BUSINESS AND SOCIETY

Dr. V.E.”Bill” Haloulakos is an AIAA National Distinguished Lecturer and a contibutor to The Business Thinker

Business and modern society are inseparable.

Business causes society to become organized, educated and civilized.

A modern society cannot exist without a business activity as a partner.

American society was built on and by business.

That’s the primary reason that the country progressed so fast to become the superpower that it is. The benefits to the world that originated in the United States are beyond measure. Its business innovations have created many industries whose products are helping the entire world. The technology spin offs from the American space program have changed and are still changing the world and our lives.  Most notably, American Agriculture has saved millions of people from famine. Former Soviet leader Nikita Krushchev went to his grave still thinking, talking about and admiring the Iowa cornfields!

 

EARLY HISTORY

Business and society have been interwoven with one another since the beginning of recorded human history. Obviously business needs society for it needs customers. Similarly society needs business for its products and services it provides as well as the organizational structure that assures a smooth operation. Society has existed from the inception of humans on earth and it is constantly and continuously evolving. At first it consisted of the family unit then it transformed into the tribal unit, then into groups of tribes, nations, empires, etc. From the early beginnings the need to trade and exchange goods and services between the various society groups started an activity that eventually led to the concept of business. It became apparent that individuals and small groups could not efficiently produce all the goods and services on their own and found it more convenient or economical to turn to others for some of their needs and “these others” would likewise get some of their needs fulfilled by this mutual exchange of goods and services. Originally this was in the form of barter trade but as the time progressed money was invented and from then on the concept of business sort of came on its own and this interweaving of business and society took a new form.

The earliest humans were hunters and foragers but as times passed they became agriculturalists and farmers, thus growing their own food by cultivating the earth and domesticating animals to help them in their farming tasks and transportation of products plus also providing for their own meat needs. Then the next advancement came in the form of tools, such as plows and improved hunting weapons. One major advance came with the building of water sailing vessels and eventually larger ships with which they were able to navigate the seas and the oceans. With sea-going ability one sees the building of significant trade and the creation of empires. The Phoenicians and later the Greeks, primarily the Athenians, were able to spread their influence in the Mediterranean World and even beyond the Pillars of Hercules, today’s Straights of Gibraltar, into the Atlantic Ocean. With all this trading capability new products were found in far away places and were transported into major population centers and from there, in order to facilitate their flow from the harbors to the consumers, the concept of the middleman shopkeeper/trader was generated. Thus, the idea of handling products by buying and selling them at a profit started becoming more and more widespread which eventually became the modern business enterprise.

SEAFARING BUSINESS NATIONS

With the expansion of seafaring trade, nations and states that actively engaged in it prospered and became very influential in human history. Even small city-states, like Venice, became strong and prosperous simply by their seafaring trade. Later on we see the expansion of colonial states the likes of Spain, Portugal, France, the Netherlands and Great Britain. All these states left their indelible mark in the world, which is ubiquitous to this day. It stands to reason, therefore, to promote such society/business community interrelationship for it improves the life of the people. It was in the western world, primarily Britain, where the industrial revolution occurred that resulted in the extraordinarily spectacular creation of wealth and the improvement of the life of all humanity. In fact this led to the most humane system business/society relationship where many millions of persons were enriched and it also resulted in the formation of the greatest system of true philanthropy known as Capitalism.

Yes, Modern-Day Responsible Capitalism is the best example of true philanthropy.

It creates an environment of economic progress and free enterprise which allows individuals to improve themselves, provides employment for many people, who in turn improve their lot and that of their families, expands wealth, which then provides opportunity for all, including for the “not so entrepreneurial” individuals as well.

It’s worth noting here how quickly a nation that withdrew from its maritime ventures lost its superior standing. This was China, when in the late 1300s and early 1400s had a fleet of over 400 ocean-going vessels that routinely navigated the world’s oceans and according to the book “1421” by Gavin Menzies, William Morrow, 2002, as well as the 1990 NASA Space Exploration Initiative (SEI) report to President Geo. H. W. Bush, they had circumnavigated the Globe and had also made stops along the coasts of what is now the United States. They used to routinely go around the Cape of Good Hope and up the west coast of Africa. But there was unrest back home in China. People would protest the expenditure of the national wealth to such far away places while there were so many poor to feed at home and they recalled the fleet back to port and in 1432, i.e. 60 years before Christopher Columbus’ voyage, they burned the entire fleet to the water line! NOW WE KNOW THE REST OF THE STORY!

Would the world today be different if a Chinese fleet had sailed into Palos de Frontera in 1492, instead of Columbus sailing out?

 

BUSINESS AND SOCIETY IN THE US 

The United States (US) from its very inception and formation recognized the value of maritime activity and seafaring capabilities. One should not forget that it was the new US nation with its meager navy, at the direction of President Thomas Jefferson, in the early 1800s that undertook the task of confronting and successfully fighting the Barbary Coast, i.e. North African Moslem, pirates while the “sophisticated and smart” Europeans were paying ransom to them. That also happens to be the origin of the US Marines’ hymn

“… to the shores of Tripoli…” It was this American intervention that ended that piracy practice back then which had been thriving for many years, very similar to what’s happening today off the coast of Somalia. One would then think that what we may need today is a Jefferson-like president to resolve the Somalia piracy scourge.

By the way, we can mention here that the Barbary pirates were one of the main contributing factors in the US’ abandonment of the Articles of Confederation and the adoption of the Constitution with a strong central government that enabled the president to operate and mobilize a real Navy to far away places, such as the Mediterranean Sea. Our “good friends” the British, with their formidable navy, they would protect the sea-lanes from the pirates, but they would not extend their protection to the US shipping.

(See “Our Oldest Enemy: A History of America’s Disastrous Relationship with France” by John J. Miller).

The US Revolutionary War against Britain, “THE MOTHER COUNTRY”, was fought over the issues of taxation without representation, a truly money and business issue, and it was over the moment the issue was settled and the new Nation was formed. The US was founded on the basis of free business enterprise unencumbered by government interference and regulations and that’s the main reason for its rapid and tremendous growth. It was that free business spirit that triggered the westward movement that helped spread the 13 original colonies to a nation spreading “from sea to shining sea” in less than 75 years! The idea of American Society and Business being interrelated can perhaps best be accented by the famous saying of  “The Business of America IS Business” by US President Calvin Coolidge. The idea of free and unimpeded free trade was one of the very fundamental principles of the new American nation. From the very early days of the John Adams and the Thomas Jefferson presidencies special efforts were made to secure the free flow of traffic in the nation’s waterways, This was especially true for the Mississippi river and the access to the port of New Orleans, as it again reverted from Spain back to France during the Napoleonic years in 1800. As a matter of fact President Jefferson sent Robert Livingston and James Monroe to France to discuss the accessibility to the port of New Orleans with Napoleon, which resulted in the unbelievable LOUISIANA PURCHASE, thus doubling the size of the United States and also, following the Lewis and Clarke expedition, sparking the westward expansion to the Pacific Ocean. As the multitude of migrants, first initiated by the Mountain Men, moved westward communities were established on the basis of economic principles, i.e. communities were economically viable quite often by the discovery of mines or the establishment of trading posts. It should be noted that when mining became economically unattractive, usually by the exhaustion of the mined ores, many of these communities were abandoned and eventually became “ghost towns”. It was the economic viability of the area that determined whether a settlement continued its existence or it was abandoned. Here we should note an observation made by an American survey group that visited Siberia in the early 1990s, following the collapse of the Soviet Union, to assess its state of underdevelopment. They said that “Siberia was not underdeveloped, it was mis-developed”! The point being that Siberian settlements were primarily or exclusively were determined by the central government authorities of  St. Petersburg and/or Moscow from the days of the Tsars through the Communist Soviet Regime.

One of the noted developments in the American West was the discovery of gold and the ensuing “Gold Rush” in California. People looking for riches came from all over the world, among them the later famous archeologist and excavator of historic Troy Henry Schliemann, boosting the population by 410% between 1850 and 1860, thus enabling it to join the United States as a state without the requirement of an intermediate territorial status. The discovery of gold and the ensuing statehood gave California its state seal composed of the Archimedean EUREKA and Goddess Athena who, according to the ancient Greek legend, was born as an adult. They say that became possible by the application of “the alternate version of the Golden Rule ‘he who has the gold makes the rules’.

Business requires organization and commitment. Hence it causes society to also organize and become civilized. People become producers and learn to care for each other. The great American business tycoons, the likes of oilman John D. Rockefeller (the original), steel magnet Andrew Carnegie, automaker (the original) Henry Ford, aviator pioneer Howard Hughes, to just mention a few, established huge business enterprises and in the process of enriching themselves they also enriched millions of others and also created everlasting educational and philanthropic institutions that continue to thrive and benefit mankind to this day. They were very much aware that they could not accomplish their goals alone but needed the help of millions of others, hence the enrichment of all these “others”. Besides they had numerous spin effects that usually go unrecognized. Case in point, how often does one hear how the “original” John D. Rockefeller saved the whales from extinction?

He did so by producing, refining and marketing petroleum products that ended up being used to light the household lamps, which up to then were using whale oil with the whales being hunted almost to the point of becoming extinct! Thus, use of whale oil became economically noncompetitive and their hunting ceased or was substantially reduced.

The next significant event, other than the US Civil War, was the Golden Spike at the Utah Promontory Point where the east-west railroads met on May 4, 1869. From then on, westward moving pioneers did not need to walk across the prairies, they simply rode the trains. This substantially increased the population, and formed major cities across the land. Business of all kinds, mining, agriculture, ranching and manufacturing literally exploded and the export trade to other lands flourished. In Northern New England ice farms were created where the ice was plowed, to get it into manageable chunks, and were shipped to far away places before the days of mechanical refrigeration. Apple growers in the state of Washington expanded their orchards and their apple production because they could export them to far away places. The results of all this expanded business activity enriched many people and helped create a more prosperous civilized society.

One could not help but wonder as to why, although free-market capitalism has helped the world so much and it has elevated the standard of living of all people, it still does not enjoy the good name it so naturally deserves but it is referred to by many people with disdain. The opinion of this writer here is that business people are very busy doing and producing and do not have the time to hit the streets with protests.

 

CLOSURE AND COMMENTS 

The American Society was formed and organized on the basis of the work ethic and strong religious roots. All of the top private universities were founded by religious orders, quite often as schools on theology. Harvard University, for example, established in 1636, although not officially associated with a church, it primarily trained Congregational and Unitarian clergy. Likewise, Yale University as well was originally chartered as the “Collegiate School” by 17th century clergymen who sought to establish a college to train clergy. Similar stories can be told about other universities, e.g. the University of Southern California founded in 1880 by the Methodist Church. The fact that these institutions of higher learning have become secular and continue to flourish bespeaks of the dynamism and the wisdom the founding business principles and spirit. It should also be noted that all these schools make it a point to have very large endowments, i.e., money.

The phenomenal growth experienced by the westward movement of the American pioneers can only be attributed to the free enterprise business spirit and its integration into the society. Self-governing communities were established with their own local legal authorities, locally controlled schools and so on. This rather unique phenomenon caused the French nobleman Alexis de Tocqueville, who was originally sent to study the American prisons, to write his famous book Democracy in America where among many other comments he exclaimed, “these people do not need an elite to govern them… Just imagine that these ordinary people organize and run their own legal and educational systems…” The common thread uniting all these new communities was that the settlers owed allegiance to the United States of America. There were few exceptions to this, such as Brigham Young’s Mormons, who originally considered themselves as independent and were busy establishing their independent country of Deseret, came around into becoming the state of Utah part of the United States.

 

MAINTAINING HUMAN RELATIONS WITH BUSINESS GROWTH: Assessing your Human Rerations Strategy

Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com, Distinguished Visiting Fellow at the Institute of Advanced Studies in the Humanities, University of Edinburgh, Scotland, publisher of www.GavdosPress.com. Founder and former CEO, JPIndusries, Inc., a Fortune 500 industrial corporation.

In this series of articles, we examine the human relations issue in the corporate environment for growth. After a discussion on what is “Human Relations” it would be very instructive to browse through a set of questions in order to focus your thoughts on human relations in your own company.

Overall we will write articles on the following aspects of this major topic:

WHAT IS HUMAN RELATIONS?

ASSESSING YOUR HUMAN RELATIONS STRATEGY

IMPORTANCE OF THE HUMAN RELATIONS ISSUE

CHARISMA, CORPORATE CULTURE AND SHIFTS IN HUMAN RELATIONS

CHOICE OF VALUES

HOW FIRMS SHARE VALUES AND GOALS

EFFECTIVENESS OF HUMAN RELATIONS STRATEGIES

CHANGE IN THE APPROACH TO FOSTERING SHARED VALUES

RETAINING COMMITMENT TO MISSION WITH GROWTH

BUILDING CULTURE AT JPI

SOME GUIDELINES FOR EFFECTIVE HUMAN RELATIONS

Goal Integration
Questions 10-1 to 10-5 examine goal integration, the degree to which organizational and individual needs match or mesh with each other. Though more appropriate to ask in a confidential employee survey than of yourself, you may want to skim through them anyway. For each of the five questions consider:
TO WHAT EXTENT DO EACH OF THE FOLLOWING DESCRIBE YOUR FIRM?
[1] To a very great extent
[2] To a great extent
[3] To some extent
[4] To a small extent
[5] To a slight extent or not at all
Question 10-1: Clear understanding of company objectives. People have a clear understanding of company objectives.
Question 10-2: Self-centeredness of employees. Everyone looks out just for themselves, rather than doing what is best for the firm.
Question 10-3: Intention to leave. Employees think about quitting.
Question 10-4: Insecurity of employees. People feel insecure about their place in the company.
Question 10-5: Lack of understanding of objectives. People lack understanding of where the firm is heading.
Question 10-6: Morale. For lower level employees, how would you rate their morale, job satisfaction and commitment to company objectives?
[1] Very high: Top 2 percent of the industry
[2] High: Within top 10%
[3] Well above average: Top 25%
[4] Above average: Top one-third
[5] Average: About the middle
[6] Slightly below average: in the top two-thirds
[7] Well below average: Bottom one-third
Question 10-7: Consistency of mission. To assess how consistent your view of the firm’s mission is with those of your managers, follow these four steps:
Step 1: What do you see as the firm’s primary mission, including products and services offered, and anything else defining its main direction and purpose? ( Refer to Question 5-11).
Step 2: Give this same question to your managers. Ask them to record their answers without discussing it first.
Step 3: Now compare the consistency of CEO and manager answers. Are they:
[1] Word for word (reads like the same mission statement)
[2] Same content, though different words
[3] Substantially the same (50-75% overlap of key issues)
[4] Some similarity (25-50% overlap in key issues)
[5] Very slight overlap (5-25%)
[6] Totally different
Question 10-8: Types of values emphasized. As CEO, do you emphasize certain values that you feel are especially important to the success of the business? What are they?
Question 10-9: Consistency of values.
Step 1: Without discussing your opinions, ask managers:
“Does your CEO or president emphasize certain values he or she considers especially important to the firm’s success? What are they?”
Step 2: Compare manager and CEO answers and rate their consistency. Are they:
[1] Word for word (reads like the same statement)
[2] Same content, though different words
[3] Substantially the same (50-75% overlap of values)
[4] Some similarity (25-50% overlap in values)
[5] Very slight overlap (5-25% overlap in values)
[6] Totally different (no overlap in values mentioned)
Question 10-10: How effectively values are shared. If you answered yes to question 10-8, ask yourself: Do you have a particular way of sharing values with your employees? If so, how well does this technique or strategy work?
[1] Extremely well
[2] Very well
[3] Fairly well
[4] Not so well
[5] Not well at all
Table 10-1 shows how firms in our study stack up in human relations. For some measures, the percentages for all firms are very similar to those for the top firms. The sharpest contrasts are in questions 10-1, 10-6, 10-7, 10-9, and 10-10. Employees have a clear understanding of company objectives (to a great or very great extent) in 44 percent of top performing firms compared with 31 percent of all firms. Morale is also better at the typical top performing firm– rated in the top 10 percent of the industry by 71 percent of top-performing CEOs, compared with 57 percent for all firms combined. Based on question 10-7, at almost 18 percent of the top-performing firms but only 6 percent of firms as a whole, at least two-thirds of the managers share the same content if not the identical language in describing the firm’s mission (though both are low percentages!). CEOs of top performing firms also have an easier time conveying values. Similar values are reported by the CEO and managers in almost 30 percent of top performers, but in only 12 percent of all firms combined (question 10-9). Finally, 50 percent of top performing CEOs feel their values are shared extremely well compared with only 36 percent for all firms combined (question 10-10).
____________________

Table 10-1: Human Relations Effectiveness for Top Performers and All Firms Combined

All Firms Top Performers
Median % %

Clear understanding of 3.0 31 a 44 a
company objectives
(quest. 10-1)

Self-centeredness of
employees (quest. 10-2) 4.0 16 b 13 b

Employees think of quitting 4.0 22 b 17 b
(quest. 10-3)

Insecurity of employees 4.0 19 b 22 b
(quest. 10-4)

Lack of understanding of 3.7 31 b 26 b
objectives (quest. 10-5)

Morale (CEO view) 2.0 57 e 71 e
(quest. 10-6)

Morale (Management view) 3.0 28 e 36 e
(quest. 10-6)

Consistency of mission 4.0 6 c 18 c
(quest. 10-7)

Consistency of values 4.0 12 c 29 c
(quest. 10-9)

How effectively values 2.0 36 d 50 d
are shared (quest. 10-10)

__________________________

a Answered [1] To a very great extent or [2] To a great extent
b Answered [1] To a very great extent; [2] A great extent or [3] To some extent.
c Percentages of firms where at least two-thirds of the managers share the same content if not the identical language.
d Percentage who say the strategy is working out “extremely well.”
e Morale rated within the top 10 percent in the industry.