The regulation of pension funds, and their protection against looting, will remain a challenge.
For most people over forty-five in developed countries, their stake in a pension fund is one of their largest single assets. During the nineteenth century, the biggest financial need of common people was for life insurance to protect their families in the event of their early death. With life expectancies now almost double those of the nineteenth century, the biggest need of common people today is protection against the threat of living too long. The nineteenth-century “life insurance” was really “death insurance.” The pension fund is “old-age” insurance. It is an essential institution in a society in which most people can expect to outlive their working lives by many years.
The regulation of pension funds, and their protection against looting, will remain a challenge to policy makers and lawmakers for years to come. In all likelihood, the challenge will only be met after we have had a few nasty scandals.
Short-term results and long-term performance are not irreconcilable, but are different, and will have to be balanced.
The new corporation will have to balance short-term performance with the long-term interests of pension-fund shareholders. Maximizing short-term performance will jeopardize the interests of pension-fund stockholders.
Significantly, the claim of the absolute primacy of business gains that made a shareholder sovereignty possible has also highlighted the importance of the corporation’s social function. The new shareholders whose emergence since 1960 or 1970 produced shareholder sovereignty are not “capitalists” in the traditional sense. They are employees who own a stake in the business through their retirement and pension funds. By 2000, pension funds and mutual funds in the U.S. had come to own the majority of the share capital of America’s large companies. This has given shareholders the power to demand short-term rewards. But the need for a secure retirement income will increasingly focus people’s minds on the future value of the investment. Corporations, therefore, will have to pay attention both to their short-term business results and to their long-term performance as providers of retirement benefits. The two are not irreconcilable, but they are different, and they will have to be balanced.
In attracting and holding knowledge workers, we already know what does not work: bribery.
Attracting and holding knowledge workers have become two of the central tasks of people management. We already know what does not work: bribery. In the past ten or fifteen years many businesses in America have used bonuses or stock options to attract and keep knowledge workers. It always fails when falling profits eliminate the bonus or falling stock prices make the option worthless. Then both the employee and the spouse feel bitter and betrayed. Of course knowledge workers need to be satisfied with their pay, because dissatisfaction with income and benefits is a powerful disincentive. The incentives, however, are different.
Knowledge workers know they can leave. They have both mobility and self-confidence. This means they have to be treated and managed as volunteers, in the same way as volunteers who work for not-for-profit organizations. The first thing such people want to know is what the company is trying to do and where it is going. Next, they are interested in personal achievement and personal responsibility—which means they have to be put in the right job. Knowledge workers expect continuous learning and continuous training. Above all, they want respect, not so much for themselves, but for their area of knowledge. Knowledge workers expect to make the decisions in their own area.
Management courses for people without a few years of management experience are a waste of time.
What I would like to see—and what I have practiced now for many years in my own teaching—is:
Management education only for a already successful people. I believe management courses for people without a few years of management experience are a waste of time.
Management education for people from the private, the public, and the not-for-profit sectors together.
Planned, systematic work by the students while at school in real work assignments in real organizations—the equivalent to the MD residency.
Far more emphasis on government, society, history, and the political process.
Teachers with real management experience and enough of a consulting practice to know real challenges.
Major emphasis on the nonquantifiable areas that are the real challenges—and especially on the nonquantifiable areas outside the business—at the same time much greater quantitative skills, that is, in understanding both the limitations of the available numbers and how to use numbers.
To develop yourself, you have to be doing the right work in the right kind of organization. The basic question is: “Where do I belong as a person?” This requires understanding what kind of work environment you need to do your best: A big organization or a small one? Working with people or alone? In situations of uncertainty or not? Under pressures of deadlines?
If the thoughtful answer to the question “Where do I belong?” is that you don’t belong where you currently work, the next question is why? Is it because you can’t accept the values of the organization? Is the organization corrupt? That will certainly damage you, because you become cynical and contemptuous of yourself if you find yourself in a situation where the values are incompatible with your own. Or you might find yourself working for a boss who corrupts because he’s a politician or because he’s concerned only with his career. Or—most tricky of all—a boss whom you admire fails in the crucial duty of a boss: to support, foster, and promote capable subordinates. The right decision is to quit if you are in the wrong place, if it is basically corrupt, or if your performance is not being recognized.
I saw no point in being the richest man in the cemetery.
There rarely is a conflict between a person’s strengths and the way that person performs. The two are complementary. But there is sometimes a conflict between a person’s values and that same person’s strengths. What one does well—even very well—and successfully may not fit with one’s value system. It may not appear to that person as making a contribution and as something to which to devote one’s life (or even a substantial portion thereof).
I, too, many years ago, had to decide between what I was doing well and successfully, and my values. I was doing extremely well as a young investment banker in London in the mid-1930s; it clearly fitted my strengths. Yet I did not see myself making a contribution as an asset manager of any kind. People, I realized, were my values. And I saw no point in being the riches man in the cemetery. I had no money, no other job in a deep Depression, and no prospects. But I quit—and it was the right thing. Values, in other words, are and should be the ultimate test.
The important thing is not that you have rank, but that you have responsibility.
The person with the most responsibility for an individual’s development is the person himself—not the boss. The first priority for one’s own development is to strive for excellence. Workmanship counts, not just because it makes such a difference in the quality of the job done, but because it makes such a difference in the person doing the job. Expect the job to provide stimulus only if you work on your own self-renewal, only if you create the excitement, the challenge, the transformation that makes an old job enriching over and over again. The most effective road to self-renewal is to look for the unexpected success and run with it.
The critical factor for success is accountability—holding yourself accountable. Everything else flows from that. The important thing is not that you have rank, but that you have responsibility. To be accountable, you must take the job seriously enough to recognize: I’ve got to grow up to the job. By focusing on accountability, people take a bigger view of themselves.
When I was thirteen I had an inspiring teacher of religion who one day went right through the class of boys asking each one, “What do you want to be remembered for?” None of us, of course, could give an answer. So, he chuckled and said, “I didn’t expect you to be able to answer it. But if you still can’t answer it by the time you’re fifty, you will have wasted your life.”
I’m always asking that question: “What do you want to be remembered for?” It is a question that induces you to renew yourself, because it pushes you to see yourself as a different person—the person you can become. If you are fortunate, someone with moral authority will ask you that question early enough in your life so that you will continue to ask it as you go through life. It is a question that induces you to renew yourself, because it pushes you to see yourself as a different person—the person you can become.