What's Your Price?
The venture capitalist looked me straight in the eyes and uttered the words that every hungry entrepreneur wants to hear: "I can offer your company a real competitive edge." My partners and I were searching for seed capital to launch an Internet company. But we also needed talent - a network of experienced workers that would help us to execute our business plan successfully. So we were keen to learn how this particular investor was going to give us the vaunted "competitive edge."
"I run a sweatshop with more than 300 software engineers in Shanghai," he explained, without any remorse at his choice of words, let alone his business practice. "We pay them a fraction of what we'd pay to build a technology system here in the United States," he added proudly.
"When the spirit informs culture, our social goals to create wealth coincide with our ideals of human development. The process is a virtuous circle."
Unbridled capitalism very well may be the most effective way to generate financial wealth. But a religious ethic does not accept that claim at face value. It takes the matter a step further: Generate wealth for whom?
When the spirit informs culture, our social goals to create wealth coincide with our ideals of human development. The process is a virtuous circle. Work is sanctified by its contribution to the well-being of others, especially the less fortunate. It helps the worker to achieve fulfillment, and fulfillment increases the wealth of all.
The following principles are a starting place for business workers to evaluate the values that drive their company, and a "measuring stick" for citizens in holding accountable their local businesses (which often are also global).
PRINCIPLE 1: Company directors and management will consider their workforce valuable team members, not merely hired labor.
Vital Signs: Does the company offer a generous equity and/or profit-sharing program; promote strong union relations; encourage employee involvement in corporate governance; provide strong retirement benefits; and limit the wage gap between management and employees?
The corporate firm arose in the capitalist economy as the private possession of a small base of financiers. Workers were treated as corporate assets, much like the physical plant, raw materials, and technology. This mindset increases the risk of treating the corporation as a commodity to be auctioned off in securities markets. Lost jobs become a casualty of profit-taking.
Businesses, of course, are dynamic. They grow, change, compete, succeed, and sometimes fail. In times of downturn, businesses may have to cut their operating costs. At such times when layoffs are unavoidable, an ethical company will support its employees and help them to find new jobs, as was exemplified by Malden Mills in the mid-1990s.
Three of Malden Mills' factories in Lawrence, Massachusetts, burned to the ground in December 1995. In the year preceeding the fire, Malden Mills had sold $400 million worth of fabric - particularly the synthetic fleece Polartec. CEO Aaron Feurstein, whose grandfather founded the business, made it a priority to provide for his employees during the disaster. Rather than taking the insurance money and walking away, he continued to pay the workers who lost their jobs for 90 days, plus full health care benefits for 180 days. It cost him $10 million.
But within three months, Malden Mills' factories were rebuilt and the workforce was back in place. Through mutual loyalty between the owner and workers, Malden Mills' production doubled and product quality increased. After losing nearly everything in 1995, Malden Mills - including the CEO, workers, and the community in Lawrence - is a thriving and very profitable business.