The vast majority of the business community campaigned for the UK to stay in the EU. So why did the British public not follow their advice?
According to Bill Boulding, Dean of Fuqua School of Business, visiting London last week, it was down to a fundamental lack of trust. Data from the US shows that trust in politicians is low but trust in big business is lower still. A similar situation in the UK allowed politicians from the ‘leave’ side to benefit from the perception that: if the heads of banks and multinationals support ‘remain’ it must be wrong for the rest of us.
Leave campaigners were able to move the argument away from the economic consequences of Brexit, which for better or worse will have a profound impact on business and the country, and to play on fear and anger around immigration and the social fault-lines brought on by globalization.
This troubling trend, paralleled in the US, during the current Presidential campaign, means that there is no pressure for accountability for politicians to offer a better alternative, but rather an easy way out by deflecting responsibility away from policy to business and the focus away from the economy.
Boulding believes that, although in fact business has done a lot since the 2008 crash to introduce more socially responsible practices, this is not the message that is getting out to the public. From the VW scandal to the rigging of Libor to news about excessive executive pay, stories of bad behaviour keep coming out. The business community has not done enough to repair the damage of 2008. Banks have never really been held accountable nor individuals suffered any significant personal loss.
He points out that although improvements have been made “perception is reality,” and the business community needs to “mind the trust gap.” It needs to build common ground between communities based on an understanding that diversity and difference are good and can be drivers of sustainable economies, and it needs to prioritise the development of a generation of ethical leaders.
Some on the left would say this is nothing to do with leadership or business practice – it is the capitalist system that is wrong. Although the socialist alternative has a long history of failure, the current climate has led to the surprising growth in support for Jeremy Corbyn and Bernie Saunders, and US data suggests the younger you are the less confident you are that capitalism is the right answer.
Boulding believes the capitalist model is far from being broken, but that Adam Smith’s ‘Invisible Hand’ – his belief that unseen market forces cause demand and supply to reach equilibrium in a free market – has been misread and conflated with the idea that ‘greed is good’ – the creed of Gordon Geko in the film Wall Street. The system is not broken but it has been badly damaged by individuals’ self-interest.
Self-interest is not good business nor are short-term profits. Profit is essential to economic sustainability, though profit without purpose can be very damaging – with customers and employees quick to leave if they do not believe in an organization and its leaders’ purpose. “Businesses that only keep score with money are not doing enough,” says Boulding, and although this thinking does exist, we have not yet seen enough of it.
Business schools have an important role to send out a message that business can make a positive difference in the world. “It needs to own-up and take responsibility for the bad that has happened and then develop a new breed of leadership that is crystal clear about putting other people first,” says Boulding.
There is data showing that women find business to be less ethical than men do – a dangerous situation as business can ill afford “to lose the good people and talent we need in the game.” Business needs to identify and develop those men and women that have the right mindset and have already demonstrated ethical values. Asked if business educators can teach people to become ethical, Boulding says “The optimist in me says you can teach core values, but the realist says probably not.”
There is an enormous opportunity and obligation to get the right people into the right places. Boulding remains positive. He is encouraged that young people are more globally focused and more ready to embrace difference than older people, and is confident that change can happen and through better leadership business can be a force for good.
Suggesting we need an industry wide initiative, he quotes advice given by his father “We all have a choice – either actively to engage in making the world go from good to better, or to stand by.”