What's a Business For?

In the paper "What's a Business For?" by Charles Handy, why are virtue and integrity so vital to an economy?

Virtue and integrity are of utmost importance because they are the basis of trust. Consumers are not going to want to do business with you if they don't feel that they can trust you. Charles Handy reminds us that markets in the economy rely on rules and laws, but these depend on truth and trust. He goes on to say,  "Conceal truth or erode trust, and the game becomes so unreliable that no one will want to play. The markets will empty and share prices will collapse, as ordinary people find other places to put their money – into their houses, maybe, or under their beds." If this were to completely happen, I think our economy would truly suffer and possibly even crash because there would be no stimulation of the economy with buying and selling of goods, stock prices would fluctuate and my no longer exist for some companies.

I appreciated Handy's analogy of business to a piece of china and how both are fragile. Once either is cracked, it will never be the same. With trust, you may be able to gain it back with hard work and effort but people will always be leary and wonder if they will lose your trust again.

According to Charles Handy, the “real justification” for the existence of businesses is to make money so that they can do more good for others, not to make money just to better themselves. "The purpose of a business, in other words, is not to make a profit, full stop. It is to make a profit so that the business can do something more or better. That 'something' becomes the real justification for the business." Obviously businesses need to keep their investors and shareholders in mind, but this can't be their sole purpose for doing business and turning a profit.

As I read through this article, two solutions that Charles Handy proposes that I agree with are:

1. Business executives should not be paid based on their title but rather on the amount of work they put into the company. Even in my own employment, I recognize the inequities of "higher ups" vs what I like to call the "worker bees". Without the employees who report to the executives, there wouldn't be a business. Salaries that reward employees based on their contribution to the company, sales, work, etc. will go a long way to keep employees happy and satisfied with their jobs as well as with the company as a whole. They will know they can trust that the executives care about them and what they are doing for the company.
2. Instead of the financiers, investors, etc. "owning" the company, those who provide the intellectual property or ideas, who contribute their time and talents rather than their money, should have some rights, some say in the future of what they also think of as “their” company. I think people would feel more invested in the company if they knew that what they were contributing was truly being appreciated.