A three-minute conversation…
As companies pare people from their payroll to restore the bottom line, Socrates might raise a simple question: What is the bottom line? The answer is not as straightforward as you might imagine. Consider this fictional three-minute conversation with a CEO.
Socrates: Good morning, Pete. How’s your company doing?
Pete: Not good… haven’t you read the papers? We’re in an economic crisis and have to trim a percentage of our employee base – gotta improve the bottom line.
Socrates: I understand, Pete – but have you heard of a “triple bottom line?”
Pete: Yeah, I read a book about it, where profits go side-by-side with environmental and social performance. It sounds wonderful but I’m not sure how it works in the real world – or in a time of economic crisis.
Socrates: What do you mean by “the real world?” Are you saying a triple bottom line is unrealistic in an economic crisis? Pete, did you know that the Hebrew people, for example, believed a triple bottom line was the most realistic way to measure work?
Pete: The Hebrews? I work in Houston. And isn’t a Hebrew triple bottom line religious?
Socrates: It was once recognized as reality. The bottom line was based on a “cultural mandate” in a book called Genesis. Work was people caring for the planet – it was a six-day cycle in a seven-day week. So, work had to produce surplus capital – profits. It was more than making cash – it was making culture. Have you never heard of this, Pete?
Pete: Yeah, but, Socrates, get real. If you don’t make a buck, you can forget the rest.
Socrates: Yes, Pete, profits matter. But when the bottom line is only profits, the calculus is simple: train people to make money. A triple bottom line company is different – it treats profits like breathing. You don’t live to breathe, but you have to breathe to live. The calculus then becomes more complex. Do you know how it becomes complex, Pete?
Pete: If it includes people and the planet, I guess you have more to consider.
Socrates: Exactly. When people and the planet matter, you have to weigh competing tensions between profits, people, and the planet. It’s more than doing the math; it now involves moral choices and doing the right thing. People can learn about markets and economics from a textbook. But they can’t learn about the moral nuances associated with a triple bottom line without something else. Do you know what it is, Pete?
Pete: I’m not sure – I guess it has to do with helping people figure out how to “do the right thing,” right?
Socrates: Yes. The Hebrews believed moral people are the product of mentoring, not management. In fact, the Hebrews believed that we only train and “manage” animals. We mentor people because a triple bottom line calls for wisdom and a clear conscience – a faculty that an animal lacks. People have the capacity to be thinking, responsible, and creative. The key is the conscience. What type of conscience characterizes you, Pete?
Pete: I had a feeling you were about to ask me that question. I hope I have a good conscience. But… how would I know?
Socrates: Great question. One of the Hebrew prophets wrote: “The human heart is hopelessly dark and deceitful, a puzzle that no one can figure out.” This means the one person I can most easily deceive is… myself. Many wise men, however, have suggested that we “wear” our heart on our face. How would you see your face, Pete?
Pete: I could look in a mirror. Is this the role that mentors play – as mirrors?
Socrates: Yes – they reflect the truth about you… back to you. But they are also models. They are a reflection of wisdom and a clear conscience. They are “living tissue,” practitioners with lots of experience weighing the competing tensions between profits, people, and the planet. In a triple bottom line company, they produce protégés with healthy consciences. These companies are “professing” that work is more than making a buck. Pete, do you understand what is meant by our work “professing” something?
Pete: I’m not sure. Is this where we get our word “professional?”
Socrates: Yes – the Hebrews believed that all work says something about the world we live in – it’s professing something. A single bottom line company professes that people are animals to be trained to produce profits. A triple bottom line company professes that people are intelligent and responsible – and ought to be mentored to make wise decisions. But this raises a question in my mind, Pete. Your business gurus say: “The fish rots from the head.” Pete, who are you mentoring in your company? And would anyone anywhere say that you are their protégé?
Pete: Socrates, I’m not sure that I have any time to be a mentor or a protégé. I’m busy enough running this company.
Socrates: Pete, everybody already has some mentors. They are our heroes. They might be sports figures, business leaders, or rock stars – they are the people who, if you had the opportunity, you’d “be like them.” You’re absorbing your mentors’ values right now, Pete, whether you know it or not. I believe the unexamined life is not worth living and that wise people – or protégés – take the reins and find their mentors. That’s why mentoring is very different than managing. Real protégés look for mentors who will impart their whole life, so that the protégé will “profess” a whole way of life. My protégés included Plato and Aristotle – see how mentoring yields long-term benefits? It’s a more effective use of your life but sometimes a less efficient use of your time. You have to “be with” protégés for extended periods of time. But it all depends on the bottom line. What’s your bottom line, Pete?
Pete: I want to lead a triple bottom line company and hold together these tensions of people, profits, and planet. But where do I begin? Should I still go ahead and let go of some of my people? Do I place the environment above profits?
Socrates: First, stop and think about the tension you’re feeling right now, Pete. I’ve been intentionally mentoring you. You’ve probably only been managed up to this point in your life. Moral decision-making inside these tensions is more caught than taught. It comes from mentors rather than studying ethics grids. Your first step is to become a protégé by finding a mentor. If your company’s bottom line does not go beyond eliminating waste and improving productivity, then mentoring will be meaningless for most of your people – or it will collapse into a program. Mentoring is not a program, Pete. It’s a way of life.
This means my original question to you needs to be amended. Instead of how is your company doing, I’m asking what is your company doing? What’s your bottom line, Pete?
“How are you doing?” vs. “What are you doing?” makes for some interesting thoughts.
Hmmm. A lot of ground covered here. I think it’s relatively easy to say that a triple bottom line is important. I don’t think it’s always so hard balance them.
When I went through survival school in the Air Force, we started with the assumption that a person needs air, water, and food to live. But they’re not the same. You can live weeks without food, days without water, but if you’re without air, you have only moments.
I just helped a company through its first downsizing. Of course it was about people; that wasn’t the question; without the prospect of cash, the question turned to “which people?” Which people can we hang on to and survive? So, yes, it was a balance of people and profits (or more accurately, people and cash flow). But the cash flow was the driver.
Mentoring turns out to be more of a food question–something you can consider when you have enough air to breathe and water to drink. We weren’t discussing mentoring when trying to figure out how many jobs we could keep. But yes, in the normal run of the business, mentoring becomes the central issue, just like thinking about your next meal when you’re not worried about taking your next breath.
BJeffrey: The food-water-air model is a good addition to the mix. Healthy food in good times prepares our bodies for the times we must live on air alone — the more healthy we are when we hit hard times, the better we will handle the hard times and survive intact. Mentoring (or more accurately, the wisdom we catch by it) in easier times prepares us to make better decisions in hard times. The combination of cash flow and balance sheet can indeed be a harsher task master than profits, and it may, in the end, be wise to cut jobs (a lesser evil than bankruptcy). But before doing so, wisdom and a 3-bottom line will have us considering many other options (as I hope your client did).
More importantly, consider a bigger picture. Had we wisdom in the easy times, perhaps we would have considered much more carefully the responsibility and relationships we were taking on in hiring, and we would have been much more careful to build a sustainable organizational structure. Overstretching (even greed) is often the air inside a bubble.
So, true, it is not always easy to juggle a 3-bottom line, but hard decisions are precisely why we need wisdom. For simple things, all we need is knowledge. And wise actions early often prevent us from getting into situations that call for hard decisions. So, mentoring (wisdom) is every bit as much present and needed in hard times as in easy times — perhaps more so.
The triple bottom line is nice to talk about, and a responsible firm has to consider environmental and social performance along with profits. Their responsibility is guided by the law and by ethical considerations. However, the firm is ultimately responsible to the shareholders (owners). Any firm that uses resources to promote a social or environmental end is essentially stealing from the shareholders. (Assuming the firm was not formed specifically for that purpose.) There is a classic Milton Friedman paper on this subject.
M Hoekstra: True enough: In making a change, we must keep our existing promises. If a company’s charter is a traditional 1-bottom line, a single promise was made to shareholders: to maximize financial value. However, even within the strictures of a 1-bottom line, there are ways of increasing value *by* being responsible (e.g., public image value) or increasing value *while* being responsible (e.g., saving resources may save money).
But in your assumption at the end, you’re heading toward the real point: Changing the model. If the corporate charter explicitly includes a 3-bottom line orientation, then shareholders know that they are investing to create value in ways beyond raw and simple financial value. Not everyone enjoys being Scrooge.