Elder Robert C. Gay a general authority of The Church of Jesus Christ of Latter-day Saints, gave a talk to the faculty and students of BYU entitled “Entrepreneurship and Consecration”. In the introduction, we are told that, before becoming a General Authority, he was the managing director, co-founder, and chief executive officer of Huntsman Gay Global Capital, a private equity firm headquartered in Palo Alto, California, with offices in Florida, Massachusetts, and Utah.
Gay said he gives a talk almost every week and seldom writes it out. However, this talk he wrote out to be sure we understand the purpose of business, that it is about service and rescue.
He said that today’s business models are flawed. Companies are likely to fail if they just seek to maximize profits. Only 1 in 10 can sustain long term profits by doing things right, and they are missing something when they only seek for profit.
These are some of his quotations that made an impression on me;
- Before ye seek riches, seek ye first the kingdom of God
- Business is about service and about rescue
- It is not what you have but who you are, and who you are is not what you say but what you do
- Your attitude towards wealth will be critical
- Be inward focused but outward driven
When asked to provide a history of the world in one sentence, Francois Rene’ de Chateaubriand said, “In the days of service, all things are founded. In the days of special privilege, they deteriorate. In the days of vanity, they are destroyed.”
Elder Gay’s talk was inspiring in that it made you think about companies differently. Are the oil companies just out to make money? Does Walmart really take advantage of their employees? Are the “too big to fail” banks as bad as some people say or do they support the financial needs of the community. If I start a company, how will that company uplift the people I serve?
Why are virtue and integrity so vital to an economy?
In a capitalistic society, markets depend on rules and laws. However, those rules and laws depend on truth and trust. When truth and trust become distorted, the financial structures become unreliable, our stores will become empty and share prices will collapse as people take their investments elsewhere.
Capitalism provides a way for our savings to be used for the creation of wealth. If we allow our society to become more socialistic to the extent that we become reliable on government for the creation of our wealth, we will be doomed. Experience has shown that governments all over the world are incompetent in creating wealth.
According to Charles Handy, what is the “real justification” for the existence of businesses?
Charles Handy says that the purpose of business is not to make a profit only. It is to make a profit so that the business can do something more. Doing something more becomes the “real justification” for the business. Handy says that it is a moral issue, and to mistake the means for the end is to be turned in on oneself, which Saint Augustine called one of the greatest sins.
From my own experience, I work for a large mortgage company. Our vision is to help people buy affordable homes for their families. We strive to manage our risks so that people can feel safe in their homes. By managing our risks effectively, only 3% of our clients lost homes during the mortgage crises of 2008. Many other mortgage companies at the time were chasing risky business in order to make a profit but when the housing bubble burst, their clients lost their homes and the companies folded. Our company believes in doing the right things for the right reasons and the profits will follow as a natural by-product.
What are two solutions proposed by Handy that you agree with? Why?
Handy considered the European model concerning the hours that people worked. Many employees were working 35 hour weeks and enjoyed 5 to 7 weeks annual holidays (vacations). In the USA, employees usually work around 40 hours per week and were given 3 weeks’ vacation time.
He also said that there was a growing trend in Europe to customize a worker’s contract and have individual development plans. He noted that these measures increased productivity and improved the company’s reputation in the community.
Do I agree with Handy? I think that there is merit in what he says. We’ve seen similar occurrences in the USA when companies such as Google have activity areas such as pool tables, bowling alleys, and gyms; day-care and free food cafeterias all included in the employees benefits at no extra cost to the employee. Google says that organizations that foster a workplace culture of creativity are likely to have happy, motivated employees who are more loyal and more productive. Other companies such as Wells Fargo, steeped in old banking traditions, is creating breakout zones and gaming areas in their corporate campus buildings where staff can stimulate their creative thinking. Employees spend their most productive hours at work and if it can be done in an environment where their contribution is valued and that they are among friends, their loyalty and productivity will increase. After all, there can be no loyalty when your employees are in a master-slave relationship.