The Human Side of Business

While chasing profits I think we often forget that a business is about the people who produce products, who consume products, who move, trade or deal with products. And these choices people make impacts other people at home, the community, the place of operation and even countries.

The size of some organisations means that they can operate like a mini country – a diaspora of individuals that needs to be steeped in the organisational culture. For example SAP has over 2 million members communicating online (Kiron et al., 2012)! Think of the potential of that collective power!!

Responsibility is important. Soon after the March 2011 Fukashima Earthquake, in June, I attended a conference in Nagoya where we were addressed by the Toyota Motor Corporation (TMC) President, Akio Toyoda

Earthquakes are common in Japan and Toyota was prepared for an earthquake but the unthinkable happened – a low probably event happened.  A type 9 magnitude earthquake, a tsunami and a nuclear disaster? What were the odds? Japan learnt the hard way “Low probability does not mean No probability”. A so called “Black Swan” event. For Toyota this event was devastating as 45% of its autos were built in Japan. It lost its leadership position in the first quarter, profits fell and so did share price.

Mr Toyoda told the community of international researchers who came to show their support for Japan a little story. Before he became President, he was sent to USA to work and the car manufacturers there were very puzzled by the Japanese way of management. They could not understand its logic or value. “Now”, he said addressing us – “I can explain”. He went on to say that if this had happened in USA and sales fell so drastically, the first thing the company would have done was to fire employees to raise their bottom line. But this would never happen in Japan he said.

Senior management went to the employees and explained that the devastating losses to life, property, and the country meant that they had to cut costs and rebuild their supply chain while rebuilding devastated communities. They offered a solution: Every one could keep their job but they would all have to manage with half pay till such time they could up their production. All managers would also take a pay cut. The beauty of this collective social responsibility approach was that all employees voluntarily took the  pay cut and even though they only had to work every alternate day, everyone came to work every day. So they worked on kaizan or continuous improvement on their day off – rebuilding their community of suppliers, and improving parts in the process. By November, TMC was operating at its full level of production prior to the earthquake. In USA, employees were given options  – training or working with habitat for Humanity at full pay even though the plant was idling due to lack of supplies.

I wonder if anyone can forget the haunting pictures of the earthquake or the discipline of the Japanese people waiting for food? Maybe it is embedded in their culture. The Japanse call it “ittai” which  means to belong to one body. The Fukashima nuclear power plant was leaking radiation and needed its workers to go in to prevent it going critical- everyone knew it was a suicide mission. 700 pensioners volunteered.  The old were protecting the young.

These are just a few examples of the human side of business but it should give food for thought. When it is all about numbers…it is not about the human side of business. We are human because we are irrational and emotional – why do we so badly want to eliminate all of this in business – for money? This can be wiped away in a day in fickle stock markets, in currency fluctuations, in media scandals, political standoffs or sanctions and global supply chain disruptions. What is more lasting – the human resilience and endeavour or the profits? Those companies that invest in the human quality have a competitive advantage few can steal.

Picture Source: Carlos Barria/REUTERS

 

Advertisements

About Melodena

Professor Marketing Strategy & Branding Passionate about Branding, Entrepreneurship (especially social entrepreneurship), Place Marketing, and Crisis Management. Working to educate the world about MENA regional opportunities!
This entry was posted in Crisis Management and tagged , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s