Managing beyond our time
"We have too much to live with and too little to live for," writes Os Guinness. And it's true that more and more, leaders in business and in broader culture have no end beyond their own satisfaction, their own short-term gain at long-term expense. The next generation of Christian cultural leaders needs to look beyond today's circumstances, and learn stewardship for tomorrow.
In a culture bent on pursuing its own immediate gratification, the next generation of Christian business leaders has its work cut out.
The pressure to think and act on short term results is stronger than ever before. In a culture of disbelief, the less we corporately hold on to, the more we look out only for ourselves. But you, the readers, will need to understand and lead from a sense of meaning and purpose beyond yourselves and your own generation. You must commit to managing for the long term, and making intergenerational investments.
Short-termism is the pursuit of immediate gratification at the expense of long-term thinking. Consider the following reports from the business sphere:
- In 2003, the former U.S. Securities and Exchange Commission (SEC) Chairman William H. Donaldson called upon business leaders at the Business Roundtable Forum on Corporate Governance "to manage the business for long-term results and to get away from the attitude that you're managing the business out of a straight jacket that has been put upon you to create earnings per share on a regular basis." Expanding on his concern at the 2005 CFA Institute annual conference, Donaldson cited "short-termism" as a critical issue facing the financial industry and the broader capital markets.
- In research conducted by the Business Roundtable Institute for Corporate Ethics, chief executive officers (CEOs) at many of the largest U.S. corporations were asked to identify the most pressing ethical issues facing the business community. "Effective company management in the context of today's short-term investor expectations" was among the most cited concerns.
- In a recent survey of more than 400 financial executives, 80 percent of the respondents suggested that they would be prepared to reduce discretionary spending on critical long term areas such as research and development, advertising, maintenance, and hiring in order to meet short-term earnings targets. An astounding 50 percent plus said they would delay new projects, even when it meant the long-term sacrificing of value creation.
These results confirm what we already know: that short-termism is a major challenge to corporate integrity, risking economic decay and self-destruction. Some examples of how short-termism might play out include:
- asset sales;
- cuts in research and development;
- the foregoing of strategic, long-term investments;
- the contortion of corporate structures; and
- executive management compensation schemes.
While management's number-one objective should be the creation of long-term shareholder value, it is increasingly obvious that some managers aim only for short-term earning expectations or, worse, for short-term personal gain at the expense of other stakeholders.