We Need to Rehumanize Our Economy!

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Liliane Held-Khawam: We Need to Rehumanize Our Economy (Le Temps)

The level of dehumanization that we are witnessing in 21st century businesses is the cause for a sense of insecurity and much anxiety. The explosion of health care costs is a good indicator of this state of affairs. And yet, Switzerland's economic success is pretty much based on its advanced corporate skills.

By Liliane Held-Khawam, author of the book "Management of Processes by Coaching (MPC): Learning to Cope With Complexity in a Globalized Economy". This article was published in French in the Swiss daily Le Temps on October 15th 2010.

Financial performance as the end goal of corporate life is a dogma that has been continually gaining ground in the past 20 years. It has taken a priority over everything that could form the basis and the framework of a society or a nation. We have been witnessing the emergence of companies that we may call "supranational" and which, being active worldwide, have greatly contributed to the rise of globalization. They wield enormous power as the amounts of money they handle defy all human logic. They can create jobs as well as condemn an entire region - and even a whole country - by simply relocating parts of their business. They also have the power to influence national policies, and not only in democratic countries.

The essential question everybody would like to ask here, is: why do we actually need such outrageous growth? Apart from the willingness to achieve global political and economic power, two main reasons may be put forward: economies of scale and the concept "eat or be eaten". Economies of scale are based on profit maximization. This is achieved by maximizing the production – and thus, the revenue – on the one hand, and reducing unit costs, on the other. Against this background, it sounds very natural and logical to try and develop on the largest geographical area possible. In this logic of maximization, achieving a global presence is a key business goal.

Cost reduction is achieved by cutting the budget whenever this is possible. Payroll, being one of the income statement's major largest expense item, is naturally first in line. Relocating in order to get the required skills at the lowest rate possible becomes a standard policy, even if this implies transferring one's know-how to other countries. This is also achieved by replacing older employees with talented but inexperienced young graduates. Yet another way of achieving this goal consists in raising productivity demands or in forcing employees to deal with an overload of unpaid work.

Another sensitive issue in relation to profit maximization is taxes. By constantly threatening to relocate their business, these groups' tax participation may be proportionately less than that of an SME, or of a private business. Moreover, it is the latter taxpayers who have to bear the burdens of successive dismissals, as well as of banks and insurance companies' bailouts, when their losses are too big.

The activity of these supranational companies relies on a workflows-oriented organization. Their organizational structures are designed by engineers, economists and financiers who are trying to find the cheapest, yet the most profitable path between order and delivery. In this context, the logic and efficiency of which are quite irresistible, the human factor is almost solely regarded as a constraint.

The "eat or be eaten" concept is based on the fact that big fish eat small fish. This scenario, although very favorable to the company's shareholders who can see an increase in the price of their shares, is regarded as harmful by the top management. Indeed, they will at best comme second on the decision-making list or even worse, get fired. If we add to this the fact that these managers' bonuses are linked to the size of their organization (in terms of revenue, profit margin…), we can expect decisions that are more based on personal and egotic motives rather than on a "scientific" planification.

In order to achieve maximum effects in a minimum amount of time, these companies go through an uninterrupted succession of takeovers and mergers. They adopt a frantic pace that is especially unbearable to grassroots employees. Such behavior, having come into fashion again and being reproduced by local companies, results in an instability and unpredictibility of both local and international markets and capital movements. This uncertain environment directly impacts humans, organizations and the regional economic fabric, thus resulting in a variety of costs at local and national level! Health costs, in particular, clearly evidentiate this phenomenon.

Human beings and their health are existentially determined by two factors, namely space and time. Globalization, however, by maximizing the financial performance using the minimum amount of time possible, is tearing this dual reference framework to shreds. Individuals are propelled into an unlimited space, where historical and cultural references do not have the smallest importance anymore. They have no more rooting and need to make constant efforts to adapt to unpleasant changes they do not even understand anymore. Their past is overlooked, their present turbulent and their future uncertain!

In their working life, individuals are subjected to a workload so excessive that they can be simply be defeated by their physiological limits. They can also only feel considered through their performance and the financial and commercial prowess they achieve. They will tend to work and have others work at an ever faster pace.  Is it really surprising then that some of these employees use all kinds of drugs to enhance their performance? The greatest dangers come when managers fall victim to this pressure. There is indeed more risk that they will be passing on what they have been experiencing in their professional and family environments. The snowball effect is launched. Sooner or later, however, the engine will get jammed and cause human, technical and financial damage.

What about the feeling of injustice when the very same people also have to finance the costs of these supranational companies, without enjoying any benefits? What will they think of top managers who show a total lack of legal and financial responsibility in making such risky investments? Are there two types of decision-makers in the eyes of the law: top managers and simple artisans? Are there two classes of citizens: those responsible for abysmal losses and the citizens who pay for them?

The level of dehumanization that we are witnessing in 21st-century corporations generates a sense of insecurity and much anxiety. The explosion of healthcare costs is a good indicator of this state of affairs. And yet, Switzerland's economic success is pretty much based on its advanced corporate skills (high added value businesses and people), quality products (craft industry, agriculture) and, of course, banking secrecy. Thus, the health of its workforce is essential! Therefore, rehumanizing and stabilizing the economy is a vital challenge for our political leaders.

The economic history of Switzerland has been shaped by men and women who pushed their love of the craft, quality and reliability to the limits of excellence. The "Swiss made" label is a precious legacy that still appeals to the whole world. It is a true asset for our present and future and ought thus to be preserved.

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