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Bookshelf The Customer Comes First Many corporations—and business schools—focus on maximizing share- holder wealth as the only way to measure a company's success. Yet, judging success by shareholder wealth is an extremely inaccurate yardstick. The narrow emphasis on short-term profits often dooms a company to failure by sacrificing its future, because it requires that so little money or energy be invested in R&D, employee retention, or competitive advantages. A better method for determining a company's success and future course of action is to focus on corporate purpose, which is always to serve the customer. So argues Richard R. Ellsworth— very persuasively—in his book Leading with Purpose. A corporation that makes all decisions based on how to serve the customer will have every other variable fall into place, from research and development allocations to market strategies. "A customer-focused corporate purpose provides the key to understanding performance and to enhancing the lives of those the company serves and those who serve it," Ellsworth notes. Concentrating merely on profits focused companies did significantly less well. That's one of the tidbits that should give pause to corporate lead- ers dedicated to maximizing share- holder wealth. Another is even more compelling, as Ellsworth points out the transitory nature of the share- holders' investment in the company, since they can buy or sell shares at a moment's notice and have no real commit- ment to the long-term success of the corpora- tion. "Does the share- holders' almost total lack of personal respon- sibility for the compa- ny's actions lessen their claim to property rights to the underlying cor- Ellsworth's view—and he makes an extremely good case for his opinion. (Stanford University Press, $35) porate assets?" he asks. A few para- graphs later, he makes an even more chilling point: "By arguing that their overriding allegiance is and should be (both legally and morally) to the shareholders, senior managers can align themselves with one of their most docile major constituencies and thus increase their professional freedom." A long chapter on what individu- Organizational Ethics The recent spectacular collapse of corporations from Enron to WorldCom has incited a new interest in business ethics, and Tim Hatcher's Ethics and HRD arrives right on time. In this complex, balanced book, he examines the issues that are driving the need for ethical behavior and corporate social responsibility—and then he dissects the various doctrines of corporate behavior, corporate worldviews, stakeholder theories, and leadership models that are most likely to lead to ethical behavior and social responsibility. Though it is that can be funneled back to shareholders puts all that at risk. Ellsworth offers statistics drawn from a study of 23 companies with value systems variously built around the customers or the shareholders, or a balance of the two. Those that were customer-focused exceeded their industries' median performance by 36 percent; the shareholder- 58 BizEd JANUARY/FEBRUARY 2003 als want from a work environment is well-researched and fascinating, tracing man's relationship to his job through religious, psychological, and historical contexts. Individuals who find some personal fulfillment in their jobs remain more loyal, are more motivated, and help the com- pany retain the "embedded knowl- edge" that is so critical to the com- pany's continued success. Yet even employee satisfaction is not more important than the overriding need to serve the customer. It is just a bigger part of the equation, in clear that Hatcher's own sympathies lie with environmental and social ethicists, he analyzes all the- ories with a thor- ough and detached approach. For instance, after a comprehensive dis- cussion of the four major worldviews that dominate corporate cultures, he does not simply advocate the world- view of the "virtuous organization," in which organizations foster the "good society" and feel an obliga- tion to build a better world. Rather, he notes, "The ability to see and understand our own worldviews and acknowledge others' worldviews is a mark of socially conscious and values-based leadership." How do ethical practices relate to human resources development— which is, after all, a part of the book's title? Hatcher's basic premise