainable management organizations, which are dynamic in nature, which when used responsibly, effect efficiency in building a company’s public image while making a profit for all the stakeholders, which include the employees and the communities where the corporation are located. In these types of organizations, economics is not the main motivator for the decisions that are made regarding how business is conducted, how leaders relate to employees and how a corporation views itself in relation to the community and the externalities to the environment and society that conducting business creates. By doing so, each has created a desirable public image and has a company which has been profiled as best places to work.
keywords: servant leadership, traits approach, transformational leadership
Socially Responsible Theories That Lead to Profit
Increasingly, ethicists are having to remind company leaders that the shareholders are not the only stakeholders for which they should be working. Most, it seems, are driven by the much adored adage of the late Nobel Laureate in Economics, Milton Friedman (1970), who stated—
“There is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” (NY Times).
Most often, when he is quoted, we only hear the first part of the statement. Having only half the statement leaves the hearer, often a neophyte student, with an open-ended interpretation which has too often ended with the phrase, “at all costs.” However, given what we have come to understand about the role business plays in society, that once lauded adage has come into question about the extent to which the economic interests of investors should motivate the direction a company takes in its strategic planning to turn a profit. I will show in this paper that it is possible for a corporation to turn a profit while maintaining a robust social responsibility to, not only the shareholders but, the workers and the communities in which the business resides. There is one such company called SAS Analytics in which the co-founder and chief executive, Goodnight, seems to defy business norms through his insistence on employee well-being through a series of perquisites offered to every employee, which using conventional norms, many would argue lessens the bottom-line. Moreover, studies in organizational leadership seem to support the notion that a commitment to well-rounded social responsibility initiatives, which include, “economic, social and ecological perspectives to develop sustainable effectiveness” for certain types of corporations, bring about the desired profits, after all (Lawler & Worley, p. 45). His approach to leadership is not unique to his firm. The Servant Leadership model, one of the models used in characterizing his style, presents as an integral part of yet another major corporation, Southwest Airlines.
One hardly has to use one’s imagination in the present climate to understand that the leadership methods used by Goodnight of SAS Analytics run counter to what many corporate governance boards have come to understand as compensation parity related to the average worker as compared to the chief executive. According to Davis & Mishel (2014), “from 1978 to 2013, average CEO compensation, inflation-adjusted, increased 937 percent, a rise more than double stock market growth and substantially greater than the painfully slow 10.2 percent growth in a typical worker compensation over the same period” (EPI). One does not expect that the compensation of the average worker should be equal to the chief executive, but it might be expected that worker compensation should at least keep up with inflation. According to DeSilver (2014) of the Pew Research Center, “for most US workers, real wages—that is after inflation is taken into account—have been flat for decades, regardless of whether the economy has been adding or subtracting jobs.” Regarding the policies which provide the fuel for such attitudes towards workers in the US, Reich (2013) of the Economic Policy Institute has stated, “economic inequality is real, it’s personal, it’s expensive and it was created” (EPI).