A National Business Anthem (Part 1)

Our national anthem is certainly the best in the entire world and it gives that warm feeling of unity and collective power and it is most suitable to sing prior to any game of sport (and the opening of Parliament). It ignites that needed sense of dedication and passion towards the contest at hand. It harmonizes with the vision of the players, namely the world title. That is probably one of the main reasons why we can consider ourselves as world class at sport (I’m not sure about Parliament) – vision and clarity of direction, brought to life every time the anthem is sung before a match. “If you don’t know where you are going, any road will take you there.” This is very true of the building of a nation. We cannot enjoy our anthem on an empty stomach. Neither can we enjoy political freedom on an empty stomach. Business is what is building a nation, not sport. The lack of an explicit powerfully communicated vision towards the building of our economy is what creates resistance to sacrifice and brings focus to symptoms instead of rout cause. Maybe the creation of a business anthem that we sing every so often at our seminars, sitting of Parliament, before work and at school might help to bring the awareness of the vital importance of building a growing economy. Obviously, in contrast to national anthems primarily based on elements of history with emotional undertone, the business anthem must be based on the future with a flavour of dreaming, but ingredients of critical reality.

The first step is to explore what these critical fundamentals of economic growth are and to compile them into a basic theme that is simple, effective and achievable:

Economic growth can for purpose of simplicity be expressed as the growth in GDP of a country. That is the total of production, which are in fact exchanged for real money of real customers. The two basic fundamentals of economic growth are,

  1. Employment growth, and
  2. Productivity growth, where the first is a consequence of the second.
    (It is of no use to have only a few working very hard neither is it of use to have many working very little – we need many to work hard)

The mathematical relationship is therefore straight forward: Economic growth = Employment growth x Productivity growth. If the status quo is: 4 = 2 x 2, and we wish to increase economic growth to 8, then it means that either 8 = 2 x 4 (the same number of people working twice as hard as before, or 8 = 4 x 2 (double the number of people working at the same rate as before).
I don’t underestimate your intelligence, but it is a vital principle as it implies that artificial employment, not leading to value added, will not lead to economic growth: 4 x 1 = 4 and not 8 as the newcomers are not performing, thus the productivity factor for the group halved to become 1 instead of 2. It is therefore critical that in existing business additional employment comes as a result of productivity growth, which implies more efficient production therefore better value-for-money products therefore a greater demand for products leading to a greater demand in employment.

In view of creating a business anthem the second important issue is employment growth. First let’s have a look at a simple economic system:

Business exist to produce market offerings (products, services, etc.), which they sell to customers. These customers are primarily from the local households. Where do they get the money from to buy these products? From wages they earn from these businesses in exchange for their skills to produce these market offerings. The amount of money possessed by households is therefore a critical factor and seeing that they obtain them from employment opportunities, the latter is vital. There can exist basically two extreme scenarios in an economy as far as existing business is concerned:

1. The vicious downward spiral: Productivity levels are low resulting in the market offerings to be considered low-value-for-money and the demand decreases. As the demand decreases, businesses down-size (Oops! Sorry, I meant right-size) and households as a whole therefore have less money to spend on these market offerings. As they spend less, the demand goes down and companies right-size again or close down. As they do that employment drops again and ….. (Hallo, South Africa!). I forgot the chorus: Then employees go on strike not to be retrenched and productivity comes down as a direct consequence and the downward spiral gets a powerful downhill boost and ….
2. The virtuous upward spiral: Productivity goes up and better value-for-money market offerings are produced leading to an increase in demand leading to an increase in business activity requiring more employees resulting in employment growth resulting in more money in households leading to more spending capacity on these market offerings leading to an increase in demand leading ….I forgot the chorus: The better the business, the happier the employees, the happier the employees the more dedicated and motivated they are resulting in an increase in productivity leading to better value-for-money ….

By Dr. Deon Mushavi Huysamen:

Published: Management Today – May 2002

Advertisements

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