Wealth and income inequality is the greatest threat to organizations and workers in the 21st century. According to Thomas Piketty, wealth and income inequality is when “r>g, the rate of return on capital is greater than the rate of growth in an economy” (Piketty and Goldhammer, 2014). This leads to a slowdown in the countries growth, gross domestic product. According to the OECD, “Rising inequality in the two decades after 1985 shaved 9 percentage points off the UK growth between 1990 and 2000.” (Elliott, 2014) Economic growth is essential for businesses and worker’s sustainability and development. The recent economic crisis, starting in 2008, which has led to many businesses collapsing; shows how crucial growth is to an economy. In order to
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It sees businesses as responsible for all its stakeholders, not just their shareholders. This form of capitalism contrasts with more recognized theories including Friedman, who reports “The social responsibility of a business is to increase its profits.” (Friedman, 2007). Whole Foods Supermarket remove the emphasis off profit maximisation and address all stakeholders equally. Their leader John Mackey is a conscious manager who understands the importance for leaders “to integrate their hearts with their heads by developing self-awareness and emotional intelligence, while empowering other people to do the same.” (Mackey and Sisoda, 2014) This caring form of leadership from the CEO inspires Whole Foods’ employees as they then “passionately believe in what the company is doing”. This emphasis on the worker will attract the best employees, important for the long term success of the company. (Pirson and Lawrence, 2009) found overwhelming evidence that “people work for respect, acceptance, communion and shared values instead of short-sighted personal utility.” This suggests empowering the employee psychologically is more important than short term “performance related pay” incentives. This could help organisations in the short term as they invest less in financial incentives, more in emotional incentives which in turn will lead to higher productivity in the long term, therefore there is more financial rewards to be distributed …show more content…
Aghion, P., & Bolton, P. (1997). A Theory of Trickle-Down Growth and Development. Jstor. Retrieved March 22, 2016, from https://www0.gsb.columbia.edu/faculty/pbolton/PDFS/A_Theory%20of%20Trickle%20Down.pdf
2. Cingano, F. (2014). Trends in income inequality and its impact on economic growth. . doi:10.1787/5jxrjncwxv6j-en
3. Elliott, L. (2014, December 9). Revealed: How the wealth gap holds back economic growth. The Guardian. Retrieved March 22, 2016, from http://www.theguardian.com/business/2014/dec/09/revealed-wealth-gap-oecd-report 4. Fitzroy, W. (2015). VALUES MATTER. Retrieved March 22, 2016, from https://assets.wholefoodsmarket.com/www/company-info/investor-relations/annual-reports/2014-WFM_Annual_Report.pdf
5. Friedman, M. (2007). The social responsibility of business is to increase its profits. doi:10.1007/978-3-540-70818-6_14
6. Mackey, J., & Sisodia, R. (2014). Conscious capitalism: Liberating the heroic spirit of business. Boston, MA: Harvard Business Review Press.
7. Piketty, T., & Goldhammer, A. (2014). Capital in the twenty-first century. United States: The Belknap Press of Harvard University Press.
8. Pirson, M. A., & Lawrence, P. R. (2009). Humanism in business – towards a paradigm shift? Journal of Business Ethics, 93(4), 553–565.
It sees businesses as responsible for all its stakeholders, not just their shareholders. This form of capitalism contrasts with more recognized theories including Friedman, who reports “The social responsibility of a business is to increase its profits.” (Friedman, 2007). Whole Foods Supermarket remove the emphasis off profit maximisation and address all stakeholders equally. Their leader John Mackey is a conscious manager who understands the importance for leaders “to integrate their hearts with their heads by developing self-awareness and emotional intelligence, while empowering other people to do the same.” (Mackey and Sisoda, 2014) This caring form of leadership from the CEO inspires Whole Foods’ employees as they then “passionately believe in what the company is doing”. This emphasis on the worker will attract the best employees, important for the long term success of the company. (Pirson and Lawrence, 2009) found overwhelming evidence that “people work for respect, acceptance, communion and shared values instead of short-sighted personal utility.” This suggests empowering the employee psychologically is more important than short term “performance related pay” incentives. This could help organisations in the short term as they invest less in financial incentives, more in emotional incentives which in turn will lead to higher productivity in the long term, therefore there is more financial rewards to be distributed …show more content…
Aghion, P., & Bolton, P. (1997). A Theory of Trickle-Down Growth and Development. Jstor. Retrieved March 22, 2016, from https://www0.gsb.columbia.edu/faculty/pbolton/PDFS/A_Theory%20of%20Trickle%20Down.pdf
2. Cingano, F. (2014). Trends in income inequality and its impact on economic growth. . doi:10.1787/5jxrjncwxv6j-en
3. Elliott, L. (2014, December 9). Revealed: How the wealth gap holds back economic growth. The Guardian. Retrieved March 22, 2016, from http://www.theguardian.com/business/2014/dec/09/revealed-wealth-gap-oecd-report 4. Fitzroy, W. (2015). VALUES MATTER. Retrieved March 22, 2016, from https://assets.wholefoodsmarket.com/www/company-info/investor-relations/annual-reports/2014-WFM_Annual_Report.pdf
5. Friedman, M. (2007). The social responsibility of business is to increase its profits. doi:10.1007/978-3-540-70818-6_14
6. Mackey, J., & Sisodia, R. (2014). Conscious capitalism: Liberating the heroic spirit of business. Boston, MA: Harvard Business Review Press.
7. Piketty, T., & Goldhammer, A. (2014). Capital in the twenty-first century. United States: The Belknap Press of Harvard University Press.
8. Pirson, M. A., & Lawrence, P. R. (2009). Humanism in business – towards a paradigm shift? Journal of Business Ethics, 93(4), 553–565.