Article by Charles Handy on the goal and meaning of business beyond profit. He argues that enlightened businesses exist to give greater access to the good things in life to more and more people. Corporations can achieve this enlightened status by creating a community in the organization and seeing employees as assets, rather than costs. Handy begins the article discussing how, in the wake of U.S. corporate scandals, people are questioning the assumptions underlying the triumph of stock-market capitalism, with enlightened companies responding that they exist not just to make a profit, but to use such profit to achieve a nobler end. This end is achieved, Handy states, by gathering a community of individuals who want to accomplish something collectively that they could not do separately, and he warns that unless American business rediscovers such a higher purpose, increasing amounts of people will view capitalism as a rich person’s game that benefits itself and its agents. Handy then provides a list of recommendations for defining a firm’s true purpose and repairing the damage to capitalism’s image. Such issues and points are raised in greater depth as the article proceeds. Handy observes that, currently, the Anglo-American version of stock market capitalism holds the criterion of success as shareholder value, expressed by a company’s share price. A result of the obsession with share prices has been a diminishing of what is conceivable for an organization, as companies are mortgaging their futures in return for a higher stock price. He goes on to note that Europeans continue to gaze upon America with a combination of fear and envy, because the practice of American capitalism, while dynamic and entrepreneurial, is also flawed and vulnerable to deep disasters. Despite the insecurity of capitalism, Handy advises that the urgent need now is to retain the energy produced by the old model of capitalism while remedying its flaws for the future. For this purpose, better and tougher regulation, as well as a clear separation of auditing from consulting, is needed. He also recommends that businesses revisit the question of what they are for, advising that the business’s purpose is to make a profit so that the business can do something more or better, and goes on to contend that Anglo-Saxon cultures, and those of continental Europe, need to restore confidence in the wealth-creating possibilities of capitalism and its instruments, the corporations. Alongside this confidence, an acknowledgement that longer working hours do not necessarily mean better working hours, is important, and a reduction in working hours, attendant with certain government safety programs, should be considered for capitalist-based economies. Handy closes the article stating that enlightened, philanthropic businesses that function as communities must become the norm in both America and Europe if capitalism is to be seen as anything other than the rich man’s game.
Handy, Charles B Harvard business review book series Capitalism Meaning (Philosophy) Augustine, Saint, Bishop of Hippo Unilever (Firm) Citicorp New York times May, John Trust Nasdaq Stock Market Keynes, John Maynard, 1883-1946 British Broadcasting Company Socialism Merck, George W. (George Wilhelm), 1894-1957 Organizational change Organizational behavior Organizational effectiveness Employee loyalty Employee retention Employee selection Harvard Business Review
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Article by Charles Handy on the goal and meaning of business beyond profit. Handy argues that enlightened businesses exist to give greater access to the good things in life to more and more people. Corporations can achieve this enlightened status by creating a community in the organization and seeing employees as assets, rather than costs, 2002; Charles Handy Papers; Box 20, Folder 15; 16 pages
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