2004 Calls For New Tactics

Jan 05, 2004
George Anderson

By George Anderson

An article in The McKinsey Quarterly, 2004 Number 1, suggests an improving economy will pose new challenges to companies that have been in cutback mode over the past several

To meet the challenges ahead, companies will need to find the answers to three questions:

  1. What is success?

  2. How can we nurture talent?

  3. What is the role of business in society?

The definition of success, argues Ian Davis, the article’s author, should be more broadly based than the current share price of a company’s stock.

“Management should be evaluated on what it can control – the fundamental economic performance of the business and the institutional strength of the organization,” he writes.
“It should set financial and non-financial goals and assess risks with an eye toward the long-term total value of the enterprise. A more balanced view of success, and the time
over which it is measured, would ultimately serve shareholders (and society) better by encouraging more innovation and growth.”

Nurturing talent within organizations will become an even more critical factor in business success going forward. It will be made all the more difficult because many in the workforce
have heard the company-speak before (“Our people are our most important asset.”) only to discover they were a nonessential cost when things got tight.

Mr. Davis writes, “The best companies will create jobs and roles where employees feel they have some control over what they do, where professional relationships are valued, where
more than lip service is paid to the work-life balance, and where there is a real belief in the social and ethical responsibility of the employer. The companies that translate
these principles into concrete practices and build the social and knowledge capital of the organization will establish a source of competitive advantage not easily displaced.”

Ethical scandals, which have rocked business in recent years, have caused a crisis of faith across various stakeholders groups. Rather than attempting to defend past actions,
companies need to “demonstrate more confidence in their moral position as creators of wealth, opportunity, and rising living standards and should work proactively to build trust
between their organizations and society at large.”

Moderator’s Comment: Which of the three questions in the McKinsey piece are most important for businesses to answer at this point in time?

Nurturing talent gets our vote.

We see a growing labor crisis taking place in the country with good paying white-collar jobs being outsourced overseas.

The growth of service sector employment has meant more people working for less than a livable wage. The strikers in Southern California are being widely
supported by the general public because many recognize their own plight in the experience of the grocery workers there.
Anderson – Moderator

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