Excellent Business is not Enough!

Regardless of high profits, more and more employees are made redundant. The Insincerity of Economy!

Our author Ulf D. Posé thinks we should not get used to wordlessly accepting when managing directors talk about making employees redundant and at the same time announce high profits. He keeps looking into what companies advertise as their company values and finds out that there are light-years between theory and practice. More and more people are just considered “human resource” by enterprises. But the logic of social market economy is a different one: the more economically successful an enterprise is, the more it has to do in order to optimize a social community. Here comes a resume by Ulf Posé, the president of “http://de.wikipedia.org/wiki/Ethikverband_der_Deutschen_Wirtschaft” o “EVW” t “_blank” Ethikverband der Deutschen Wirtschaft (EVW= German Association of Ethics in Economy), which is a registered club with a membership of 17,500 (as of: March, 2008).

There is something we should not misunderstand: what we find abusive is not the fact that an enterprise makes a profit and wants to make a profit. Rather, what we find abusive is the circumstances under which some enterprises make their profits, especially when, regardless of high profits, the “liberate people”. If you have made excellent profits way beyond your expectations and achieved capital gains way beyond average, then it is highly unethical to make employees redundant. It shows an attitude which gives economic success top priority. If, on top of this, you claim that this happened for company safety if de-facto this safety has never been at risk, you are just as insincere.

The following example is quite interesting. In the company code of the Allianz AG, you can read: “The cultural change intended by the leadership wants to create an atmosphere of open communication and trust between employees and customers”. My question is whether Allianz with its enormous profits of around six billion Euros – which far exceeds expectations- , still adhere to this principle if they at the same time announce that 7,500 employees are made redundant.

It also says in the company code of Allianz: “We offer our employees feedback and support and see to it that a job well done is adequately honoured”. This almost sounds like a sneer, because the adequate honour for excellence at Allianz is a “reward” in the form of liberation from the company.

Later on, you can read at Allianz: “We invest in our employees. When we select and sponsor talented employees, our standards are high. We promote diversity and thereby a culture respectful and appreciative of various personalities… We want to be an attractive employer in all respects.” Last not least, the codes of Allianz say: “Our success is based on mutual trust, fairness, integrity and clear and open communication. We encourage our employees to be innovative, show us potential for improvement and hand on knowledge and ideas. A motivated and constructive feedback is thus promoted.”

All this does not seem to correlate with what actually happened. A company’s credibility does not depend on what it says in its pamphlets but on how what they say matches what they do, the relation between norm and reality. In an ARD poll, people were asked what they think about the sacking of 7,500 Allianz employees. Nine per cent found it phantastic, saying this was the only way to achieve the desired profit. 29 per cent thought it was just normal procedure in our economy. 62 per cent, however, found it outrageous, because they found that the mass sackings were simply not justifiable.

Conclusion: Economy degenerates towards low capitalism if what is practiced is not balanced with the ethics of codes and directives.

Our second example is the energy company BP. The enterprise was in the limelight when an oil pipeline had burst and more than a million litres of oil had leaked. Consequently, the pipeline had to be deactivated and 16 miles of it were renovated. The stock market price went up. Incidentally, the pipeline was only checked after the US authorities intervened. It had not been inspected since 1992, although the oil industry had declared a monthly inspection standard procedure. It is interesting to note why BP had not inspected the pipeline any more: 14 years ago, it had already been so soiled that the inspecting robots could not get through.

What does the GP code say about this? “Being one of the leading energy suppliers, we also see our top responsibility in helping to find a solution for the climate problem and its application.” And later: “A well-directed enterprise should be competitive, act progressive and promote general well-being. In all we do, we want to contribute significantly to the world-wide increasing demand for energy and raw materials.” Finally, two more citations: “Being one of the leading enterprises in the world, we have the responsibility to set high standards and be viewed as being dedicated to integrity.” “We protect the natural environment and safety of the townships where we work and guarantee the health, safety and protection of our people.”

What do we learn from this? Economic success has to be paired with a socially acceptable concept of community. That is the basis for social market economy. The only possible logic is: the bigger the economical success, the more can and must an enterprise do in order to optimize the social concept. Everything else is insincere and unethical und ruins the social aspect of our market economy.

Today, globalization motivates many enterprises to behave unethically. However, we should not condemn globalization per se. There should be a careful, objective and critical discussion of globalization. Enterprises should see that it is extremely insincere to use globalization as an excuse for socially unacceptable behaviour regardless of economic success. There is an inner responsibility of enterprises they cannot shed, because they influence their employee’s consciousness by promoting values. That is how they have an impact on the entire social structure of a nation. It also means that a company’s social responsibility cannot be separated from its responsibility towards the employees.

The code of conduct at Deutsche Bank says: “We want to be the worldwide leader of financial solutions for high-standard customers and thereby create lasting increase of value for our shareholders and employees”. The lasting value for employees was counteracted last year with the announcement that 6,000 employees are made redundant, even though the institute had a capital profit of 28 per cent. Another sentence you can read in the list of values of Deutsche Bank is: “Trust: we are absolutely reliable, fair and honest. Teamwork: the diversity of both our employees and fields of activity make co-operation with us a success.”

The managing director of a company with 7,000 employees worldwide shows that it is possible to be different: “Currently, the messages are too profit-oriented for my taste! I am familiar with what my own economic advisers say: unless your capital profit is at a minimum of 10 per cent, you will no longer exist ten years from now. During the last 136 years, we have had but few years during which we were able to get a ten per cent profit! And one more information: 95 per cent of our value refunding (as of 2004) goes back to our employees – and around three per cent to the shareholders!”