Charles Handy : organisation

5089 Words Oct 1st, 2013 21 Pages
Gruter Institute Project on
Values and Free Enterprise
With support from:
John Templeton Foundation
UCLA – Sloan Research Program
Ann & Gordon Getty Foundation

What is a Business For?*
Charles Handy
Fellow of the London Business School

This chapter is part of a collection posted on the SSRN website in the Economics
Research Network section located at - http://papers.ssrn.com/abstract=932676

Electronic copy available at: http://ssrn.com/abstract=932676

2
What is a Business For?

Charles Handy

Could capitalists bring down capitalism, wondered the New York Times in the wake of the series of corporate scandals in both America and Europe in recent years?
They concluded that a few rotten apples would not contaminate
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Cutting or postponing expenditures that are geared to the future rather than the present will push up the profits immediately even if it imperils the longer term. Buying and selling other businesses is another favoured strategy. It is a far quicker way to boost your balance sheet and your numbers than relying on organic growth, and, for those at the top it can be much more interesting. The fact that most mergers and acquisitions do not, in the end, add value has not discouraged others from trying. One result is an inevitable shortening of horizons. Paul Kennedy is not alone in believing that companies are mortgaging their futures in return for a higher stock price in the present, but he may be optimistic in sensing the coming end of the obsession with shareholder value.
The stock option, that new favourite child of stock market capitalism, must share a large part of the blame. Whereas in 1980 only about 2% of executive pay was tied to share options it is now thought to be over 60% in the US. These executives, not unnaturally, want to realise their options as soon as they can, rather than relying on their successors to deliver. The stock option has also acquired a new popularity in
Europe as more and more companies go public. To many Europeans, however,
hugely

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