On May 1, 2013, Louise Hartmann writes on the Thom Hartmann Program blog:
Most of us are still feeling the effects of a struggling economy, but the corporate elite and the Wall Street banksters are doing better than ever. Many corporations have seen record profits in recent years, which have fueled buying sprees on Wall Street, pushing the DOW Jones to it’s all-time high. But, the income gap between workers and CEOs, which has gone up almost 20% since 2009, shows that all that profit is going straight to the top.
The owners of the corporation ( which ties them to the private property rights on the earnings of their productive capital and workers) elect and/or appoint a Board of Directors, who in turn hire a CEO at an agreed compensation rate. The CEO in turn sets the salary and wage levels of everyone else below him or her.
The reality is that because corporate America is owned narrowly by a relative few individuals (90 percent of the securities are owned by less than 10 percent of the population, which means that a large majority of the population––essentially everyone who presently does not possess significant productive capital assets––is not an OWNER)
The impact of expanding and broadening ownership of FUTURE productive capital assets (held by our corporations) would be beneficial in creating a more democratic structure of corporate ownership whereby income differences are far less unjust.
As corporation become more democratic they can operate under the principles of Justice-Base Management.
What Is Justice-Based Management?
Justice-Based ManagementSM (JBMSM) is a leadership philosophy and management system that applies universal principles of economic and social justice within business organizations. The ultimate purpose of JBMSM is to create and sustain ownership cultures that enhance the dignity and development of every member of the company, and to economically empower each person as an owner and worker.
JBMSM promotes a company’s long-term profitability within the global marketplace by enabling all worker-owners to serve and provide higher value to the customer. JBMSM connects every worker’s self-interest to the bottom-line and long-term success of the company.
The JBMSM process builds upon a written articulation of the philosophy and principles of the company’s leader (typically the CEO or chairman of the board) and leadership core group, in terms of universal principles and core values of the company. JBMSM proceeds in stages to build a consensus upon these fundamental shared values and vision of the company within each work area of the company.
These articulated values provide the foundation for enhancing the productiveness of workers and company profitability, and include such structures as employee-monitored economic incentive programs, participation and governance structures, two-way communications and accountability systems, conflict management systems and future planning and renewal programs.
The ESOP and Justice-Based ManagementSM
One of the main components of JBMSM is the “empowerment ESOP .” While the employee stock ownership plan (ESOP) was originally invented as a means for providing working people with access to capital credit to become owners of corporate equity, most ESOPs are set up as just another employee benefit plan or tax gimmick, or as an employee share accumulation plan (“ESAP”). Most ESOPs today are not designed to treat worker-owners as first-class shareholders. The “empowerment ESOP,” on the other hand, is designed to encourage workers to assume the responsibilities and risks, as well as the full rights, rewards and powers, of co-ownership.
Furthermore, all academic and government studies to date have concluded that ESOPs alone are not enough to affect individual and corporate performance. Within a JBMSM system, in combination with a regular gainsharing program tied to bottom-line profits, and structured systems of participatory management, the empowerment ESOP stimulates everyone in the company to think and act like entrepreneurs and owners.
Balancing Moral Values and Material Value
Justice-Based ManagementSM offers an ethical framework for succeeding in business. JBM balances moral values (treating people with fairness and dignity) with material value (increasing a company’s productiveness and profits while enriching all members of a productive enterprise). JBM’s three basic operating principles are:
1. Build the organization on shared ethical values—starting with respect for the dignity and worth of each person (employee, customer and supplier)—that promote the development and empowerment of every member of the group.
2. Succeed in the marketplace by delivering maximum value (higher quality at lower prices) to the customer.
3. Reward people commensurate with the value they contribute to the company—as individuals and as a team.
Justice-Based ManagementSM is guided by the concept of social justice, as articulated by the late social philosopher William Ferree, SM. Social justice involves the structuring of social organizations or institutions (including business corporations) to promote and develop the full potential of every member.
JBM also embeds within an ownership culture the three principles of economic justice defined by the late lawyer-economist Louis Kelso and philosopher Mortimer Adler: (1) “participative justice,” or the right to the means and opportunity to participate in the economic process as an owner as well as a worker; (2) “distributive justice,” or the right to the full, market-determined stream of income from one’s labor and capital contributions; and (3) “harmony” (or social justice), or the right and responsibility of each person to work in an organized way with others to correct the “social order” or institution when the principles of participative or distributive justice are being violated or blocked.
Within JBMSM the principles of social and economic justice provide a logical framework for defining “fairness” and structuring the diffusion of power within the corporation.
Structuring Ownership Participation
JBM is designed to systematize and institutionalize shared rights, responsibilities, risks and rewards within all company operational and governance structures involving:
- Corporate values and vision
- Leadership development and succession
- Corporate governance and future planning
- Operations (policies and procedures) and hardship sharing policies
- Communications and information sharing
- Training and education
- Pay and rewards
- Grievances and adjudication
A well-designed Justice-Based ManagementSM system sharpens and crystallizes the leader’s philosophy around “universal” principles, providing a solid foundation for a corporate culture that enables people to internalize these guiding principles. JBMSM generates organizational synergy by connecting each worker-owner to the financial tools of ownership (i.e. ESOP and profit sharing), participative management systems, and a defined share of power in the governance of the organization. This in turn enables people to make better decisions, discipline their own behavior, and work together more effectively and cooperatively—because it is truly in their self-interest to do so.
