Home

1 (800) 363-1207

How Bottom-Line Thinking Destroys the Human Side of Business

When Nixon opened China to American business, U.S. manufacturing was still a viable source of employment for a large swath of the middle class. When robots began replacing workers on assembly lines, it was an early sign of myopia. When corporations (which, as late as the 1990s, offered mentoring programs for high school and college students and often provided internships as a first step toward employment) stopped nurturing a domestic workforce, U.S. industry made it clear that profitability was number one. There was no consistent number two.

leadership_profit_focusNow the problem is severe. The American middle class is the subject of countless political speeches by candidates and elected officials. Yet nothing’s ever done that offers real hope of restoring domestic employment. Meanwhile, in parallel, there is the rise of smart machines, the export of white collar jobs, and the elimination of job training/retraining programs for lack of funding (and the easy availability of Asian workers who can be brought into the States on H-1B visas, be hired as students, or be employed in situ in their home countries). This is, in a very real sense, a tax issue, as I’ll explain.
 

Smarter than a Rocket Scientist

Taken to a logical end, artificial intelligence has the potential to replace millions of workers in the U.S. and around the world, whether A.I. is employed to solve problems, run machinery, or create new machines that can program themselves. For all the good that IBM’s Watson can do in fields like medical research (to find effective treatments and cures for disease), national security (to detect threat patterns), and fraud detection (in financial services industries), it also implies that humans aren’t fast enough or objective enough to do that work. And a November 2015 story in the Harvard Business Review, while crowing about a new generation of robots that are safe enough to interact with people, points out with no sense of irony that the robots can learn from their human co-workers. That is not a source of comfort to the labor force.

Of course, in a power outage during a natural disaster, the computers and robots will grind to a halt...until battery backup systems are universal. That’s one reason why the U.S. Navy decided to reinstitute training in celestial navigation...just in case a hack disables GPS communications.

Though it’s encouraging that some U.S. manufacturers are bringing operations back to our own shores, they’re often bringing overseas talent along with them, at least on the high end – engineering, computer sciences, and the like. Or they’re hiring them as U.S. university students, according to a story in Computerworld, and getting the government to extend their student visas as a way around the caps on H-1Bs. The manufacturers’ reasons, however, are not strictly altruistic. The price of manufacturing in and shipping from China has gone up, and China is demanding more IP secrets in exchange for favorable terms (which may explain the surge in corporate espionage tied to Chinese hackers).
 

Everything Old Is Not New Again

The new domestic manufacturing jobs “are not your father’s factory job” because much of the work is automated and the workers are in charge of the machines, instead of making the products; the machines aren’t necessarily domestic; and the training isn’t available (through the manufacturer) to displaced U.S. workers. That’s part of the reason why companies can claim that Americans lack the skills and hire foreign employees. We’ve gone from the GE College Bowl on TV to Are You Smarter Than a Fifth Grader. It’s sad.

Sports fans can rejoice, however. The deductible expenses of in-house nurturing and training programs seem to have been re-directed toward marketing – the tens of millions spent on naming rights for sports stadiums, for example. This is money that does nothing to attract revenue, but it gives CEOs bragging rights. Will Petco Park attract more pet owners to San Diego Padres games? Will Chase Manhattan lose business to fans who watch the Mets in Citi Park? Will Giants fans switch from Verizon after seeing a game at AT&T Park? Not likely. But those millions, if invested in local school districts that lost state funding thanks to lower tax rates (and, because of joblessness, tax revenues), could invigorate American education – a system which ranks abysmally low in international standings – 24th in one study (below Estonia in 11th place and Vietnam in 19th), though that’s up from 36th in an earlier report.
 

Taxes vs. the Tax Base

By focusing on profit, business leaders have lost sight of the connection between education, employment, and purchasing power. If the folks who used to make TVs and PCs, handle claims processing and legal discovery, and do accounting and web design are all out of work because their jobs were replaced by AI robots, offshore plants, and a lack of training, they can’t afford to buy those TVs and PCs, purchase insurance or file lawsuits, or hire an accountant or designer.

Nobody likes taxes but they like unemployment, non-competitive skills, and a lack of buying power even less. Firms that

  • boost stock prices through buybacks instead of investments in R&D which creates jobs and new sources of revenue and profit,
  • improve margins by offshoring jobs and, through corporate inversions, moving their headquarters overseas,
  • and lower overhead by eliminating outreach and training

may look good on paper now. At some point, however, even those companies’ managers may all find themselves in jobs where they have to ask, “Want fries with that?”

 

Related Articles

Leadership Awakening: An Interview with Executive Search Consultant, Catherine Bell Read article >>

Best Practices for Hiring a Diverse Workforce Read article >>

Leadership Development: Too Little - Too Late? Read article >>

Complimentary TweetChat Transcript: Becoming a Better Leader

Some of the questions asked included:

- What qualities and behaviors do you believe define a good leader?
- How does emotional intelligence and self-awareness fit into leadership development?
- Are leadership assessments still important to the executive hiring process?
- How can modern leaders make the workplace better and inspire their teams?
- How do I identify and prepare my successor?
- And more!

Read the Transcript Here

About the author

Peter Altschuler's picture

BlueSteps Executive Guest Writer

Peter Altschuler has been making products and services irresistible for more than a generation in a career that extends from high technology to television production.

He’s currently the chief marketing and creative strategist at Wordsworth & Company and has served as a Group Creative Director at San Francisco ad agency Anderson & Lembke, run the in-house agency at Candle Corp (now part of IBM) and, earlier, worked in television, producing for ABC News, Sesame Workshop, The Food Network, and PBS.
   
In his spare time, he brings books to life — most recently narrating Getting Religion by former Newsweek religion editor Kenneth Woodward and Creativity, Inc. by Pixar founder Ed Catmull — and performs in everything from Shakespeare to commercials.

Become a BlueSteps Executive Guest Writer >>

Other posts by this author

Share your thoughts

Comments

If I may, I´d like to join yr thoughts and hopefully offer a useful addition.

First, the idea of resorting to celestial navigation as a contingency plan option for technological mishaps sounds perfectly in line w/ what I once proposed (and surprised IT folks) as contingency for an ERP migration project: hand-written and issued invoices cause the one thing that could not happen was products not be shipped because of back-office work being disrupted. That did require the one or two over 50 yrs old employees physically teaching youngsters how to get that done. It brought everyone closer and simply worked wonders, securing U$ 8M worth found its way to customers (that was the total amount of mishaps that regardless of the 6 pre go-live simulations did take place). So yep, going manual works wonders. I only thought of that option cause though in charge of getting things going, I´m anything but a tech savvy professional.

Second, what I identify as being the root cause of the mid ans short term impacts you mention, seems to be more of an immediatist, short term vision centered on the value "how to make the most now, regardless of tomorrow" that ultimately reflects what has shaped into being the perception of success: the trick is to be an overnight sensation at the earliest possible age (again regardless of what comes next once one is 50).
So, I believe it´s beyond centering on profit which is perfectly okay. Businesses emerge to serve markets, society and shape new markets and societies etc at profit yep preferably sharing that value with whoever is served and so forth. Point being, strategies of the kind you mention have been coined to be immediatist, i.e., short term, full stop businesses not being ideated to necessarily last 5-10 years at all. Of course all of that backlashes in the form of poor engagement, for starters. As the EY Beacon Institute puts it, these are not purpose-driven strategies in the sense of any other purpose other than a handful making big bucks now.
A friend of mine pulled together when HR leader at PwC here in Brazil in 2007 a very smart report that identified this individualistic motivational driver as opposed to that collective, which ultimately would drive concerns as you mention involving health, education and other typically "social" issues. Here is how I read her words applied to this context you herein propose:

If when coining strategies investors were to demand business plans factor in social, environmental, etc impacts (in the form of shared value, global compact pillars, or at least one of the 17 SDGs) that would push, using this colleague's words, large "blue world" companies and "orange world" entrepreneurs (that arise from fragmentation) to not only design but deliver a mid and long-term strategy of the businesses continuity including these points you mention as part of the impact assessment, i.e., this being WHY the company exists. (purpose).

Why? Back to yr "human side of management": Profit thus becomes a consequence and certainly the new generation of leaders (as of the Y generation) will truly feel attracted cause that´s what I most hear from them. They feel attracted to the "green world" because the purpose provides a sense of belonging, i.e., what they do matters. To some extent the "orange world" offers that to them too since they can innovate and just might become FB-like overnight sensations too. Fine. They certainly are not finding much of that in the "blue world", don´t feel it pays off studying as much and of course, that´s how on the other side, HR folks and line end up complaining there is an absence of good and reliable talent particularly amongst these Y-onwards folks.

So, I believe this is one way out of the mess we are seeing. It´s only a first thought but what we cannot do, as I once heard a supposedly top notch "green celebrity" here in Brazil say to college students (in an anything but socially responsible manner), is take the stand to solely enhance awareness and then say solving the problem is something that´s up to the new generation, full stop.

As mature leaders (and I guess that´s what Blue Steps is all about) we cannot comfortably pull our you know what from the swing and dump the burden on who comes next (as you pinpoint) and if I understood you correctly, that is precisely whY I´m answering yr call on us here as a community, cause its still our "seasoned" example that just might be followed if we get as much buzz at least as mentors. Tks!

... to mine. The notion that companies should have a long range view became problematic in the Gordon Gekko ("Wall Street") world of the 1980s. The market expected every company to enhance shareholder value each quarter, and that pressure is still there. Under that microscope, CEOs assumed a "whatever it takes" attitude to ensure that their companies made their numbers, and that led to a collection of practices that depressed R&D investment, reduced headcount, and eliminated non-essential expenditures.

More recently, the notion of corporate social responsibility has gained attention, and various publications that rank companies' financial performance also measure the contribution they make outside the business. Fortune magazine, in its annual feature on the World's Most Admired Companies, offers a ranking based on "community responsibility" (along with "wise use of corporate assets" and "innovativeness"). In this year's list of the "The Best Performing CEOs in the World," the Harvard Business Review included the CEOs' companies' "environmental, social, and governance (ESG) performance" and came up with some remarkably divergent numbers. For the most part, however, firms with top-ranked financial performance have low ESG scores.

There are, clearly, moral and ethical dilemmas in even the newest ventures. Travelers may love Airbnb and Uber, but the livelihoods of hundreds of thousands of people have become compromised by the new services. Neither company seems particularly concerned about absorbing those people (which the nature of their services won't allow) or underwriting community programs that might offer a way to offset the displacement.

The most cynical side of me imagines a time when AI, robotics, and disruptive services eliminate so many jobs that humans have nothing to do, can't afford to buy anything that automated operations produce, and economies collapse. But it's a perspective that is, admittedly and definitely, not short-term.

Stay Connected