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The Business Case Debate
Eve Poole
1 July 2006
[email protected]
07974 000707
Why are Businesses so Keen on Business Cases?
• Shareholder mentality
• Many organisations need to be able to demonstrate that business decisions represent the
best use of resources in terms of business success and profitability, whether in regards to
shareholder return, or to expenditure of public monies
• Decision-making habit
• A quick way of standardising decision-making by requiring some sort of cost/benefit
analysis, often expressed in accounting terms like ROI, ROCE, etc.
• Personality preference
• Ashridge research amongst c8000 business people shows a statistical over-representation
of Myers Briggs NT-preference types, who will tend to like to use objective ‘scientific’
decision-making processes (T) to support, defend and explain more ephemeral data (N)
Carr, M, Curd, J and Dent, F: MBTI Research into Distribution of Type
(Ashridge: 2005)
Current Business Case Arguments
• Meaningfulness and the bottom line
• organisations whose mission or superordinate goals make a difference in the wider
community, are consistent with personal values, and which reflect these values in their
policies, inspire greater levels of employee commitment, motivation, performance,
innovation and loyalty than their competitors
• Good HR practices and enhanced performance
• satisfied employees tend to be more loyal, which breeds satisfaction and loyalty in their
customers, creating a virtuous circle
• Spirituality
• there is a gap between the willingness and opportunity to bring the soul to work, and giving
the soul a role might make companies healthier and more naturally and openly ethical
Poole, E Organisational Spirituality: TBC? 2006
Meaningfulness and The Bottom Line
• Hackman and Oldham (1976) - the causal importance of ‘experienced meaningfulness of the work’ for personal
and work outcomes, defined as ‘the degree to which the individual experiences the job as one which is
generally meaningful, valuable and worthwhile’
• Peters and Waterman (1982) - companies that stand for something outperform those that do not
• Jaques (1988) – people will work to their full capacity and achieve their potential if their values are aligned with
their role
• Renesch (1992 - editor) - various contributors argued that organisations of the future would adopt a more
values-based approach to tap into the intuitions, to build greater esprit de corps, to provide inspiration, to
promote health and productivity, and to provide jobs that are worthy of each person’s highest ideals and
commitment
• Collins and Porras (1994) - companies that are held up as role models by their peer-group over time not only
have vision, but a clear sense of deep purpose and of standing for something beyond mere profits
• Milliman et al (1999) - Southwest Airlines’ values of a sense of cause, community, empowerment, work ethic,
and rich emotional expression formally link with its consistently excellent performance
• Alford and Naughton (2001) - human beings are hard-wired to seek the good, so companies that tap in to this
yearning through their identification of ‘excellent goods’ will access employees’ ultimate motivations and
release their discretionary effort
• Zohar and Marshall (2004) – for Starbucks, being ‘good’ through their CSR initiatives pays, in that every 1%
increase this generates in employee tenure adds $100,000 to the Starbucks annual bottom line
Poole, E Organisational Spirituality: TBC? 2006
Good HR Processes and Enhanced Performance
• Lloyd (1990) - being a ‘nice’ company, with nice corporate goals supported by nice internal policies, leads to
better-than-average bottom line results
• Reichheld (1996) - loyalty is the primary driver of company profitability, not market share
• Patterson et al (1997) – people management practices contribute a +17% impact on changes in productivity and
profitability, and a company owes +5% of its variation in profitability and +16% to its variation in productivity to
employees’ job satisfaction
• Heskett, Sasser, Schlesinger (1997) – in the service industry, there is a strong and mutually reinforcing
relationship between profit and customer loyalty, employee loyalty and customer loyalty, and employee
satisfaction and customer satisfaction
• Rucci, Kirn, Quinn (1998) – research at Sears demonstrates that employee attitudes drive customer service,
employee turnover and referrals, and therefore profit
• Buckingham and Coffman (1999) – ‘the Gallup 12’ showed that causal link between positive experiences of
being managed and higher levels of productivity, profit, retention, and customer satisfaction
• Catlette and Hadden (2001) – ‘best companies to work for’ outperform their competitors in terms of growth,
earnings and jobs because they can access greater discretionary effort through providing meaningful work,
high standards, clear purpose and direction, balanced rewards, a level playing field and a sense of being and
feeling competent
Poole, E Organisational Spirituality: TBC? 2006
Spirituality
• Hawley (1993) - the only way to get the best out of people at work - their best energy - is to help them move closer
to the spirit, which will not only promote health and well-being but also power great achievement and accelerated
organisational change
• Neck and Milliman (1994) - spirituality positively affects employee and organisational performance by enhancing
intuitive abilities and individual capacity for innovation, as well as increasing personal growth, employee
commitment and responsibility
• Mitroff and Denton (1999) – on a scale of 7, respondents scored spirituality at 5.7 in terms of importance, but
reported that they could only bring less than ‘half’ of their soul to work, in spite of feeling its appropriateness as a
workplace topic rated at 4.16
• Lips-Wiersma (2002) – people with spiritual world views will be ‘animated’ if their work allows them to develop and
express themselves, and to serve and have unity with others; without this alignment they will transition to
alternative employment
• Moe-Lobeda (2002) - moral agency and the indwelling spirit are one and the same, so business ethics is
disorientated where workplaces deny spirituality, but more genuinely ethical when they nurture spirituality
• Lamont (2002) - ‘soul-friendly’ companies have below average rates of absenteeism, sickness and staff turnover
• Giacalone and Jurkiewicz (2004) – spiritual cultures provide opportunities for transcendence and interconnectedness through the work process, which provide, within a moral framework, better work outputs
• Howard and Welbourn (2004) - nearly 75% of UK workers would be interested in learning to live the spiritual side
of their values but 90% of UK managers believe that their organisations have not attempted to discuss the issue of
spirituality with their employees
Poole, E Organisational Spirituality: TBC? 2006
Challenges
• Technical
• use of the Harvard system has led to some sloppy referencing so the train of argument is no longer clear
• Logical
• this need to ‘prove’ such an ephemeral concept with data has led to the widespread use of proxies and a
lack of clarity over correlation v causality, including the direction of any causality mooted
• Philosophical
• the location of the academic discussion within the Social Sciences has led to a bias in favour of empiricist
methodologies which prefer a quantitative approach
• There are wider challenges to this approach (see Flyvbjerg) and it may be that this field needs to migrate
towards the arts to find a more appropriate methodology (e.g., the study of ethics)
• Ethical/Legal
• questions over the ethical probity of appearing to use of spirituality to enhance profitability, and the precise
nature of the legal and psychological work contract (the very expression ‘business case’ suggests an
instrumental view that is profit-driven)
• in practice any expressed spirituality may be hard to differentiate from expressed religion, and both ‘sides’
need to be aware of the formal implications of anti-discrimination and human rights legislation (NB many
US academics and commentators are touchy about the Constitution’s separation of religion and public life)
Poole, E Organisational Spirituality: TBC? 2006
Bibliography
Alford, Helen J and Naughton, Michael J: Managing as if Faith Mattered (Notre Dame, IN: University of
Notre Dame Press: 2001)
Ashmos, D and Duchon, D: “Spirituality at work: a conceptualization and measure” Journal of Management
Inquiry, Vol 9 No 2 2000 pp134-45
Benefiel, Margaret: “Mapping the terrain of spirituality in organizations research” Journal of Organizational
Change Management Vol 16 No 4 2003 pp367-377
Buckingham, Marcus and Coffman, Curt: First, Break All the Rules (New York: Simon & Schuster: 1999)
Carr, M, Curd, J and Dent, F: MBTI Research into Distribution of Type (Ashridge: 2005)
Catlette, Bill and Richard Hadden: Contented Cows Give Better Milk: The Plain Truth About Employee
Relations and Your Bottom Line (Germantown: Saltillo Press, 2001)
Collins, James C and Porras, Jerry I: Built to Last (New York: Harper Business: 1994)
Dent, Eric B, Higgins M Eileen and Wharff, Deborah M: “Spirituality and leadership: an empirical view of
definitions, distinctions, and embedded assumptions” The Leadership Quarterly, 16 (2005) pp 625-653
Flyvbjerg, Bent: Making Social Science Matter (Cambridge: CUP: 2002)
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Jurkiewicz CL (eds) Handbook of Workplace Spirituality and Organizational Performance (Armonk, NY:
ME Sharpe: 2003)
Hackman, J Richard and Oldham, Greg R: “Motivation through the design of work: Test of a theory”
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Hawley, Jack: Reawakening the Spirit at Work: the Power of Dharmic Management (San Francisco, CA:
Berrett-Koehler: 1993)
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Press: 1997)
Howard, Sue and Welbourn, David: The Spirit at Work Phenomenon (London: Azure: 2004)
Bibliography, cont.
Jaques, E: Requisite organization: A total system for effective managerial organization and managerial
leadership for the 21st century (Arlington, VA: Cason Hall: 1996)
Lamont, Georgeanne: The Spirited Business (London: Hodder & Stoughton: 2002)
Lloyd, T: The ‘Nice’ Company (London: Bloomsbury: 1990)
Lips-Wiersma, Marjolein: “The influence of spiritual “meaning-making” on career behaviour” Journal of
Management Development Vol 21 No 7 2002 pp497-520
Milliman, J., Ferguson, J, Trickett, D and Condemi, B: “Spirit and community at Southwestern Airlines : An
investigation of a spiritual values-based model” Journal of Organizational Change Management 12(3) 1999
pp221-33
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values in the workplace (San Francisco: Jossey-Bass: 1999)
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Neck, CP and Milliman, JF: “Thought self-leadership: Finding spiritual fulfillment in organizational life”
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Patterson, Malcolm G, West, Michael A, Lawthom, Rebecca, Nickell, Stephen: Impact of People
Management Practices on Business Performance (London: IPD:1997)
Peters, Thomas J and Waterman Robert H: In Search of Excellence (New York: Harper & Row: 1982)
Reder, Melvin W: “Chicago Economics: Permanence and Change” Journal of Economic Literature 20:1982
pp1-38
Reichheld, Frederick F: The Loyalty Effect (Boston: Harvard Business School Press: 1996)
Renesch, John (ed): New Traditions in Business (San Francisco: Berrett-Koehler Publishers: 1992)
Rucci Anthony J, Kirn, Steven P, and Quinn, Richard T: “The Employee-Customer-Profit Chain at Sears”
Harvard Business Review January-February 1998
Zohar, Danah and Marshall, Ian: Spiritual Capital (London: Bloomsbury: 2004)