海角大神

No institution is more responsible for educating the CEOs of American corporations than Harvard Business School 鈥� inculcating in them a set of ideas and principles that have resulted in a pay gap between CEOs and ordinary workers that鈥檚 gone from 20-to-1 fifty years ago to almost 300-to-1 today.

A聽survey, released on September 6, of 1,947 Harvard Business School alumni showed them far more hopeful about the future competitiveness of American firms than about the future of American workers.

As the authors of the survey conclude, such a divergence is unsustainable.聽Without a large and growing middle class, Americans won鈥檛 have the purchasing power to keep U.S. corporations profitable, and global demand won鈥檛 fill the gap. Moreover, the widening gap eventually will lead to political and social instability. As the authors put it, 鈥渁ny leader with a long view understands that business has a profound stake in the prosperity of the average American.鈥�

Unfortunately, the authors neglected to include a discussion about how Harvard Business School should change what it teaches future CEOs with regard to this 鈥減rofound stake.鈥� HBS has made some changes over the years in response to聽earlier crises, but has not gone nearly far enough with courses that critically examine the goals of the modern corporation and the role that top executives play in achieving them.

A half-century ago, CEOs typically managed companies for the benefit of all their stakeholders 鈥� not just shareholders, but also their employees, communities, and the nation as a whole.

鈥淭he job of management,鈥� proclaimed Frank Abrams, chairman of Standard Oil of New Jersey, in a 1951 address, 鈥渋s to maintain an equitable and working balance among the claims of the various directly affected interest groups 鈥� stockholders, employees, customers, and the public at large. Business managers are gaining professional status partly because they see in their work the basic responsibilities [to the public] that other professional men have long recognized as theirs.鈥澛�

This view was聽a common view聽among chief executives of the time.聽Fortune聽magazine urged CEOs to become 鈥渋ndustrial statesmen.鈥� And to a large extent, that鈥檚 what they became.聽

For thirty years after World War II,聽as American corporations prospered, so did the American middle class. Wages rose and benefits increased. American companies and American citizens achieved a virtuous cycle of higher profits accompanied by more and better jobs.

But starting in the late 1970s, a聽new vision聽of the corporation and the role of CEOs emerged 鈥� prodded by corporate 鈥渞aiders,鈥� hostile takeovers, junk bonds, and leveraged buyouts. Shareholders began to predominate over other stakeholders. And聽CEOs began to view their primary role as driving up share prices. To do this, they had to cut costs 鈥� especially payrolls, which constituted their largest expense.

Corporate statesmen were replaced by something more like corporate butchers, with their nearly exclusive focus being to 鈥渃ut out the fat鈥� and 鈥渃ut to the bone.鈥�

In consequence, the compensation packages of CEOs and other top executives soared, as did share prices. But ordinary workers lost jobs and wages, and many communities were abandoned. Almost all the gains from growth went to the top.

The results were touted as being 鈥渆fficient,鈥� because resources were theoretically shifted to 鈥渉igher and better uses,鈥� to use the dry language of economics.

But the human costs of this transformation have been substantial, and the efficiency benefits have not been widely shared. Most workers today are no better off than they were thirty years ago, adjusted for inflation. Most are less economically secure.

So it would seem worthwhile for the faculty and students of Harvard Business School, as well as those at every other major business school in America, to assess this transformation, and ask whether maximizing shareholder value 鈥� a convenient goal now that so many CEOs are paid with stock options 鈥� continues to be the proper goal for the modern corporation.

Can an enterprise be truly successful in a society becoming ever more divided between a few highly successful people at the top and a far larger number who are not thriving?

For years, some of the nation鈥檚 most talented young people have flocked to Harvard Business School and other elite graduate schools of business in order to take up positions at the top rungs of American corporations, or on Wall Street, or management consulting.

Their educations represent a substantial social investment; and their intellectual and creative capacities, a precious national and global resource.

But given that so few in our society 鈥� or even in other advanced nations 鈥� have shared in the benefits of what our largest corporations and Wall Street entities have achieved, it must be asked whether the social return on such an investment has been worth it, and whether these graduates are making the most of their capacities in terms of their potential for improving human well-being.

These questions also merit careful examination at Harvard and other elite universities. If the answer is not a resounding yes, perhaps we should ask whether these investments and talents should be directed toward 鈥渉igher and better鈥� uses.

This essay originally appeared in the Harvard Business Review鈥檚 blog.