ACCOUNTABLE CAPITALISM & SERVANT LEADERSHIP
Making boards of large corporations more accountable is not a new or foreign idea. Its recent American roots come from the business world. A central thesis of Robert Greenleaf’s book Servant Leadership (1977) is that board members of large corporations (both profit and nonprofit) should become responsible servant leaders in order that:
One of Greenleaf’s college professors had argued that large organizations dominating our culture were mediocre, and challenged his students to reform them from within. Greenleaf become an employee of the largest, AT&T. At the end of his career he was senior executive responsible for values, organization and the growth of other senior executives. Choosing retirement at age sixty to spend his time writing and consulting, he affirmed he had no regrets for choosing the business sector of society.
Greenleaf was not naïve about American business. He described it as without professional standards. He observed a very wide range of behavior. At the low end, much that was “corrupt and really bad,” but at the high end “a level of excellence that is truly distinguished.” (SL 151). Greenleaf was not tolerant of anti-business attitudes:
Nor was Greenleaf sympathetic to government regulation of business:
Greenleaf did not consider himself as a scholar; rather he pursued “wisdom, what works in practice.” He was interested in organization, “how things get done.” He began his work at AT&T as a common laborer but quickly moved up to facilitating discussions among groups of foreman about how they did their jobs. He regarded that period as his graduate education in organization.
He saw this new ethic as part of societal change in values:
He observed that business administration was being transformed by information processing systems, so that grown in knowledge and understanding were becoming more important:
Greenleaf was convinced that the young will drive the emerging business ethic:
He was confident that the best businesses would respond positively:
Rather than conflict, Greenleaf advocated:
This was not unlike Pope John XXIII who advocated: “true human community, concerned about the needs, the activities and the standing of each of its members.” Greenleaf admired Pope John arguing that age had given him the advantage to do the right thing for the long term without worrying about dealing with the consequences.
Greenleaf conceptualized corporate administration and unions as complementary voices for the goals of the corporation:
Greenleaf might have opposed union members on boards because he opposed administrators on boards. Rather Greenleaf proposed worker input into trustee decision from far deeper down in the organization. Greenleaf’s advice included:
Two decades of experience with county mental health boards and mental health provider agency boards in Ohio have formed my understanding and admiration for Greenleaf’s proposals.
County mental health boards in Ohio fund but do not directly operate services. The funds come from federal, state, and local taxes, especially county mental health levies. Many boards have two ten year levies staggered on the ballot for renewal about every five years.
The system encourages boards to focus upon the people served and outcomes rather than upon the provision of services, the agencies that provide the services, or the task of constantly raising money
County mental health board members are appointed by state and county officials for four year terms that may be renewed once. Some may be very knowledgeable about mental illness; others may not be. Some are very supportive of provider agencies, others may be skeptical or even critical. All are concerned about how to spend very limited resources..
In both county mental health boards where I was a senior staff member, board leaders were the strongest advocates for outcome evaluation They were stronger even the Executive Director, even than myself as the person responsible for evaluation! It allowed me to become a servant of the board and agencies to help everyone excel. A mentor had given me the key. “Never hype or sell data. People may deny it at first but they will come around to accepting it.”
Agency provider boards were very different. Agency board members focused on supporting the executive director and the staff rather than setting goals and evaluating outcomes. Like Greenleaf I saw board members get themselves into conflicts of interest by serving as unpaid consultants. Trustees did not easily question or replace executive directors even when there was clear evidence the agency was failing miserably.
Like Greenleaf I experienced the transforming of administration made possible by computers. In 1980 county data was processed on a mainframe in New York; reports were monthly. Within a few years a local mini-computer connected agencies and sites though desktop terminals. In my agency overnight data entry meant each morning clinical managers knew what was happening as of the end of the previous business day.
In 1980 I was hired by the largest mental health center in Toledo; it was directly funded by the Federal government with a mandate to spend two percent of its budget on evaluation. My first task was to prepare an evaluation report for our federal site visit at the end of the month. The facts were devastating. We were not defunded because Reagan’s block grants were ending direct federal funding. Under block grants we received a phase down of $2,000,000 over eight years, i.e. $250,000 less each year.
However computer data and feedback saved the day. All clinicians had to do was become better clinicians. In outpatient care, they were losing so many people in the first three sessions that they could easily make money by engaging them for the six to nine sessions that research showed was optimal. Similar problems occurred for other programs. For each program I provided month by month, sometimes week by week, payer by payer, exactly what they needed to do to keep their jobs-namely engage clients. The agency over the next four years doubled its budget, and went from the worst managed agency to the best. I moved to the county mental health board.
Those years at the agency level changed my ideas of the business world. It became apparent that excellent service generated money. Maybe I should have enjoyed making a fortune doing good in the private sector, retired at forty, and become an independent scholar? Being over forty, I continued to serve the public mental health system but retired at age sixty.
We can and should expect social and financial success from profit, nonprofit, and government sectors of our society. Certainly there are greedy, and power seeking people in all sectors. We should not adopt ideologies of either the left or the right that give them encouragement. We should develop and support talented and creative people who can give better outcomes across the spectrum of human concerns
the outcome be that people in, and affected by, the institution will grow
healthier, wiser, freer, more autonomous
and more likely to become servants of society. (SL 116)
healthier, wiser, freer, more autonomous
and more likely to become servants of society. (SL 116)
One of Greenleaf’s college professors had argued that large organizations dominating our culture were mediocre, and challenged his students to reform them from within. Greenleaf become an employee of the largest, AT&T. At the end of his career he was senior executive responsible for values, organization and the growth of other senior executives. Choosing retirement at age sixty to spend his time writing and consulting, he affirmed he had no regrets for choosing the business sector of society.
GREENLEAF’S ATTITUDE TOWARD BUSINESS
Greenleaf was more critical of large non-profit organizations, such as higher education, foundations, and churches than of business. He was more optimistic about for profit corporations, and was not surprised that a business was the first to respond to his call for boards of trustees to be concerned with social as well as financial goals.businesses are more questioning of their adequacy,
more open to innovation,
disposed to take greater risks to find a better way (SL 147)
more open to innovation,
disposed to take greater risks to find a better way (SL 147)
Greenleaf was not naïve about American business. He described it as without professional standards. He observed a very wide range of behavior. At the low end, much that was “corrupt and really bad,” but at the high end “a level of excellence that is truly distinguished.” (SL 151). Greenleaf was not tolerant of anti-business attitudes:
People in churches, universities, government and social agencies
do not love business institutions. As a consequence,
many inside business do not love them.
Can one love this abstraction called the corporation? One doesn’t!
One loves only the people who are gathered to render the service…
The people are the institution! (italics original, SL149)
do not love business institutions. As a consequence,
many inside business do not love them.
Can one love this abstraction called the corporation? One doesn’t!
One loves only the people who are gathered to render the service…
The people are the institution! (italics original, SL149)
Nor was Greenleaf sympathetic to government regulation of business:
When any action is regulated by law,
the incentive for individual conscience to govern is diminished (SL 148)
the incentive for individual conscience to govern is diminished (SL 148)
Greenleaf did not consider himself as a scholar; rather he pursued “wisdom, what works in practice.” He was interested in organization, “how things get done.” He began his work at AT&T as a common laborer but quickly moved up to facilitating discussions among groups of foreman about how they did their jobs. He regarded that period as his graduate education in organization.
AN EMERGING BUSINESS ETHIC
Greenleaf foresaw a new business ethic emerging much more favorable to workers:The work exists for the person as much as the person exists for the work
meaningful work is as important as products and services
serving both those who produce and those who use
the significance of the work will be more in the joy of doing
rather than the goods and services produced (SL 155)
meaningful work is as important as products and services
serving both those who produce and those who use
the significance of the work will be more in the joy of doing
rather than the goods and services produced (SL 155)
He saw this new ethic as part of societal change in values:
the world owes every person a living (dispensed as money)
every person is entitled to work that is meaningful in individual terms (SL 158)
every person is entitled to work that is meaningful in individual terms (SL 158)
He observed that business administration was being transformed by information processing systems, so that grown in knowledge and understanding were becoming more important:
the institution embraces both work and learning..
I am in the business of growing people
people who are stronger, healthier, more autonomous,
more self-reliant, more competent.
Incidentally we also make and sell at a profit things that people want to buy
so we can pay for all this. (SL 159).
I am in the business of growing people
people who are stronger, healthier, more autonomous,
more self-reliant, more competent.
Incidentally we also make and sell at a profit things that people want to buy
so we can pay for all this. (SL 159).
Greenleaf was convinced that the young will drive the emerging business ethic:
I am close enough to this restless generation of young people
to believe that the more able and discerning among them will not settle for less (SL 155)
to believe that the more able and discerning among them will not settle for less (SL 155)
He was confident that the best businesses would respond positively:
How do I know we are distinguished?
Because the best of young people want to work for us.
We select the best of the best and, once inside they never want to leave. (SL160).
Because the best of young people want to work for us.
We select the best of the best and, once inside they never want to leave. (SL160).
SMALL COMMUNITIES WITHIN THE CORPORATION
From his earliest experiences at AT&T, Greenleaf became convinced that the informal leadership of foremen and workers working together was just as important as the formal directives from above. This shaped his attitudes toward unions:First there will be, and should be, labor unions
In saying this I am not approving of unions as they stand,
any more than I approve of corporations as they stand (SL 168)
In saying this I am not approving of unions as they stand,
any more than I approve of corporations as they stand (SL 168)
Rather than conflict, Greenleaf advocated:
cohesive work groups or teams that are small enough
that the group becomes a community (SL 169)
that the group becomes a community (SL 169)
This was not unlike Pope John XXIII who advocated: “true human community, concerned about the needs, the activities and the standing of each of its members.” Greenleaf admired Pope John arguing that age had given him the advantage to do the right thing for the long term without worrying about dealing with the consequences.
Greenleaf conceptualized corporate administration and unions as complementary voices for the goals of the corporation:
The administration …to see those who pay for the service are well served
The union …to those who do the work are adequately rewarded,
psychically as well as material1y (SL 169)
The union …to those who do the work are adequately rewarded,
psychically as well as material1y (SL 169)
Greenleaf might have opposed union members on boards because he opposed administrators on boards. Rather Greenleaf proposed worker input into trustee decision from far deeper down in the organization. Greenleaf’s advice included:
each major division of the company will establish a task force study team
of five administrators and five workers
who will be relieved of their regular duties for three months
to conduct a study of opportunities
for greater participation of workers in the decisions that will affect them (SL 173)
of five administrators and five workers
who will be relieved of their regular duties for three months
to conduct a study of opportunities
for greater participation of workers in the decisions that will affect them (SL 173)
BOARDS IN THE OHIO PUBLIC MENTAL HEALTH SYSTEM
Two decades of experience with county mental health boards and mental health provider agency boards in Ohio have formed my understanding and admiration for Greenleaf’s proposals.
County mental health boards in Ohio fund but do not directly operate services. The funds come from federal, state, and local taxes, especially county mental health levies. Many boards have two ten year levies staggered on the ballot for renewal about every five years.
The system encourages boards to focus upon the people served and outcomes rather than upon the provision of services, the agencies that provide the services, or the task of constantly raising money
County mental health board members are appointed by state and county officials for four year terms that may be renewed once. Some may be very knowledgeable about mental illness; others may not be. Some are very supportive of provider agencies, others may be skeptical or even critical. All are concerned about how to spend very limited resources..
In both county mental health boards where I was a senior staff member, board leaders were the strongest advocates for outcome evaluation They were stronger even the Executive Director, even than myself as the person responsible for evaluation! It allowed me to become a servant of the board and agencies to help everyone excel. A mentor had given me the key. “Never hype or sell data. People may deny it at first but they will come around to accepting it.”
Agency provider boards were very different. Agency board members focused on supporting the executive director and the staff rather than setting goals and evaluating outcomes. Like Greenleaf I saw board members get themselves into conflicts of interest by serving as unpaid consultants. Trustees did not easily question or replace executive directors even when there was clear evidence the agency was failing miserably.
Like Greenleaf I experienced the transforming of administration made possible by computers. In 1980 county data was processed on a mainframe in New York; reports were monthly. Within a few years a local mini-computer connected agencies and sites though desktop terminals. In my agency overnight data entry meant each morning clinical managers knew what was happening as of the end of the previous business day.
In 1980 I was hired by the largest mental health center in Toledo; it was directly funded by the Federal government with a mandate to spend two percent of its budget on evaluation. My first task was to prepare an evaluation report for our federal site visit at the end of the month. The facts were devastating. We were not defunded because Reagan’s block grants were ending direct federal funding. Under block grants we received a phase down of $2,000,000 over eight years, i.e. $250,000 less each year.
However computer data and feedback saved the day. All clinicians had to do was become better clinicians. In outpatient care, they were losing so many people in the first three sessions that they could easily make money by engaging them for the six to nine sessions that research showed was optimal. Similar problems occurred for other programs. For each program I provided month by month, sometimes week by week, payer by payer, exactly what they needed to do to keep their jobs-namely engage clients. The agency over the next four years doubled its budget, and went from the worst managed agency to the best. I moved to the county mental health board.
Those years at the agency level changed my ideas of the business world. It became apparent that excellent service generated money. Maybe I should have enjoyed making a fortune doing good in the private sector, retired at forty, and become an independent scholar? Being over forty, I continued to serve the public mental health system but retired at age sixty.
We can and should expect social and financial success from profit, nonprofit, and government sectors of our society. Certainly there are greedy, and power seeking people in all sectors. We should not adopt ideologies of either the left or the right that give them encouragement. We should develop and support talented and creative people who can give better outcomes across the spectrum of human concerns