By PETER SHELDRAKE 

Years ago, Charles Handy, in a 1990 memorial address to the
Royal Society for the Arts, Commerce and Manufactures, posed the
question "What is a company for?" In his case, the question was
somewhat rhetorical, for he wanted to argue that:

The principal purpose of a company is not to make a profit -
full stop. It is to make a profit in order to continue to do
things or make things, and to do so even better and more
abundantly.

(Handy, 1995, p.61)

Towards the end of his address, he went on to remark:

... To talk of profits is no answer because I would say "of course, but profits for what further purpose?" Talk of meeting the requirement of the stakeholders I would also regard as a necessary but not sufficient condition of existence. To have survived is not, in my view, sufficient justification for a life, either for oneself, or for one's corporate community. To make that life worthwhile one must, I feel, have a purpose beyond oneself.  

What that purpose is has to be the major concern for my boards
of trustees, and they should think laterally. If all aim to be
number one, then 99% will be disappointed.

You don't need to be big to be great, or even big to be global
these days. I think I would say to these trustees, as I would to
any individual that what you are is as important as what you do,
and will last longer in the hearts and minds of people. A
company is not an instrument, it is, or should be, a living and
growing community. There is a difference.

(op cit., pp. 74-5)

At present, the great majority of business people seem to think
that the answer to that question is easy: the business of
business is business - and nothing more. With a somewhat studied
patience, journals like The Economist regularly suggest that the
single source of improved social, political and economic
conditions in countries has been the encouragement of the free
open market.

Increased wealth slowly raises the living standards of everyone,
even if the 'multiple' between the lowest paid workers and CEOs
slowly climbs up from 10 to 20, to 200 or more.

In the last 30 years, this view has taken on a harder edge with
the advent of the so-called 'economic rationalists'.

Of particular importance has been discussion about what should
be the constraints on the 'free and open market'.

Some have gone as far as to argue that business just focuses on
doing things efficiently, without making moral decisions: those
are made by others (Sternberg, 1995).

The emergence of the 'economic rationalists' approach has seen a
great deal of criticism over the past decade, however.

Indeed, in more recent years, it seems an alternative approach
has appeared. This is one that suggests that there is a place
for things that sit outside the market, and that traditions and
values do have their place.

In practice, business has many facets, and many stakeholders.
Peter Block caught the very essence of this situation in his
book Stewardship, a book that introduced much of the current
stakeholder approach (1996).

The role of the manager is that of the steward, looking after an
organisation, and acting in the interests of all those who have
entrusted the company to their care.

Indeed, what Block did was to remind us that stewardship, the
stakeholder approach, is about people, and that it is at the
level of the individual that we should be focusing.

One way of talking about people and the way in which they relate
to one another is role theory, looking at the roles people
occupy, and how they interrelate.

When we look inside an organisation, we can talk about the role
of a manager, and describe a number of the attributes and
behaviours related to that role.

However, when we examine how that role is described today, we
find it has become broken down into 'competencies', and these
competencies describe a number of operational skills
(communicating, team leading, managing information, planning,
etc.).

In practice, the role of the manager is immensely complex and
challenging. The manager deals with subordinates, peers and
superiors, with Board members, contractors, casual staff,
consultants, professionals; the manager deals with suppliers,
customers, agencies, regulatory bodies, unions, shareholders,
community groups, seekers of sponsorships and assistance,
teachers, academics, and many others.

The manager deals with all the stakeholders of the organisation,
and often deals with people who are simultaneously in several
different roles.

In other words, the stakeholder approach to understanding
organisations is simply a metaphor for the reality of the
individual in the organisation.

Real people experience the many different relationships that
exist between 'the organisation and its stakeholders' through
their interactions with a multiplicity of other people within an
outside the organisation.

The processes of specialisation and the division of labour have
simply masked and made more complex the processes that were
always there.

Working in an organisation has always been about being in the
world, and relating to others.

While this analysis may seem complex and esoteric, it is
actually liberating.

By denying that organisations exist in some sense independently
of the people that comprise them, we are forced to recognise
that the stakeholder approach is nothing more than a recognition
that we have to deal with all sorts of other people, in a
complex web of role relationships, in our 'work' as in all
aspects of our lives.

Business is not different from the rest of our lives; it is
merely one arena in which we interact with others.

It is an arena with its own culture and sets of rules and
operational requirements, but is not 'outside' everyday life.

Indeed, work is a central part of life, and to deny its
complexity, to simplify what work is about, is also to deny the
complexity of our lives and to simplify what human beings are.

The stakeholder approach is an important element in trying to
make work meaningful and bring organisations into the real
world, and the 'triple bottom line' approach to accounting is a
mechanism to remind us of the realities of the place of
organisations in society.

Peter Sheldrake is the Professor of Business Entrepreneurship at
RMIT.