Good business is good business
Friday, 13 January 2023
| Jenny George
I never thought I was going to be in business.
When I was growing up, I had a picture of business, competitive business, as being about corporate titans sitting around planning how to undercut their competitors, how to run the ‘little guys’ out of business, how to force their employees to work as many hours as they could and generally be as cut-throat as possible. I think this image was fed by movies like Wall Street and Working Girl, two movies that came out around the time I was thinking about where I might end up working. It seemed to me at the time that this was the water you had to swim in if you wanted to be a corporate success.
Looking back, one of the reasons I initially went down an academic route and not into a business was that the images I saw of ‘big corporate’ were not something that gelled with being a Christian. I wanted to be successful, but I couldn’t imagine myself into those movies and see myself in any roles that were both commercially successful and had integrity.
That’s why it’s been so refreshing to discover over the years that these images are dead wrong. I don’t mean bad behaviour and corporate greed don’t happen; they do. But they’re not what make for successful businesses. In my experience, it’s quite the opposite.
A misunderstood vocation
Over the years, I have discovered that many of my prejudices and misconceptions have not been borne out in practice. I have worked alongside many people, including CEOs and board members of large companies – the corporate titans who were in my imagination back in high school. The ones who have been most successful have been decent people, focused on building healthy cultures and hiring people with good values. Competitive, yes, but focused on making products and delivering services that people want to pay for.
This is very different from the common myth, one I heard repeated recently, that you have to be a bit of a psychopath to be a CEO. In a way I had to admire the guy who said that to me. He was in my office last week, he’d never met me before, he knew I was a CEO and he was trying to sell me something. So he certainly had chutzpah to suggest that maybe I had some psychopath in my personality!
But I was struck by the statement and did a bit more digging. There actually is quite good evidence to suggest that the proportion of CEOs with narcissistic, high conflict or even psychopathic traits is above the population average. But I think there are two important things to bear in mind here.
First, let’s understand the magnitudes. The population rate for psychopathic traits is about 1 percent, and for narcissism and high conflict behaviours about 4 percent. Studies have found that anywhere from 4 to 20 percent of CEOs could display some of these tendencies. Now this is much higher than the general population, but it is still only a small proportion of CEOs. Eighty percent of us are, actually, OK.
And second, while these traits can help someone land the top job, there’s growing evidence that businesses with corporate psychopaths at their helm do much worse on measures like share price, profitability and business longevity.
You can always point to some exceptions – Steve Jobs or Elon Musk, for instance – leaders with well attested dark traits in their personalities who seem able to run a successful company. But for every Jobs or Musk, there are many more Robert Maxwells (newspapers), Dick Fulds (Lehman Brothers) and Elizabeth Holmeses (Theranos), CEOs whose dark traits helped to ruin their company, destroy jobs, lose investments and disrupt whole industries.
Ordinary corporate snakes whose names never pop up in news reports are also likely to take their companies down with them. One estimate by researchers from Stanford University showed that corporate narcissist CEOs in listed companies oversaw rises of 4 percent in share prices compared to the 27 percent rises their less narcissistic peers enjoyed over the same period.
Narcissistic traits may help you get the top job, but they don’t seem to help you run a company well. In the realm of leadership, good business is good for business.
The pitfalls of ‘authentic leadership’
While we’re talking about leadership, I want to comment on something Ridley College lecturer Tim Foster wrote about very eloquently recently and on which I agree thoroughly with him: the folly of jumping too completely on the bandwagon of ‘Authentic Leadership’.
If, say, 10 percent of corporate leaders are somewhere on the spectrum of psychopathic behaviours, surely the last thing we want is for them to display their authentic selves. And with a well-developed doctrine of sin, I think Christians should be wary about a version of authentic leadership that excuses and allows our sinful natures full expression in the service of authenticity. Mark me down as someone who aims to be authentic and sincere but only if I’m expressing the ‘new creation’ part of me. I want to be authentic in displaying the fruit of the Spirit, but I’m totally in favour of supressing the times I feel irritable, bad tempered, arrogant and envious.
Untangling this issue of authenticity has been important to me because of the work that my company, Converge, does. Promoting wellbeing among workers, we often come across people suggesting that authenticity is the answer. ‘If only people were true to themselves, they would be healthy, happy and productive.’ Of course, there can be unhelpful and unhealthy ways to be deceptive or mask who you are. But at Converge, our research into wellbeing showed that the strongest relationship was between wellbeing and virtue – that is, morally good behaviours – than anything else. It almost wouldn’t be going too far to say that wellbeing and virtue are two sides of the same coin.
It's the practice of good habits – thankfulness, generosity, a positive mindset, investing in relationships – that is the foundation of virtue. And these habits are what lead to wellbeing.
Something that surprises me is that wellbeing is a word that is so in vogue, so acceptable in every situation in the workplace, and yet virtue is not. We sort of sidle up to it in boardrooms by talking about values. And yet, even more than good values, what everyone in the workforce really needs is more virtue, more practical outworking of values.
‘Do unto others as you would have them do unto you’ is not just the Golden Rule that has been the mainstay of moral teachers throughout human history. It’s also been shown by social scientists to be one of the strongest drivers that lead to wellbeing.
Why business ethics courses aren’t enough
In 2009, during the GFC, I was the Dean of the Melbourne Business School. At the time you couldn’t open a newspaper without reading an article demanding that business schools run more ethics classes. I was constantly being asked whether business schools had failed the community, whether we felt responsible and what we were going to do to fix this. It’s really hard to know how to take a 30-year-old, who’s already been formed over a lifetime by parents and workplaces, and ‘fix them’ in a 3-hour-a-week ethics course. But apparently that was our job.
The interesting thing when you think about business ethics courses is that the focus tends to be on teaching people to make ethical decisions, normally by learning a bunch of rules and trying to figure out how to apply them in different situations. The excesses and unethical decisions of companies during the GFC were shocking. Other corporate scandals have rocked us since then. The #metoo movement. Destruction of Aboriginal sacred sites. But when these things happen, our response is usually to focus on sanctions and rules and stopping bad behaviour. That was what newspapers wanted from ethics classes.
That’s not wrong. But I don’t think it’s best. Ethical decisions can come from rules and from company governance processes. But they are more likely to come from the internal habits of a virtuous person. Virtuous workers make ethical decisions even when they are put into a situation where there’s no rule book. And ethical decisions are what keep businesses alive. That’s why I think virtue should be discussed in boardrooms. Not just codes of conduct. Because goodness is good for business.
I wish I’d known that in high school. I wish I hadn’t thought that competitive businesses were somehow wrong. That big corporate is evil. And that the marketplace means squishing your competitors and trying to run them out of business.
How to beat competitors
Even now, I have people who picture my life as CEO as focusing on beating our competitors. They are surprised when I tell them I don’t worry about our competitors much at all. I do occasionally – and when we set strategy, we think very carefully about them. But most of my time I think about clients. I think about customers. Beating our competitors won’t happen if we spend all our energy on them. It will only happen if we focus on doing something great for customers.
Imagine if athletes spent 90 percent of their time analysing what kind of race their opposition was going to run and only 10 percent of their time actually running, and training, and building muscle. Sure, you think about your opposition, but only after you’ve trained as hard as you can and focused on being in the best possible shape for the event. It’s no different in business.
The reason I like competition is that power lies where it should: with customers. Customers decide if we succeed or fail.
It’s common to talk about democracy as the best way to run a country, not because it’s so fantastic in and of itself but because the alternatives are all worse. I think it’s the same with competitive markets. The alternatives all put power in worse places. You don’t want companies to hold the power of a monopoly. You don’t want governments to hold the power of a planned economy. In fact, it’s competition that gives virtuous action its strength.
In a competitive market, succeeding means doing something great for customers. Succeeding means not deceiving them or lying to them or taking advantage of them. Because if we do that then we won’t last for very long. We’ll be found out, and someone else who is more trustworthy, or who offers something better at a lower price, will come along and beat us.
This presumes that I’m taking a long-term view. Swindling people is possible and you can become very rich that way. But you better get in and out quick. It’s a way to steal. But it’s not the way to do business. Because businesses aren’t here just for one transaction. If your business is successful, it needs to still exist for the long run.
Two companies, two approaches
Recently I’ve had two very different examples of this. We were looking for investors for Converge and were fortunate to find investors who were really supportive of what we’re doing and where we’re headed. But along the way I had a meeting with a group who had once invested in a company that was a bit similar to us. The investors had just been involved for a few years, had made a profit in a short time and then got out.
Over the years at Converge we’d watched that company lose key customers as they cut costs. Some of their staff left and joined us and told us they felt burned out by the way they’d been treated. That company fell a long way in its position in the market over a number of years. And yet, in my meeting with those investors, they seemed happy with the money they had made and kept asking me why our profit margins weren’t as good as the margins they’d been able to wring out of the other company.
Theirs was such a short-term focus. Some of the ways they had treated staff and customers were just wrong. Their approach had led to short-term profits but had been bad for the business. It didn’t make for sustained profits or a reputation that would last the distance. For me that was a really cautionary tale.
In contrast, I’ve been so privileged to be on the advisory board for a wonderful family business, Dahlsens, a hardware supplier to the building trade. The company started in Gippsland and still has a strong presence there, but now owns hardware stores all over Victoria and NSW, and parts of Queensland and the Northern Territory. And I have loved seeing the way they operate as a family business that’s still owned by the many times-great grandson of the founder.
Dahlsens don’t always think about decisions in quite the same way I would. The decisions they make are the way a family makes decisions. They have over 1,000 employees but they treat them like family. They are so loyal to their people. They have second and even third generations of staff working in the business. They wanted to move a whole team from the country to the city but they put off doing it because a current employee was a few years off retirement and they didn’t want to disrupt his life. They share profits across the whole company when they’ve had a good year and the owners take the hit first if they’ve had a bad year.
If I was being hard-nosed, I wouldn’t make those decisions. That location decision was costly. It was kind of dumb. But I’m delighted that that’s the choice they made. Maybe in any one year their profits aren’t as high as they could be. But they’ve been around for 145 years. That doesn’t happen by accident. And it’s a measure of success that not many businesses can claim.
They make good decisions. Decisions that are morally good. Decisions that help you sleep well at night.
I’m so proud to work at Converge, because we strive every day to be that kind of business too. We’ve been around for more than 60 years and we want to be around for 60 more. We want to continue to grow and be successful. And that success will come if we have a great culture. It will come if we care for people, our own employees just as much as our clients. It will come if we care about growth because we are eager to help as many clients as possible. We truly believe that good business is good for business. And that’s how we make our decisions.
Business as a calling
As I reflect on this, as a Christian, I have become more and more comfortable in business as a calling.
There’s a danger in the way I’ve been talking tonight that you might go away thinking that I only value high moral standards because they lead to higher profits. Just to be clear, I believe we ought to do the right thing no matter what. But what I have been pleased to discover is that doing the right thing in business is not a recipe for competitive failure. You don’t have to be Gordon Gecko. In fact, it’s better if you’re not!
This understanding has given me such a feeling of freedom. It has also meant I feel less and less restricted in talking explicitly about my faith at work. I talk with my team about why I make decisions. I want them to know that my allegiance to God is one of the driving forces behind the vision I have for the business. I want to give everyone permission to find their purpose there, too. I want everyone who works at Converge to feel like talking about virtue is allowed, in fact encouraged.
Because goodness underpins business that is sustainable, a good place to work delivers good value and good products to customers and ultimately makes for a functioning and healthy community. That’s why I see business as a calling.
I’m extra privileged to work in a company where the very work we do has an added dimension of support and help for people with mental illness, people in crisis and people who need advice. I strive to do my part in building a good business. A business that builds up our community, a business that gives meaningful and productive work to people, a business that provides for our clients’ needs and, yes, a business that makes healthy and sustainable profits for the long haul.
This is a good thing. Work is good. And it is right to give thanks for our work. I give thanks to God for my work and thank you for this chance to reflect on it.
Jenny George is the CEO at Converge International, a social enterprise that is one of Australia’s largest mental health providers to Australian workplaces. Jenny is a former Dean of the Melbourne Business School, University of Melbourne, and since 2007 has been a non-executive director of businesses in the finance, retail and services sectors and has served on the boards of many not-for-profit organisations. She has a PhD in Operations, Information and Technology from Stanford University. Jenny is married to Matt, an Anglican minister, and they have a daughter.
Image credit
Photo by Adeolu Eletu on Unsplash.
This is an edited version of Jenny’s address at the Faith and Work Dinner on 6th May 2022 at Ridley College, Melbourne, where she received the 2022 Faith and Work Award, presented by Ethos and the Ridley Marketplace Institute. It first appeared in the Summer 2022 issue of Zadok on ‘Work’. Subscribe here to receive your copy.