How Forgetting About Money Will Bring You Money
On 13. Sept. 1970 Milton Friedman published an article in the New York Times. It expressed an idea that since has been the official mantra of the Corporate World:
“The goal of a company is to maximize money for shareholders”
In the name of this mantra, a lot of bad things had been done. To comply with it, ENRON falsified financial statements, and rating companies have granted “A” ratings to bad investments. The financial crisis of 2008 was because of the purest application of this concept: Get all the money for your company you can, the fastest you can no matter how.
How could a Nobel laureate like Milton Friedman be so sloppy making such a toxic statement? Well, the statement he made was not that bad:
“(The) responsibility (of a CEO) is to conduct the business under (the shareholders) desires, which will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.” (1)
It is always good to read the original source by yourself and try to avoid middlemen. Ruthless businessmen and professors took away the last part of Friedman’s statement to justify a brutal way of doing business, that implied that employees are things we use to make money, customers are people we separate from their money, and the environment is our dump.
From the point of view of the Business Psychology, squeezing workers has created a sick society where stress, depression and burnout are at the highest levels ever. This business mantra has made companies LESS profitable! We can talk about the damage to the environment or people’s savings disappearing because of financial sharks, but they are not my field of expertise. I will focus on the damage to the mental health of millions of people.
Why just maximizing money for shareholders is so bad for employees and in the long run for companies? For starters, money is a means, not an end. You can’t eat, breath, or drive money. Money can take you out of poverty, and that is a fantastic thing, but above a certain level of income (Around $75.000 a year in the USA) every extra dollar brings very little extra emotional well-being (2). I’m not saying that earning more money is bad. I’m saying that not having money is bad, but above a certain point we humans need a different thing. We need meaning.
Some business thinkers have been pointing at this direction, like Simon Sinek with ideas like “Find your why” or Steve Jobs with his “look for your passion”. People are consuming millions of hours of motivational videos in YouTube and TED because they are lost and looking for meaning.
Questions like “What is meaningful?” “What do I have to do to have a meaningful life?” “How do I find my passion?” “What is my why?” Are now floating on people’s minds, most of them finding no answer.
To know what is meaningful, look at your heroes in action. If you see a doctor saving a kid’s life, that’s something. If you see a teacher changing the future of a poor community, you see meaning. We love to watch a man saving a dog from drowning in a wild river. Or a fireman fighting a fire in a forest.
What have those four stories in common? They are people protecting or improving other people’s lives. They are people doing good. That’s all. Are you looking for meaning? Then think about what are you going to do to help people and change the world for the better, today, tomorrow, and in one hundred years.
Companies can and should capitalize on this quest for meaning. Companies’ mantra should be “making people’s life better and changing the world for the better”. By giving meaning, these companies will attract the best employees because they are offering much more than a paycheck: They are giving something to work for. They are giving hope. They will attract customers too, because the best brands create fans around a meaningful product or service. But be careful, because meaning can’t be delivered through marketing. Meaning can be just delivered with actions. Do good to people, society and the environment, not just say you do it.
Not so long time ago people were proud of their professional expertise. Shoemakers could make a pair of shoes and directly see the impact their work had on their customers. We are social animals. We have thrive for thousands of years giving to our tribe and receiving from our tribe. That’s how we feel good, that’s how we feel that we belong and that’s why being valuable for our tribe is so important for us. It is ingrained in our genes.
Today, with mass production and digitalization, the impact we make in the life of our clients, society and environment are abstracts difficult to grasp. Money is easy to measure, but making it our success’ measure is wrong.
How we impact the lives of other people and our environment should be the measure of our success as companies and as individuals. If we do this, we will be happy at work. Stress, depression and burnout levels will go down and money will come as a natural consequence.
(2)https://www.princeton.edu/~deaton/downloads/deaton_kahneman_high_income_improves_evaluation_August2010.pdf
