Harnessing The Effect of Globalization On The Bottom Line: Why A Feminine Form Of Leadership Is Best
SEMINAR 900
WOMEN, LAW AND THE GLOBAL ECONOMY
Professor Elvia R. Arriola
Fall 2009
December 16, 2009
Eric D. Leninger
(630) 742-9355
IN COMPLETION OF THE
GRADUATION WRITING REQUIREMENT
NORTHERN ILLINOIS UNIVERSITY
COLLEGE OF LAW
Part I: Introduction
“The point I’m trying to make – you’ve got to give more than you take.”[1]
The bottom line…how much is too much? As current students and future workers of America, we have been taught that the most important thing is results. We are pushed to achieve more and more. If result “X” is the goal, then result “X+1” is always better. In the business world, the focus on results is shaped in the form of company profits. Bottom-line profits have become the only goal, and many companies believe that there is no such thing as ‘too much’ profit. This intense focus on profits has led many companies to neglect the well being of their employees, and even to endure the negative effects of legal and political backlash.
To succeed in the competitive business world, companies are expecting increased production from their workers, while providing fewer benefits. In purely economic terms this policy makes sense: the two ways to increase profit are to either decrease costs or increase revenue. But herein is one of the most negative consequences of a globalized economy: the loss of human compassion. Corporate executives often choose company policies that exploit workers solely in the name of reducing costs. Globalization facilitates this process by drastically increasing the supply of workers who need a job, thus permitting companies to offer lower compensation and treat their employees in a substandard manner. This is especially true where companies exploit the workers of a developing country because even the meager compensation offered for slaving in a factory puts them in a far better position than the average standard of living in their country. The production benefits of globalization have contributed to companies forgetting that in order to prosper; sometimes it is necessary to give more to their employees instead of always looking to take.
In a globalized economy, a company can be both successful and profitable by scrapping the purely bottom-line analysis, refraining from the exploitation of its workers, and instead utilizing a workplace environment that is based on interpersonal values. Bottom-line profits are essential for a company in the globalized economy; however, they are not the only essential element and should not be acquired at all costs. Instead, a company should build their foundation of their success based on a workplace environment that values interpersonal relationships. As stated from the work of Carol Gilligan, this is a model that defines success in the terms of how it affects one’s relationship with others and is based on values found in the feminine personality. This type of environment that values interpersonal relationships in the workplace can effectively be accomplished whether a company has a female or male chief executive officer (CEO).
This paper will explain why, in a globalized economy, a more feminine-based approach to business that focuses on interpersonal relationships and the proper treatment of a company’s workers is both more important and more profitable than the masculine counterpart that focuses strictly on bottom-line profits and often neglects workers as a result. First, this paper will define globalization, and explain how a globalized economy has led to deteriorating working conditions for many employees. Then, stemming from the work of Carol Gilligan, the differences between masculine and feminine personalities will be examined. The traits of a hard-charging, results-orientated masculine personality will be compared to the traits of a more caring and interpersonal relationship orientated feminine personality. These traits will then be examined within the context of company leadership. The company of Wal-Mart will be discussed as a specific example describing how globalization has increased focus on the bottom line, and therefore has often led to the exploitation of workers. Then C2 Technologies and Berkshire Hathaway will be discussed as global entities, with a female and male CEO respectively, that utilize business methods differing from those of Wal-Mart. The policies utilized by the CEOs of C2 Technologies and Berkshire Hathaway will illustrate how a company can remain successful in a global economy without exploiting their workers. Finally, a brief discussion of legal and political consequences will be presented, exemplifying negative events that may result if a company becomes too focused only on bottom-line profits.
Part II: Globalization
In today’s economy, workers cannot escape the effects of globalization. Employees of large and small companies from across the globe are experiencing a change in their respective workplace environments as both production processes and labor are reorganized and shifted to different parts of the world. Dictionary.com states that to globalize is “to extend to other or all parts of the globe; make worldwide.”[2] Thomas Friedman has identified four subparts to define globalization, each based on a different historical time period, and differentiating sizes of the world.[3] In the realm of economics, Joseph Stiglitz has defined globalization as “the removal of barriers to free trade and the closer integration of national economies.”[4] In terms of human and natural resources, Vandana Shiva states that globalization transforms all beings and resources into commodities.[5]
Based on these definitions, it should be noted that depending on the context one wishes to discuss globalization, the appropriate definition can change. For the context of this paper, globalization should be understood almost as a paradox: a simultaneous shrinking and enlarging of the world. A prime example of this shrinking of the world is the elimination of trade barriers between Western and European countries.[6] Free trade allows each country to pass along their comparative advantage of specialization in a certain product via a single, global market instead of merely trading in a regional market. Globalization also has vastly expanded the production resources available to companies. A prime example of this global expansion was examined by Thomas Friedman with regards to Boeing’s production process of airplanes. The comparative advantages of Boeing’s production plants in Russia were utilized while simultaneously having the effect of working around the clock.[7] This was achieved by allowing both the Russian and American production plants to work on the same subject material at the same time. The stopping point of production after the work day in the United States would become the starting point of production for the work day in Russia, and vice-versa.[8] Thus advances in technology allowed Boeing to globalize and work towards producing airplanes virtually twenty-four hours a day, everyday.
Regardless of the definition one chooses to use to describe globalization, the key is to objectively analyze the effects globalization has on the world. As one would expect from such a controversial topic, globalization has been avidly been supported and criticized. Critics have noted that globalization has the potential to positively impact the world, but that global policies currently in effect need to be rethought.[9] Supporters of globalization have embraced its benefits to the global economy and merely accepted the unfortunate side-effects as a mere calling-to-arms for the workforces of countries such as the United States.[10] It is precisely within these contexts that the positive and negative effects of globalization need to be closely analyzed. The benefits of outsourcing and off-shoring have been documented for cutting production costs and yielding immense gains in productivity.[11] However, while a supporter of globalization like Thomas Friedman notes the money saved in streamlining the production process, he seems merely to glance-over the harmful effects felt by employees of global entities. Global corporations can successfully exploit Indian workers for pennies on the dollar merely because the standard of living in India is so incredibly low. At the same time the outsourcing of jobs to India causes Americans in the United States to lose jobs.[12] Friedman properly sums-up the pressures upon companies to slash production costs by any means by stating if you fail to do so, your competitors will.[13]
This allowable exploitation of workers in third-world countries has led to the demise of working conditions for the employees of many global companies. The questions are: how does a company remain profitable and competitive without resorting to the tactics of exploiting cheap labor or neglecting workers, and how much profit is too much?
Part III: Foundations of Leadership in a Globalized Economy
The first step toward running a profitable company is for the company to have a steadfast leader. Without a passionately committed leader, the workers of a company cannot be expected to follow.[14] Next, the leader must value and build a company atmosphere centered upon important interpersonal relationships. According to Bill Pollard, Chairman and CEO of ServiceMaster, helping employees to find meaning and purpose in their work, no matter how menial the task, is a key component to a successful company.[15] An employee that finds a higher purpose in her work, besides merely earning a paycheck, is what can make a company really profitable.[16] Finally, the leader must also lead by example, and show through her actions that the well-being of the company’s individual workers is important. Jeffrey H. Coors, former President of Adolph Coors Brewing Company, has stated that a company motto or statement of values demonstrating the company’s commitment to its workers is very successful in boosting employee morale.[17]
The examples noted above were each mentioned from the perspective of a male company executive; however, it is interesting to note that through the work of Carol Gilligan, the values placed on interpersonal relationships as described above have been noted as traditional traits of the feminine personality. Could there be a fundamental difference between the traits of masculinity and femininity with regards to corporate leadership in the global economy?
Part IV: Feminine and Masculine Personalities: The Ethic of Care and the Logic of Justice
Through her studies, Carol Gilligan has become an influential pioneer in the study of psychological theory and women’s development. Prior to Gilligan’s work, little thought was given to the possibility that males and females socially interact with themselves and others in totally different ways. As her studies progressed, Gilligan noted that women often define and describe their social interactions in ways that are different from men.[18] Women tended to view themselves in terms of their relationships with others, and this realization spawned an entire new field of research delving into women’s development and social interactions. One of the most influential studies conducted by Carol Gilligan was named the rights and responsibilities study.[19] In this study, Gilligan analyzed the different responses given by male and female participants when they were presented with a difficult moral dilemma. The dilemma was one originally used by psychologist Lawrence Kohlberg and it consisted of a man who had a seriously-ill wife that would soon die if she did not receive a certain medication. The man could not afford the medication, and the pharmacist refused to lower his price to one that the man could afford. The man was left with the difficult decision of whether to steal the drug and save his wife, or to helplessly obey the law and watch his wife die.[20] Gilligan presented this moral dilemma to males and females of all ages, and she noted that by age eleven, vast differences were present in the analysis of the problem between males and females.[21]
When presented with the dilemma, an eleven-year-old boy seemed to analyze the problem in terms of financial costs and logical conclusions.[22] The boy mechanically focused on the bottom line: because the life of the man’s wife had a greater financial value than the profit-margin earned from the sale of the drug, the man would be justified in stealing the drug for his wife.[23] When faced with the legal consequences of stealing the drug, the boy responded by saying that a judge would understand that stealing was right in this case and that laws cannot adequately govern all situations.[24] The boy’s response was undoubtedly grounded in the views of math and logic. While the sale of the drug had a limited quantifiable value, the value of life had an unlimited price tag. Further, the boy seemed to assume a judge would know that stealing was the ‘correct thing to do’, and rested his logic on a universal recognition of correct moral behavior.[25] The boy utilized a mechanical, problem-solving approach for solving the moral dilemma that failed to recognize any interpersonal relationships. Instead of analyzing the man’s actions in terms of how they would affect relationships with others, the boy reasoned that anyone in this position should steal the drug because it should be universally accepted as the correct solution to this dilemma.[26]
In stark contrast to the boy’s mechanical approach, the eleven-year-old girl utilized a fluid system of connected interpersonal relationships to reason her way through the dilemma.[27] Choosing to focus more on the continued interactions between the man, the pharmacist, and the man’s wife, the young girl reasoned that stealing the drug would not be the best approach because the short-term benefits of stealing would be outweighed by the long-term detriments to the characters’ respective relationships with each other.[28] The young girl reasoned that the long-term love and support from the relationship with her husband as more important than the short-term treatment of the drug. If the man was incarcerated for stealing the drug, his wife would ultimately be hurt due to the loss of his companionship.[29] Further, if the man stole the drug, the couple’s relationship with the pharmacist would be permanently severed. Instead, the young girl reasoned that all parties would be better off if the man acquired a loan to purchase the drug, or pleaded with the pharmacist to lower the price. Contrary to the boy’s mathematical approach, the girl suggested that the pharmacist would recognize the need to help the man’s wife instead of merely looking to secure a sale of the drug.[30] The girl believed that the pharmacist’s relationship with the man and his wife was more important than the financial sale, and thus the pharmacist should be willing to negotiate some kind of deal so the man could secure the drug for his wife.[31]