2003
Becker Lecture
University
of Iowa
October
13, 2003
Getting
Social Values into Corporate Decisions: New Models of Governance
and Communication
Stanley
Deetz
University
of Colorado
I
want to start with a couple of stories, for stories often offer intuitive
insight into complex core processes. The first is a true story,
the second fun but none-the-less instructive. I spent several
years of my life living in a glass house in New
Jersey.
Living in a glass house (even in Jersey)
is great because you can never tell whether you are inside or outside,
it provides a fantastic connection with nature. But it creates
certain problems with birds. They tend to believe that they can
fly through the house. Normally one accepts this because it's
only a random, periodic activity. While the inevitable collisions
are jarring, most birds are more shocked than seriously hurt.
But, for one period of time the problem was more sever.
For a period
of years a cardinal lived outside my bedroom window. And every morning
when the sun came up this cardinal would fly to a branch in front of
the window and fly head long into the window [Bang!!!] and fall to the
ground. It would brush itself off, go back up to the branch, and
one more time fly head long into the window and fall to the ground.
This isn't a real cool thing to happen at that hour of the morning.
I used to sit there and swear at it. I'd throw pillows at it. I did
find that playing Led Zeppelin early in the morning would in fact deter
the activity, but I also decided that it wasn't worth it.
This is small
but personally interesting problem, and I had a tremendous amount of
time to lie there and think about it. Of course, the early thoughts
were all about how stupid this bird was; how superior I was to this
bird. It took a while, but it gradually dawned on me that I really
conceived the problem in the wrong way. Anybody who knows much about
birds knows that what the cardinal was doing is what cardinals do.
And, in fact, one of the reasons cardinals still exist on the face of
the earth is because they protect their territory. What was occurring
from the cardinal's standpoint was very different from what I saw.
From the cardinal's standpoint, every morning that it got up there was
another bird in its territory. And, unfortunately, the only way
to deal with this other bird was, of course, to attack the bird.
And, from the cardinal's standpoint, the cardinal was remarkably successful
at this behavior because every time it hit this other bird, it went
away. From the cardinal's standpoint, as it lay there on the ground
and shook itself off, the real problem of the situation was not its
behavior but the tenacity of the other bird.
So
the cardinal perceived itself as engaging in a difficult situation caused
by a problematic other with a repetitive but successful, instinctual
activity. The lesson in this story is directly applicable to organizations
and a number of social phenomena. The major problem in most situations
is not that we're doing something stupid, but that we're doing something
that is very smart. And, within the situation as we perceive it, what
we're doing is at least somewhat successful. When the difficulty
persists, we only fault ourselves for not being tenacious enough to
carry through to success. We need only to do the same with more
will—the same faster and harder. Its like when we are speaking
to someone who doesn't speak our language, we sometimes just believe
that if we say it louder life will be better. Many of our common
problems today follow this model. What we have is a perfectly
fine solution to another time and place's problem. What I wish
to address tonight is our difficulty in trying to invent an appropriate
way of responding to the social difficulties of this time and this place,
focusing on our difficulty of getting social values into important contemporary
social decisions.
The second story
is fable about a company formed by very short people. Since they
were all short and they wanted to be highly efficient and cut costs,
they chose to build their ceiling short and the doorways shorter so
that they could have more work space in the same building. And,
they were in fact very successful. As they became more and more
successful, however, it became necessary for them to start hiring taller
people. And, as they hired more and more tall people, they came to realize
that tall people were at a disadvantage at this company because they
had to walk around stooped over. They had to duck to go through
the doorways and so forth. Of course, they hired organizational
consultants to help them with the problem.
Initially they
had time-and-motion experts come in. These experts taught teams of people
how to walk carefully. Tall members learned to duck in stride
so that going through the short doors was minimally inconvenient. And
they became more efficient by learning how to walk more properly for
their environment. Later, because this wasn't working so well, they
hired psychological consultants. These experts taught greater
sensitivity to the difficulties of tall members of the organization.
Long-term short members learned tolerance knowing that the tall people
would come later to meetings, would be somewhat less able to perform
their work well. They provided for tall people networks for support.
Of course, those of us in communication would immediately have see and
said something different.
Two lessons
in these stories: first, when we have a problem we frequently
blame the people when the problem is the structure, and second, we have
lots of popular perfectly good solutions to problems of another time
and another place. If you think about problems today in organizations
in this light—problems such as of social responsibility and responding
to social values—what we have is basically a set of 19th
century solutions to 21st century problems. This happens
both at the level of understanding corporate governance and at the level
of understanding communication. In both cases, the 19th
century view of how the governance should operate, and how communication
should operate, hampers our ability to think clearly about our problems
and makes it difficult to generate more appropriate responses.
Even in the case of socially damaging choices and bad business decisions,
corporate leaders are not so much evil or stupid (though some probably
are) as our structures of governance and processes of communication
don't match our contemporary needs.
The problems
today talked about in the media—the problems of corporate irresponsibility,
of Enrons, WorldComs, mutual funds and virtually everyone working in
the investment process—are outcomes of far most basic and invisible
problems. They really just the tip of the iceberg. Many of us wish that
the press would have paid as much attention during the expensive merger-mania
and when companies were laying off workers across the country as they
have when investor started losing money in the stock market. Many of
the most important issues have simply not been made press worthy because
they were not problems for the right people.
And when there
has been press attention they have generally identified individual deficiencies
as the problem, rather than governance and processes of decision making.
The problem identified in most discussions is inadequate or evil people,
people who lack moral standards. Hence, discussions of solutions
focus on regulating individual behavior because the problem is seen
to exist at the individual level. People are fired, we change
people in the seats, but the "short doors" are overlooked. The problem
and solutions reside in the realm or communication and decision making
rather than individual psychologies and moral standards. When our solutions
stay at this level we are operating like the cardinal.
Corruption and
narrowly self-interested decision-making, however important, are merely
the visible tip of the responsibility iceberg. They are encouraged/allowed
by the structures that underlie them. Focusing our attention there is
misleading. The real issues of responsibility reach far deeper
into issues of the environment, distribution of income, effects on the
political process, economic stability, health and safety, quality of
goods and services, and development of the workforce. These broader
concerns draw our attention less to reactive issues of law and ethics
and more to proactive issues of morality and social good. The problem
is not so much what corporate officers do to manipulate the quarterly
report, but the conditions giving rise to the importance of the quarterly
report, short-term thinking and assessments, and the numerous consequences
flowing from that. Failure to address the larger issues leaves
us with a form of "window bashing" reminiscent of my poor but proud
cardinal.
Part of the
difficulty in conceptualizing our problems and solutions in new ways
arises from a contrived contrast, a kind of almost instinctual
way of thinking in the cardinal sense, a flawed common sense in ours.
Popular discussions assume that we cannot simultaneously have profitability
and representation of social values, as if to get one we have to sacrifice
the other. It is easy to show the many places and ways in which this
is not true, but the problem is not just the media repetition of assumed
polarities or corporate managers' believe in it. The central problem
is the lack of communication processes and governance systems that optimize
the opportunity for either let alone both to be accomplished. To me,
this is not a philosophical debate over the grounds for ethical behavior
nor a regulation issue, but a question of corporate governance—who
and what shall be involved in making decisions. To the extent that it
is a governance issue, it is a communication issue—by what set
of interaction processes can we incorporate values into decisions. But,
neither the press nor communication scholars have done much to address
the issues as a governance or a communication concern.
Let me talk
about the governance problem first. Corporate governance is of course
a large complex issue. While some scholars have talked about it
much, generally it remains invisible as an already answered question
and not open to discussion. The simply, common way of conception
sees governance as linked to ownership rights represented most often
by Boards of Directors and transferred to managers in the form of a
managerial prerogative. Hence, in theory, governance functions
to fulfil the interests of owners/stockholders who have taken risks
through investment. (Though we have known for some time that the
set up most often first and foremost advances the interests of managers.)
The pressure
to rethink corporate governance today comes from two directions.
First, from the business side, the wider set of shareholders are questioning
whether the Board of Director/managerial prerogative model represents
their interests well. And, second, from the social political,
questions are being raised as to whether "short terms profitability"
should be the only measure of corporate successes and how non-fiscal
rights should be considered. Both are complex issues. In
both cases I'm not going to spend a long time developing these issues
tonight, but I want to summarize enough of this so that our alternatives
can be clearer.
First, from
the business side of this, the current set up does not allow much transparency.
Most of what happens in business remains invisible to the owners and
the wider society. This enables a lot of corruption and skewed
and/or self-interested decision making. The system is largely
based upon good will and most of the special arrangements that advance
the interests of an "insider class" (like "timed trading" of mutual
funds or managerial salaries and bonuses) remain out of the view of
the average owner. Only periodically do these activities become
visible and by then the practices are so common that one cannot opt
out of the system. With a case like that of a Martha Stewart you suddenly
see insider trading, but the ways in which it happens in most cases
is far more subtle and far more clever. Even with greater degrees
of transparency, if you could imagine the books were suddenly be open
to us, hide, in most cases, the ways in which corrupt practices occur.
It is impossible to know enough, impossible to monitor enough, and impossible
for the public to see enough, for the development of any clear way to
engage with these things.
But again, this
is just the tip of the iceberg. Organizations as we operate them
today are not highly inefficient from simply an economic standpoint.
Why? Given the dominant economic motive even if nothing else were
true, this ought to be. But business decisions always need to
be made in situations of fairly high degrees of uncertainty and limited
rationality. Routine decisional practices and values fill in the
gap between what can be known and the need to make a decision.
Enter cardinal-like thinking. Routine decisional practices reflect
what was good for another time and place. The faster things change the
quicker they lose their functionality. Like the cardinal, more
of the same, faster and harder becomes the rule whenever a risk adverse
management confronts uncertainty. Short-term processes of financial
manipulation and cost containment over company development provide common
example of this.
Beyond simple
routines, values and interests enter in to fill the gap between what
can be knows and the need to decide. Within uncertain situations,
it is of little surprise that managerial interests and worldviews become
more central than economic calculations for making choices. Faster decisional
contexts and interdependence further reduce the ability to predict outcomes.
Value-laden "industrial recipes," "conventional wisdom," or effective
stories fill in the knowledge gaps. Decisional premises based
on shared values by leading corporate officers always fill the gap between
what is known and the need for a decision. As expected in increasingly
fast moving situations not only does the amount of uncertainty increase
but more and more often the decisional premises err on the side of maintaining
managers' over other stakeholders' interests. Research suggests that
managerial beliefs that everyone operates out of self-interest and that
strategic control is central to success are core parts of the choice
making process. And, following that research, these are more a
result of business school education than an essential part of human
nature. Do you hear a structural configuration that has little
space for tall people?
Let's consider
the control issue a bit to make this point more concrete and understand
its subtleties. Managers as a rule prefer worker control and centralized
decision making over workplace participation in decisions. The presumption
that somehow high degrees of control will lead to efficiency, has led
high degrees of control to lead, in most cases, to high degrees of control.
Most control practices only appear to be justified by increased coordination,
increased productivity or anything else. They actually arise from a
managerial model or concept of how things should work. A model,
which in most cases, has not been shown to be terribly good business.
It creates problems in creativity, employee commitment and satisfaction,
and positive relation to customers and the wider society.
Let me turn
to a brief example. I have students come into my office a lot
and ask for organizational advice. One of my more interesting
cases was a Korean student that I had whose father owned a convenient
store in a neighborhood of mixed ethnicity. This was a difficult
kind of store to manage. We saw in the L.A.
riots and other places some of the tensions that exist in such circumstances.
The father was having a tremendous amount of trouble with two things
in the store—a high turnover of personnel and a lot of theft.
And he decided that his solution to this had to be a better control
system, and so his son came to me and asked me how I would establish
a better control system.
I went out talked
to the father. He described the problems of turnover and theft, but
the greatest frustration was that his employees couldn't even make change.
He blamed this on the inadequacies of the American educational system
and so on and so forth. He has an economic problem for sure, but
he also had a clear concept of himself and others and a powerful worldview
of how things worked, etc. I also talked to some of the
people that worked there. When I went back to him I provide what
he must have seen as a strange approach. As I said: "One
thing I know is that you know how to make change very well. So why don't
you run the cash register. And, then let your employees decide how to
rearrange the store, let them talk about how you might structure the
time of working, where you place products and so forth." To his
credit, he did this and the employees really got into it. They found
this to be a fun thing to do, to go around and actually change where
things were on the shelves, move things around and so on and so forth.
And guess what? While he knew a lot about making change, they knew a
lot about theft. And, they also knew a lot about turnover.
They provided interesting and creative ways of reorganizing the store
so that the most likely places of theft couldn't occur anymore.
They moved the products around to actually match the local clientele
much better because they understood what people bought. They understood
why people came into the store. And after doing this for a while, they
went back to the cash register and he went back to his job, and guess
what? They made change very well. Obviously the American educational
system had improved.
Managerial control
has always been a questionable strategy. It's been built around a kind
of assumption about how one should operate and who should know, not
around how things really work. When you look at work places, the people
on the shop floor often know best how to make products. When you look
at the ways in which we sell things to people, consumers are often the
best marketers. We all have knowledge that could contributed in
organizations that gets lost in control systems. Controlling approaches
has cost America
competitiveness. If you look at the places of greatest control,
in terms of manufacturing and so forth, we've lost most of those jobs
overseas. We survived in precisely those places where we didn't control
very well. Those places where we needed high degrees of creativity,
those places where we needed highly customized products, those situations
in which we needed a more highly committed work force. The uncontrolled
parts of the economy have succeeded. It's in the uncontrolled
parts of workplaces that creativity occurs. Even in manufacturing,
some of the most creative things that have been done have happened at
those places where control was given up for greater degrees of employee
involvement in decision making. Managerial control is good for
managers but not the economy
In short, the
current governance model does not provide adaptive responses to change,
creativity in product development and manufacturing, worker commitment
or the most effective economic relations. Short term measures as a structural
feature accentuates the weaknesses of the governance model. Fortunately,
we have positive examples of companies that have worked in a different
fashion. And, some of these come from manufacturing where managerial
control has been most problematic.
The early years
of the Saturn Corporation provide several interesting cases. In
the 80s when Saturn was invented as a company most did not think that
Americans could successfully start a new car company competing head
on with the Japanese and German imports. But by the early 90s when the
first cars appeared Saturn's primary problem was that they couldn't
keep up with demand. People ask how this occurred. A core reason was
a structure that forced widespread participation over traditional decision
routines and managerial control. Saturn was structurally based
on a governance model that from a traditional business standpoint seemed
absolutely idiotic. It had what we called co-management. For every position
in the organization there had to be a representative from GM and a representative
from the UAW. In order for them to make a decision, they had to
agree. The typical logic in companies says that you always need
an odd number of members involved to make decisions. 1 is best
but then 3 that way if they can't agree, two can vote one out.
(That of course overlooks that one of the most enduring, stable, successful
relationships in Western culture is composed of 2. If you could imagine
marriages with three, maybe they would be less conflictual, I don't
know.) It was feared that the Saturn model could lead to decisional
impasse. Not agreeing, however, led to some of the most creative
things that Saturn did.
A couple of
them. For example, one of Saturn's first conflicts concerned
where to buy parts for the building of their cars. This was difficult
and contentious decision because Saturn like most other American manufacturers
found they could not achieve parts of a sufficient quality and a right
price in America.
The long term managerial routine in the industry lead to simply buying
parts overseas. At Saturn the management representative accepted
this as a normal routine. Not unexpectedly the UAW representative
insisted that the parts be made in the US.
This might have been a stoppage but what actually occurred was that
the impasse, but still the need for a decision, lead to creativity.
Saturn went out and taught part manufacturers in America,
how to make parts the Saturn way, new processes that led to both lower
cost and higher quality than they could buy from overseas. Therefore,
impasse, rather than being a problem, becomes the moment of creativity
to the benefit of all parties.
Another problem
was high demand that exceeded manufacturing processes. Management has
a routine solution to this, when you can't keep up with the demand,
you speed up the process and reduce quality. Again the UAW representative
objected by arguing that management had it wrong. The Japanese
competitive advantage accrued from greater quality rather than lower
price as management had believed. The outcome is that they went
back and reengineered the car; the car could be built faster and a higher
quality yet. In other words, creativity comes from difference.
Creativity does not come from control.
In today's world
unless you have exceptionally low labor costs, competitive advantage
comes from high creativity, highly committed employees and the ability
to customize products. All require a highly involved, participating
workforce. Creativity requires letting differences make a difference.
Most high-end companies are more dependent on the social and intellectual
capital possessed by employees than financial investment. Without
a committed workforce these assets go out the door at night. Customization
requires front-line people having communication with customers and the
ability to rapidly change organizations to respond. From simply
a business standpoint, quite apart from the issues of responsibility,
the need for a high participation governance model is great.
But while we
don't talk about much in this society, I think a different model of
governance is probably more critical from a sociopolitical standpoint.
In today's context corporate governance is not just about the business
enterprise, its governance for all of our lives. The workplace
is the place that social values will get represented if they get represented
at all. I have written about many of the reasons for that.
I won't belabor most of these. First, business enterprises are
critical social institution as much as they are simply profit making
private businesses. They are central social institutions that
make most of the proactive decisions for our society. State governments
don't spend much time thinking about what products we should have, nor
do they have much capacity to effect them; State governments don't spend
much time thinking about how we should distribute our income nor do
they have much capacity to effect it; State governments don't spend
much time thinking about how we rear our children nor do they have much
capacity to effect it. Workplaces do. Most of the decisions about how
are natural resources will be used, what products we'll have, how they
will work in relationship to each other are made outside of the public
political space. And so, what happens in a democracy when the core democratic
decisions that need to be made are not made in the institutions that
have democratic processes? Democracy means little if democracy
does not occur where decisions are made.
In our society,
often democracy has been reduced to some 40% of the people spending
less than two minutes, once every four years, exercising their democracy.
The reality of democratic decision making is that the decisions that
affect our lives are made endlessly, routinely across the country in
one workplace after another. In what ways do significant social
values get represented in any of these decisions? Where do we
get to talk about these choices? We used to talk about the market
place as a public space. American democracy is linked to speaking at
the market place. Have you ever tried to do it in a shopping mall? You
didn't see the little sign at the door that says, "You must check your
first amendment rights as you enter." In other words, the critical places
in which we engage with each other, in which we make decisions, are
not particularly democratic. That is a major problem and contradiction
for a democratic society. The elections get a lot of attention, but
the most critical decisions are made outside of those spaces.
Even within
the state system, most of the decisions that have significant consequences,
happen in regulatory boards that you don't know, that you never selected.
The reason why we don't change much as we change from right to left
in our political spectrum is what stays the same are endless regulatory
boards and routine practices. Specific businesses, unlike most
of us, are intimately familiar with everyone and everything that affects
them, they provide trade relevant information to these boards, and they
pressures them constantly. And therefore such boards continue
to make decisions that often don't represent us and rarely fulfill the
ideas that we might have as citizens. If social values are
not represented in business decision, they are not likely to receive
much representation at all.
The principle
block to the representation of social values in organizations, however,
is the centrality of ownership rights to governance. At the most
simple, intuitive level ownership is granted a right of control based
on the presumption of risk. After all if you as an owner took
a financial risk, why shouldn't you make the choices? I
want to suggest two problems with this model: first, the contemporary
way that ownership relates to the company and risk, and, second the
treatment of financial risk as the only or most important risk to be
considered in determining the right of control.
When the 19th
century governance model that continues today was developed, the relation
among financial investment, risk and control in small shops and emerging
factories was relatively clear. De-industrialization, widespread
diverse stock ownership, and the gradual shifting of forms of capital
as manufacturing became less central changes these relations.
What was a perfectly fine model at one time in our history is not as
useful anymore. At one time strong ownership rights over the family
firm made sense. Risk and protection were balanced, and traditional
social concepts of property ownership were extended. But in today's
situation of fluid, diffused ownership, capital investment relates to
the firm more like a cost or liability than traditional ownership.
Frequently the employee has made a more serious and long-term investment
in the firm, thus needing more rightful protection, than the stockholder.
Laws regarding corporations and ownership lag greatly behind our contemporary
situation. For example, what kind of risk does the modern owner
take and how does that appropriately connect to control? Many
modern "owners" often own the stock for less than a fraction of a second.
Or in mutual funds and institutional investing the "owner" is diversified
to reduce risk and has virtually no knowledge of nor connection to the
companies "owned." In other words, the ownership leading to control
rights is relatively strange kind of thing in our contemporary context.
Our forebears,
as they wrote the constitution, never, considered corporations the way
we consider them today. They did not have in mind the types of
structures or rights that have developed. Clearly they tried to restrict
governmental intrusion as they were in many ways fearful of big government.
But it wasn't big government alone they feared; they also feared big
corporations. They worried about the global corporations of their day
and they feared that every government would simply fall in line with
dominant corporate interests. Recall that the Boston
tea party was about a tariff imposed to aid the East Indian Tea Company.
It wasn't King George and taxes as much as the cozy relationship of
distant governments and centralized global commerce.
Today, even
capitalism as an economic system gets rhetorically used to support a
corporate governance system that is often in opposition to it.
Adam Smith used the word "corporation" twice in The Wealth
of Nations. Both times negatively. Adam Smith clearly believed
that corporations would always be engaged in the process of control,
limitation and distortion of markets. They would work in opposition
to the development of national competitive advantage since their interests
would not be in free and open markets. Their interest would be in control
of markets. Chandler
showed in his history of the rise of the corporation that the principal
interest of organizations in every move they make, has been to dominant
and control markets not to support free and open markets. In other words,
it is ideology rather than reason that supports the present governance
model.
The second issue
is the way the governance models holds financial investment and
risks as superior to other forms of investment and risks. In many
industries financial capital is not that central anymore. This can be
shown in looking at major institutions today and asking the questions:
"What is the major form of capital that makes this thing work?" "Who
took the risk?" In many major industries in America
today, with the exception of some of the manufacturing, the primary
forms of capital are intellectual and social capital. It's what
employees know and whom they know that makes these companies work, rather
than who built the building. In fact, the financial capitalization of
many "knowledge intensive" enterprises is very, very small. Enterprises
of this type provide about 25% of all jobs today. Because their
"wealth" resides not in its buildings, it can go down the elevator and
out the door and every night. You just hope it comes back the next day.
Even in other service and manufacturing business, capitalization has
become much more complex and multiple. In our contemporary situation,
control justified by the building of buildings, the buying of machines,
or the setting up of the plant, doesn't account for the many forms of
contemporary investment. Financial capital is one part of investment,
but major forms of capital resides somewhere else. So does the risk.
When I moved
to University
of Colorado,
I took with me my contacts and my intellectual wealth from Rutgers
University.
They kept the buildings, but I took something important with me. But
I also incurred incredible risks. When I moved across the country to
take a new job, relocate a family and so forth, I took risks.
Every employee takes risks and these risks are often greater than an
investor takes in the buying and selling of a stock. Following
the implicit governance logic, control should follow risks. Those taking
greater risks ought to have a right to greater control of our organizations.
The right of governance, as conceptualized in our society as an extension
of ownership, shifts if we think what we own and what is invested is
different.
And this impacts
on the measurement of organizational success. Only when financial
ownership becomes the sole form of ownership does profit become the
only motive for organizations. Profit, which is an important by-product
of the successful providing of goods and services, becomes the only
real product if organizations are seen as having only one type of investor.
When we consider multiple form of investment and risk, profit becomes
to the organization what oxygen is to the body. It's absolutely
essential for survive but it's hardly its primarily reason for existence.
Profit is one way to measure organizational functioning but profit has
problems as a measurement of organizational success. For example, if
growth in the number of employees, number of new products, improvements
in work processes, quality of jobs, or average pay of workers were considered
as seriously as short-term profitability, we would think differently
about the economic quality of particular decisions within companies.
Expanded economic indicators and the use of non-economic indicators
are both important.
Let me talk
just for a second about those problems. Recall from earlier, all
organizational decisions are value-laden. The belief that decision are
economically rational is neither supported by the facts nor by any concept
that I know. Think about your own lives. How many of you have ever made
a serious or important decision? Do you feel that you had enough information
to really make that decision? How many of you feel as if you actually
made the decision and then went out and got the information? How many
of you buy cars like I do, you go buy one then you shop to see how good
of a deal you got? How many of you do personal relationships like that?
When you think about our lives, you and I live in all sorts of degrees
of uncertainty, without enough information to make a decision. We make
a decision based upon our values, antidotal evidence and our guesses.
Do you think GM is in any great way different? What information would
you have to have to make core decisions as to how you should build a
product, how you should run a company? We all exist in high degrees
of uncertainty and our values fill in the difference.
Corporate decisions
are only partly economically rational. An interesting example of that
was during the 80s early 90s, companies spent incredible large amounts
of dollars on the implementation of information technologies. The available
evidence for a clear connection between those investments and increased
productivity was very weak. Only later technologies made clear
differences. On the other hand, there was consistent and compelling
evidence that workplace participation paid off, and yet most did little
of that. Why? The value system, right? Values and interests
greatly impact decisions as they get made in these kinds of contexts.
Therefore, if business decision are in fact, value-laden (and I will
argue that evidence supports the idea that almost all business decisions
are heavily value-laden), the governance questions then becomes "Whose
values should count? How much do they count?" "In what ways do they
count?" Values are not new to the equation, but whose values
becomes a question. Both managerial decisions and the market economy
are heavily value-laden and rarely simply economic. Decisions
are made in conditions of considerable uncertainty and most often follow
value-laden decision routines. The question is not whether values,
but whose and what values get represented. Top executives
do not lack values nor do they hesitate using them implicitly in decision
making. Competing values, however, do not have an opportunity to enter
into the decision process.
The issue of
reformation of corporate governance so that social values have representation
there is more important today than before. Ownership and public interests
were once better aligned with shared risks and benefits. Further, part
of the reason property rights have relatively rarely been challenged
is that property owners have shared basic values with their neighbors.
Rights are easy to give and uphold when a person does with them what
the public would have wished anyway. Local owners have consistently
been more supportive of local communities than distant and diffused
owners. Instead of being members of communities, modern upper
managers have used their resources to shield themselves and their family
from the social effects of their corporate decisions. They have
moved to protected suburbs, sent their children to well-financed private
and public schools, avoid public transportation, and rarely meet or
talk to the unemployed. They have developed remarkable "golden
parachutes" if they themselves should ever happen to be the "victims."
They have used a concept of property rights to see and live in a different
world. Business leaders today have used their advantages to increase
their access to communication media and government and to successfully
advocate that the rights given to the family farmer and shopkeeper should
natural extend to the corporations of today.
And, further
we once thought that state governance processes could balance the equation
and assure some representation of social values through regulation.
Certainly there are important ways in which this has happened, but it
has not happened in significant arenas and is not likely to increase.
The state system (even if the desire to regulate were present) lacks
the power and resources to meaningfully accomplish it in a situation
of global commerce. And, regulation where it has occurred has
been costly and rarely generated creative responses. Most often
the outcome has been a costly double bureaucracy, a federal bureaucracy
that tries to regulate; a legal bureaucracy internal to the company
to try and avoid regulation. Trying to accomplish social value representation
from the outside has not worked very well.
Further many
hold out the hope of the representation of social values through market
pressure. A version of dollar voting. If stakeholders are
not happy with managerial decisions, they will eventually vote with
their feet or dollars. If a dollar equals a vote and everything
is either a cost or a resource expressed in monetary terms, as long
as corporations wish to be competitive, and managers employed, they
will be responsive to public desires. If the public does not respond,
then it gets the management it deserves. If this could work, we
would not need to debate values or regulate choices and the work process
would not have to be actively participatory. The public would
get what it is willing to pay for.
In the redefinitions
implicit in this solution, social and political relations are reduced
to economic relations, democracy is reduced to capitalism, citizens
to consumers, and discussion to buying and selling. Each of these
transformation entail a constraining of people's capacity to make decisions
together and reduce potential human choices to choices already available
in the system as controlled by others. The marketplace does not work
as a way of representing social values. As many have shown, free-market
capitalism was never intended to represent the public well; it was intended
to describe how to make a return on financial investment. A few
basic problems of using the market to represent stakeholder interests
are readily apparent.
First, since
money is not equally distributed, "dollar voting" is a highly skewed
representation process. Do we want a democracy with some people
having many more votes than others? Second, not all things translate
equally well into monetary terms, therefore they are not well represented.
The more humanistic qualities of service and the jobs of many women
are good examples. Third, hidden costs and longer-term benefits
get no expression. For example, long-term damage to the environment
or people's skills are often not represented, the costs are absorbed
by the community or person, and no one may provide things that are only
beneficial in the long run. The under-pricing of all natural resources
until they are nearly depleted is a serious invisible social cost as
are long-term negative effects on communities.
Finally, the
market is a weak and biased system of representation for a number of
reasons. Market-pricing and standard accounting practices are
often carefully controlled by groups in power. Managers often choose
personal gains over economically rational choices for the company.
Mass advertising and information control inevitably distort "dollar
voting" (e.g., vendor driven sales dominate many industries, and who
can equally advocate non-pharmaceutical health care?). In addition,
choice in markets is directed only toward existing products with no
assurance that the public can influence what is available in the future
(e.g., who assures the development of desired but probably unprofitable
drugs?). The problem with the economic vote is that all the costs
are not charged to the one who makes the money and alternative choices
are not available for the community to buy. Certain values thus
are never expressed, they might be expressed politically in a democracy
but not economically in the system.
I believe that
social value representation must occur from the inside. Governance
systems must be changed to get social value into the decisional stream.
Greater public involvement in corporate decision making appears warranted
by both political and economic conditions. Politically,
if an increasing number of the decisions made in corporations affect
our personal, social, and national well-being, the public has a right
to be represented in them. And as governments move away from successful
involvement in commercial choices, we must seek new ways of public involvement.
Corporate actions and decisions are value-laden, reflecting a particular
kind of culture and way of life and they entail large social (though
often uncharged) costs. On this basis alone, even if greater public
representation was economically less efficient, it might still be important.
But it is also an economic necessity today. Managerial control
and the focus on short-term profitability create dislocations and costly
inefficiencies. New systems of decision making can increase the
effectiveness of existing companies and improve long-term economic health.
So, here's the
bottom line: From an economic standpoint, we cannot be successful
in the business enterprise without changing the way we make decisions
to a more participatory system. From a sociopolitical standpoint, we
cannot represent the values of a society (when those values have no
other place of representation) unless we bring that representation inside
the business context itself. For both social and economic reasons
we need high involvement in our workplaces. Workplaces could be positive
social institutions providing a forum for the articulation and resolution
of important social conflicts regarding the use of natural resources,
the production of desirable goods and services, the development of personal
qualities, distribution of income and the future direction of society.
By focusing primarily on measuring narrow contrived economic outcomes
(often called profitability), the broader social and economic effects
of business decisions have been missed. And, we have been less likely
to develop more creative (and profitable) work processes.
Processes for
social value inclusion are underdeveloped and, consequently, decisions
are one-sided; hence, neither respond to social needs nor provide for
the most effective production of goods and services. The problem is
not that corporate leaders are irresponsible, satisfy self-interest
first, lack moral guidance from others, or consider productivity and
profit at the expense of social values. The problem is that the processes
of organizational decision-making, while heavily value-laden, do not
include a sufficiently representative set of values. Now that
leads us to a communication problem. If we need to have high involvement
and participation in our organizational decision, how are we going to
do it? New understandings of communication are central to this.
A while back
I was having a debate on these issues with a CEO from a major company
on Chicago
cable show, and finally after I thought I was winning the argument,
the CEO looked at me and said, "Do you want our companies to be run
like faculty meetings?" Some of you don't fully appreciate this
yet. And all I could say was, "I don't even want our faculty meetings
to run like faculty meetings." Anyone hanging around most corporations
will hear a lot more complaint about the endlessness and frustrations
of meetings than the lack of opportunity to participate.
This results not just from the limited nature of participation tasks
but from the inability to participate well. Our biggest task may not
be overcoming the autocratic tendencies of many managers and the communication
structures, principles and practices fostered by this, but in providing
new ways to think about and do communication in places where participation
is genuinely favored.
We have bad
models of communication. Our most common models of communication
fostered by liberal democracy are not sufficient for this task.
They made perfectly good sense at another time. As did the particular
way ownership stretched to the governance of organizations some 200
years ago. But not today. It would be the same as trying to make
believe we could produce modern medicine with 17th century
chemistry knowledge. It doesn't work that way. We're still trying to
rub stones and turn them into gold. Unfortunately we have not taken
communication as seriously as chemistry. Our communication processes
are inadequate because our models, like our cardinal's models, were
built in another time and place for the problems of another time and
place. These models worked perfectly fine for small societies with wide,
open forums with high homogeneity in the population. And, as long as
you have all of those things, the model still works perfectly fine.
But, the fact is, we don't live in a society like that. We live in a
society that is incredibly diverse in views—a society that requires
creativity in ways that those societies did not require creativity.
We need a different model of communication, a model of communication
that attacks problems in a significantly different way.
A lot of the
studies that I've been doing, along with my students, have looked at
what we call stakeholder models of governance. You cannot make decisions
that represent the values of a community without community stakeholders
having a way into the business decision process. Getting stakeholders
into decision is difficult, and so is having good discussion processes
to make them succeed when they are there. These today are important
problems for those who study business and those who study communication.
We sometimes have the ability to build forums and places of talk, though
that is still pretty limited. The number of companies that have stakeholder
involvement is fairly small. And those who do involve stakeholders
often only do so indirectly, through certain kinds of focus groups,
public meetings and advisory groups. Most current stakeholder
involvement has addressed environmental decisions. But at least
in the environmental decisions, we've found that it works. Many companies
have found that it is a lot smarter to get people in the community into
the decision process than to have them regulate the process from the
outside.
But, our models
are not very good for the kinds of talk that works best in those places.
I want to just give you a few examples of how that works. Have
you ever listened to a presidential debate? If you haven't, you're going
to get an opportunity to coming up in the next several months. If you
are a communication professor, one of the things that is interesting
about presidential debates is that you always get reporters who call
you and they ask you who won the debate. Suddenly the "debate,"
the public discussion is like a ballgame. I don't think that they
are asking the right questions. So I change the question much
to their frustration. They call up and say, "So who won the debate?"
And I basically say, "You know I'm not really interested in that.
Thought of in that way, it is a silly enterprise. Think about this from
the standpoint of leadership and communication. Is wining a debate the
best credentials for the presidency? Let me suggest something different.
I will tell you what I think of the candidate's skills the next time
if you select five problems that this society says we must deal with.
Let's just try health care. Let's just try budget. Let's see if two
intelligent human beings can work out a creative solution to these that
both are satisfied with. Then I'll tell you who I'll vote for,
because that's what I need in a leader. Somebody who can sit down with
people who are different from themselves and work out creatively something
that meets both their needs. I don't need a leader that can win debate
points and push an agenda and then spend the next four years in the
White House arguing with the other side as if we have irreconcilable
differences."
And so let's
think of this as a very different communication problem requiring another
model. Our problem today in the political area or in getting successful
public representation in business decision is trying to get people to
talk in a way that they come up with mutual decisions. Our system doesn't
do that very well. We grow up with information and adversarial model
of communication and these are actively supported by the mass media.
These models are designed to preclude reasoned discussion and creative,
mutual decisions. Democracy has been reduced to talking at people rather
than deciding together. Attempts to get creative answers that
might be for the good of everybody are thwarted by a process that requires
oppositional thinking and requires that we set it into a communication
context of winners and losers. The model is guided by the wrong motives.
The model is not guided by the motive of reaching decisions that we
both accept, that meet both our needs? It is guided by the motive
of who is going to win.
Furthermore,
most of our models of communication were never intended help people
reach decisions. We left voting and power to do that in the place of
a model that lead to a mutual decisions, decisions good for multiple
parties, committed to by multiple parties. We often structure
our meetings for public representation to fail when it comes to decisions.
I used to work for community health planning where we did a lot of stakeholder
meetings, a lot of community meetings, but ultimately these were designed
for people to stand up and yell. They are show and yell sessions.
That's all they are designed to do. Everyone had a say, but the communicative
development of a decision is left for hidden others who may or may not
represent public values or have themselves a successful communication
process. We make meetings like these far too large, and what we
do is just make sure everyone briefly has their say. Now it begins to
sound like faculty meetings. Those of you who have ever had to go through
this, whether it be in sororities or fraternities and other groups,
you know finally Delbert is right: The primary determinant of group
processes is bladder size. And, if you want to strategically manipulate
the meetings, you bring the coffee and the orange juice and you don't
drink it. Two hours later when everyone else is crossing their legs,
you find that most things you say sound pretty good.
Rather than
a communication problem, we set it up as an expression problem. Let's
make sure everyone has his or her say. That way we can be absolutely
sure that no one will make a decision. Or, we set these up so we try
to represent everybody. So everybody of any sort is represented.
Rarely do we ask what kind of diversity do we need to make this decision,
let us make sure that all relevant positions are treated by the decision.
Without this everyone has had their chance to yell, no decisions are
made and the decision-making power is passed to someone else. Or if
we look at how it functions in most of these contexts, decisions aren't
made at all; we make a "recommendation to." This is in academic
discourse as well as in business discourse. I learned it first as a
professor. As a graduate student, one of my first conferences was in
Germany.
I remember coming out of meeting in which we had an important topic
to discuss. The German press was actually there; something American
press would never dare to do at our conferences. They set a microphone
in front of us and said, "So what did you decide?" And my colleagues
said, "Well I heard a paper on…and I heard a paper on…."
"But what did you decide?"
Because we hear
lots of "papers on" but the point of a community is to make the decision
together. It's not that everyone has she or his say, but having our
say has some effect. But when you look at the way we conceptualize our
very democratic notions, our democratic notions are not that we came
up with decisions that represented well all of our interests. Our democratic
notion is we sat in a room and made sure everyone had their say. So
somewhere somebody else had to decide, or decision happened by inaction.
It's a bad model of communication. It is a model of communication that
was never designed to do what we have to do, and that is, in our interdependence,
define and make our decisions together.
And, furthermore
our models of communication have presumed that our interests are all
fixed. That we are somehow born with these things and our job is only
to come to a meeting to express them. It's like when I go to an organization
who has a problem and they say, "We have a problem can you help us get
our people out of the box?" You know what out-of-the box thinking
is and all this stuff? And, I kind of look at them and I say,
"Wrong model. All I do is try to figure out is how people got
into that box?" Because the important thing is not how you get out,
but how you got in. The processes by which you produce your interests,
and presume that these are your interests, are the critical communication
processes. We are treated as if we are first private individuals
with individual feelings and we become social by speaking to others.
The fact is we are first communicative creatures working out together
with each other before we decide what is inside. Standard everyday models
of communication make the opposite presumption. They presumes
that we're individuals first. I wish to advance a model of communication
that makes the opposite presumption. It presumes that we're social
first and only latter are positioned as individuals. The central issue
of communication is the processes by which the individual interior become
produced rather than simply expressed.
And further,
our everyday models presume that communication is a rather simple, spontaneous
process. If given the chance everyone in the world is instantly
democratic. Unfortunately, democratic communication, talking to
reach mutual decisions, is one of the most complex, sophisticated skills
that human beings have ever developed. The ability to reach decisions
with other people who are different from us, is extraordinarily difficult
and require very special and currently very rare skills. It is
one of the most acculturated aspects of being a human being. And
yet we often believe, that if we simply give them a space people naturally
have the skilsl. It's a field of dreams, produce a forum and they
will come and make good decisions together. It doesn't happen
that way. Getting people into the discussion is only half the
problem, the rest requires skills and models that work when they get
there.
The problem
with our companies today is not that bad people are there, they are
people put in certain situation, which invite certain kinds of behavior.
And, the worst decisions are not made simply by corrupt, self-interested
people, they are made by people following routine scripts and accepted
behavior. They are doing precisely what the system demands of them.
They are governing. But new models of governance are being developed.
We are creating the possibility of getting a wider set of stakeholders
into the decision chain. If we can both get them in and provide models
of talk that work, we have the potential to have creative decisions
that both better represent social values and make our companies more
economically viable. This is the hope I leave you with today.
Stanley Deetz (Stan)