Friday, 19 March 2010

Peaks and troughs

The late and great systems thinker Russell Ackoff (who died aged 90 on 29 October 2009) would have had some choice things to say about an item in this week’s news. It seems that many UK university vice-chancellors have been enjoying substantial pay awards, as much as 20% annually, more than three times the rate of inflation over the past ten years. Many are now paid over £300k.

The modest Ackoff – a professor at Wharton School in Pennsylvania – bemoaned growing greed in US universities, drawing parallels with corporate life. “Most corporations proclaim maximization of shareholder value as their primary objective. Any observer of corporate behaviour knows that this is an illusion. As a study conducted a while back at GE showed, the principal objective of corporations is to maximise the security, standard of living and quality of life of those making the decisions.” Returning to the UK, today’s press contains a report from the Treasury Select Committee claiming that Lloyds Banking Group bent the rules (disguising loans as investments) to maximise profits, resulting in large bonuses for executive directors.

Readers familiar with corporate social responsibility (CSR) will know of the framework for assessing an organisation’s stakeholders. The list usually includes customers, employees, funders, suppliers and the wider community. Normally notable for its absence is the organisation’s chief executive and fellow directors. Since the ‘agency principle’ in company law requires directors to act as agents for shareholders, there should be no need to identify them as a separate interest group. But that mood changed in companies long ago. The university sector now wants to join this elite club.

Ackoff goes on the say “One could mistakenly believe that the principal objective of universities is to educate students. What a myth! The principal objective of a university is to provide job security and increase the standard of living and quality of life of those members of the faculty and administration who make the critical decisions. Teaching is a price faculty members must pay to share in the benefits provided.”

Not that one expects vice-chancellors to behave altruistically, merely reasonably, modestly and decently. But even altruism isn’t all that it seems to be, as psychologists point out. If you read those celebrity reviews of whether it is better to give or to receive, many say ‘give’. In other words, when they give, they get a buzz and feel good about themselves. Trevor Bentley rightly notes in The Search for Leadership that “All communication and interaction have the single endeavour of personal satisfaction” (in other words, not automatically doing what the organisation contractually requires). Such self-interest is innate and not cynically exploitative.

A friend of mine recently proclaimed that she didn’t like humanity. The chief psychologist in British Airways once told me that she preferred plants to people. In both instances I was shocked. But greed sometimes stretches my faith in humanity too. Whatever next – politicians overpaying themselves?