The EFMD business magazine

The EFMD business magazine

robber baron or robin hood
‘Robber Baron’ or ‘Robin Hood’? Dan Pontefract argues that some, if not many, organisations have forgotten what they once stood for. It is time, he says, to review, refocus, recreate and thus redefine their true purpose.

The purpose of an organisation (and business itself) has long been discussed. Some leaders— firmly ensconced on the far right — believe the purpose of an organisation and its sole identity is to forever increase the magnitude of profit … and nothing more. Decades ago we might have referred to these folks as “robber barons”.

Others — particularly in public sector or government outfits — use their role and thus the organisation to uphold and gain positions of power through bureaucratic and partisan leadership practices.

Thankfully, there are those who see the organisation as a supporting agent in improving society’s multiple stakeholders, whether it is customers, employees, communities, owners or the environment.

Let us first investigate the greedy ones.

Take, for example, private equity investor Carl Icahn, who repeatedly issues public letters urging Apple CEO Tim Cook to buy back more of the company’s publicly traded shares in order to drive up the stock price and thus its market capitalisation.

We might argue that IBM has become caught up in this thinking, too. By reducing the amount of its stock outstanding (through multiple share buyback instances) IBM was able to continue reporting higher annual earnings per share, a key Wall Street benchmark. Countering a significant decline in its revenue in recent years, this strategy upheld IBM’s forecasts and guidance to “the street”’.

Interestingly, IBM has repurchased such quantities of its own stock that there are now less than one billion shares in circulation, the lowest number since 1999.

This is the definition of “maximising shareholder value”. It puts profit (and arguably greed) ahead of society’s collective needs.

This myopic, short-term thinking is something far too many private and publicly traded organisations endorse as a core operating practice. In the case of Apple, William Lazonick has pointed out in Harvard Business Review (October 16, 2014) that its shareholders have perhaps already received plenty of returned profit and cash. After all, what could the world do with $90 billion?

On the public sector side, do you remember the US federal government shutdown in early October, 2013? Roughly 800,000 federal employees became furloughed for an indefinite period and another 1.3 million employees continued to show up for work but did not know if they were going to be paid or not.

Due, perhaps, to a blind fixation on power, partisan eccentricity and bull-headed bureaucracy from some of the country’s highest elected leaders, hundreds of thousands of employees were left wondering if they would have enough money for groceries that week. And we wonder why, according to a Gallup poll, employee engagement in America’s federal government agencies and departments is so low that 72% of workers are either actively disengaged or not engaged in their role.

There are those on the extreme left who seem to argue profit is evil, and thus the mere mention of making money is (or has been) destroying society. Balderdash, I say.

Redefining the organisation

See more articles from Vol.09 Issue 03 – ’15.

Dan Pontefract is a leadership strategist and author of Work-Life Bloom: How to Nurture a Team That Flourishes.

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