Business and sympathy
Business and sympathy
By Benito Teehankee
(Managing For Society column, The Manila Times, November 4, 2008)
Lehman CEO Richard Fuld was asked during a congressional hearing whether he found it fair that the 158 year old company was now bankrupt while he had received more than $300 million in compensation. He reasoned that his pay was good when the company did well. Congressman Waxman, who was questioning him, responded that Fuld gets to keep his compensation while the investors had all been wiped out. Although Fuld stated that, “This is a pain that will stay with me for the rest of my life", there was little else in his remarks which showed any sympathy for the Lehman investors and employees who had lost so much.
Is there a place for sympathy in the world of business? The common thinking is still that business is best served when individuals participate in the market with mainly their self-interest in mind. The self-interest model of the business man is exemplified in pure form by the billionaire George Soros who, in 1992, made a billion dollars in one day by speculating against the British pound. The pound lost 20 percent of its value and much economic turmoil ensued in Britain and other countries. By his own admission, Soros chooses to ignore the negative effects of his speculative activities on others: “I never think about them and cannot afford to think about them. If I stopped doing some things because of moral scruples, I would have to stop being a speculator. I feel no remorse whatsoever about having won money when the pound was devalued; I did not speculate against the pound to help England or hurt her; I did it to earn money.”
Should the prospect of making money automatically negate sympathy for others? Apparently not. Behavioral economists have long found that people are not completely self-interested and, in fact, feel connected to the plight of others. Dr. Gerardo Largoza, a behavioral economist at De La Salle University, found that Filipino experimental subjects, even from impoverished households, would share an average of 50 percent of a cash gift with total strangers even with no resulting benefit to themselves for sharing. Interestingly, the rate of sharing among these Filipino subjects is much higher than recorded rates for similar experiments in other countries.
Ayala Land has reportedly made extra efforts to compensate the families of those who died during last year’s Glorietta 2 blast. The compensation has included hospitalization, counseling, cash and housing. The company has, it seems, also tried to keep the terms of the settlements quiet to protect the families’ privacy. Such corporate behavior certainly raises the bar on how much sympathy a company can muster for grieving families, even at substantial cost to itself.
Owen Gan, of the restaurant Heaven ‘n Eggs, believes in being reassuring to employees, especially to the most vulnerable among the rank and file. He makes sure that their needs are attended to and that they see managers as sensitive to their sentiments, particularly during business downturns. “We are on your side,” he would tell them in Filipino, “and we will not abandon you.”
Haruka Nishimatsu, CEO of Japan Airlines, has had to oversee a painful restructuring at the airline. When JAL asked older employees to retire early and downsized many employees, Nishimatsu cut all of his executive perks and brought his salary down below that of the pilots. He explained that many of those who took early retirement were his age and so he thought he should “share the pain with them.”
We shouldn’t be surprised that business and sympathy can go hand in hand. Adam Smith, the founding father of modern economics, wrote in his 1759 book, The Theory of Moral Sentiments: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.”
Dr. Benito Teehankee is the Sen. Benigno Aquino Jr associate professor of business and governance of the Ramon V. del Rosario Sr. Graduate School of Business of De La Salle University. He may be emailed at email@example.com.