Pontifical Justice and Peace Council releases handbook on business leader's vocation - Handbook checklist prompts reflection by business leaders, educators and others on business goals, ethics and meaning of work

April 17, 2012

Pontifical Justice and Peace Council releases handbook on business leader's vocation - Handbook checklist prompts reflection by business leaders, educators and others on business goals, ethics and meaning of work

In this edition:
1. Vatican handbook for business leaders.
2. Paging through the handbook: overview.
3. Human dignity, common good.
4. Quotes from "Caritas in Veritate"
a) A great risk for businesses.
b) People-centered ethics.
5. Higher education for business.
6. What business prudence is and is not.
7. Checklist prompts discernment in business.

1. Vatican Handbook for Business Leaders

A handbook for business leaders and educators released this spring by the Pontifical Council for Justice and Peace says that while businesses often fail to serve the common good, it remains possible for them to do so and to succeed as business enterprises at the same time.

Titled "Vocation of the Business Leader: A Reflection," the handbook was unveiled during a congress of Christian business leaders March 30-April 1 in Lyon, France.

Cardinal Peter Turkson, president of the pontifical council, told the congress the time has ended for following a business rule of profit at all costs. He said the new handbook offers business leaders and students in business schools both principles and tools "for discovering the good and deliberately pursuing it."

Businesses contend with various "obstacles to serving the common good," the handbook says. At the same time, it accents the positive role businesses can fulfill when they do not overlook the demands of the common good.

"When businesses and markets as a whole are functioning properly and are regulated in an effective manner by governments, they make an irreplaceable contribution to the material and even the spiritual well-being of humankind," the handbook says. It adds:

"When business activity is carried out justly and effectively, customers receive goods and services at fair prices; employees engage in good work and earn a livelihood for themselves and their families; and investors earn a reasonable return on their investment. Communities see their common resources put to good use, and the overall common good is increased."

Among obstacles to serving the common good cited in the handbook are corruption, greed and "poor stewardship of resources." However, it insists that the most significant obstacle for a business leader is "leading a 'divided' life" that allows a "split between faith and daily business practice."

Such a divided life "can lead to imbalances and misplaced devotion to worldly success," according to the handbook. Its aim, it explains, is "to encourage and inspire leaders and other stakeholders in businesses --

-- "To see the challenges and opportunities in their work.

-- "To judge them according to ethical social principles, illumined for Christians by the Gospel, and

-- "To act as leaders who serve God."

The plan to develop the new handbook emerged from a February 2011 seminar at the Vatican attended by 40 Catholic business leaders and professors who examined Pope Benedict XVI's 2009 encyclical "Caritas in Veritate" ("Charity in Truth"), which included discussions of ethics in business and the world of finance.

It is not the church's place "to prescribe in detail the actions of business leaders. Prescription is the work of practitioners and is largely carried out by lay people," the handbook explains. "The church's magisterium," it says, "does not have technical solutions to offer or models to present."

Indeed, the church does preach its social doctrine to business leaders, the handbook acknowledges. But this is "not to impose a burden upon them, but to reveal to them the spiritual importance of their actions and the social significance of business as an institution."

The impact of an "increasingly global, technological and financial economy" on "the integral development of the person" is a concern for the church, the handbook makes clear.

2. Paging Through the Handbook

"The vocation of the businessperson is a genuine human and Christian calling. Its importance in the life of the church and in the world economy can hardly be overstated," the Pontifical Council for Justice and Peace states in its handbook on the business leader's vocation.

Underlining the importance of businesses to the life of society, the handbook also notes serious shortcomings in the world of business. It says that:

-- "In this young century alone, many businesses have already brought forth marvelous innovations which have cured disease, brought people closer together through technology and created prosperity in countless ways."

-- "Unfortunately, this century has also brought business scandals and serious economic disturbances, and an erosion of trust in business organizations and in free-market institutions generally."

The handbook's purpose, therefore, is not to denigrate business enterprises, but to point out a vision that enhances the life of employee and employer alike while serving all involved with the business and the larger community. Innovative businesses that are "genuinely good" serve society by improving "the quality of people's lives," it states.

A business leader can at once be ethical and competent, the handbook suggests. It says, "An important part of the business leader's vocation is practicing ethical social principles while conducting the normal rhythms of the business world."

That entails seeing situations clearly and reaching judgments based on principles "that foster the integral development of people." It means implementing "these principles in light of one's unique circumstances and in a manner consistent with the teaching of the faith."

The pontifical council's hope is that "entrepreneurs, managers and all who work in business" will be urged "to recognize their work as a true vocation and to respond to God's call in the spirit of true disciples."

The handbook cautions against a "dangerous" view of businesses that reduces them to enterprises defined almost entirely by their bottom line and shareholders. "It is dangerous and misinformed simply to consider business as a 'society of shares,' where self-interests, contracts, utility and financial profit maximization exhaust its meaning," it says.

"When we consider a business organization as a community of persons, it becomes clear that the bonds which hold us in common are not merely legal contracts or mutual self-interests, but commitments to real goods, shared with others to serve the world," the handbook explains.

It recalls that Blessed John Paul II said the purpose of business "is not simply to make a profit, but is to be found in its very existence as a community of persons who in various ways are endeavoring to satisfy their basic needs and who form a particular group at the service of the whole of society."

The social implications of faith are accented by the handbook. Faith "is not merely a private reality." Furthermore, the church's social doctrine is "an essential part of the Christian message," it says.

The church's social principles "call upon business leaders to act, and because of the current challenging environment, how they act is more important than ever," the handbook insists.

3. Human Dignity, Common Good

"At the very least, a good business carefully avoids any actions which undermine, locally or globally, the common good. More positively, these businesses actively seek ways to serve genuine human needs within their competence and thus advance the common good," the Pontifical Council for Justice and Peace states in "Vocation of the Business Leader."

It says, "The common good embraces and supports all the goods needed to allow each human being and all human beings to develop, individually and communally."

The two foundational ethical principles for business are human dignity and the common good, according to the handbook.

-- Human dignity: "At the very foundation of the church's social tradition stands the conviction that each person, regardless of age, condition or ability, is an image of God and so endowed with an irreducible dignity or value," it says.

Thanks to human dignity, "each person has the right -- indeed the obligation -- to pursue his or her vocation and to strive for personal fulfillment in communion with others," the handbook continues. In light of the principle of human dignity, it says that "each of us has a duty to avoid actions which impede the flourishing of others and, as far as possible, a duty to promote that flourishing."

-- Common good: Vatican Council II "defined the common good" as "'the sum total of social conditions which allow people, either as groups or as individuals, to reach their fulfillment more fully and more easily,'" the handbook notes. It says, "Common goods are developed between human beings whenever they act purposefully together toward a goal which they share."

Thus, it explains, "building a friendship, a family or a business creates a common good shared between friends, family members and all the various people involved in a business. Common goods are possible because we are relational beings who do not only have individual goals and who do not only grow individually."

Businesses, the handbook points out, "produce many of the important conditions which contribute to the common good of the larger society. Their products and services, the jobs they provide, and the economic and social surplus they make available to society are foundational to the good life of a nation and of humanity as a whole."

Businesses contribute best to the common good when "their activities are allowed to be oriented toward, and be fully respectful of, the dignity of people," the handbook says.

4. Quotes From "Caritas in Veritate"

Great Risk for Businesses: "Today's international economic scene, marked by grave deviations and failures, requires a profoundly new way of understanding business enterprise. Old models are disappearing, but promising new ones are taking shape on the horizon. Without doubt, one of the greatest risks for businesses is that they are almost exclusively answerable to their investors, thereby limiting their social value. Owing to their growth in scale and the need for more and more capital, it is becoming increasingly rare for business enterprises to be in the hands of a stable director who feels responsible in the long term, not just the short term, for the life and the results of his company, and it is becoming increasingly rare for businesses to depend on a single territory. Moreover, the so-called outsourcing of production can weaken the company's sense of responsibility toward the stakeholders -- namely the workers, the suppliers, the consumers, the natural environment and broader society -- in favor of the shareholders, who are not tied to a specific geographical area and who therefore enjoy extraordinary mobility." (From "Caritas in Veritate," the 2009 encyclical of Pope Benedict XVI, No. 40)

People-Centered Ethics: "The economy needs ethics in order to function correctly -- not any ethics whatsoever, but an ethics which is people-centered. Today we hear much talk of ethics in the world of economy, finance and business. Research centers and seminars in business ethics are on the rise; the system of ethical certification is spreading throughout the developed world as part of the movement of ideas associated with the responsibilities of business toward society. Banks are proposing 'ethical' accounts and investment funds. 'Ethical financing' is being developed, especially through microcredit and, more generally, microfinance. These processes are praiseworthy and deserve much support." (From "Caritas in Veritate," the 2009 encyclical of Pope Benedict XVI, No. 45)

5. Education for Business

"To live out their vocation as faithful stewards to their calling, businesspeople need to be formed in a religious culture which shows them the possibilities and promise of the good they can do and which they ought to do -- the good which is distinctively theirs," says the handbook on the business leader's vocation from the Pontifical Council for Justice and Peace. In this formation, the family, the church and the school all have critical roles to play.

A university education is a critical component of the business leader's formation; this is "where future business leaders are often first introduced to the experiences, skills, principles and purposes of business," the pontifical council states. The church itself is a provider of this type of formation.

"With close to 1,800 institutions of higher learning worldwide, and approximately 800 of these with business programs, the church has invested herself in the formation of future business leaders. Some of these programs rank among the best in the world," according to the handbook. It says that "Catholic business education has achieved a lot, but has ever new challenges to address."

The handbook holds that higher education in business ought to include "a rich dialogue between faith and reason, which provides the resources to meet the modern challenges found in business and the wider culture."

And what should such an education include? Like every professional education, a university business education "does not merely constitute training in specific skills or theories," the handbook says. "Faithful to its own tradition, Catholic higher education cannot fail to be a formation in the moral teaching and social principles of the church and the dimensions of prudence and justice proper to business."

The handbook indicates that a business education in a Catholic setting should provide training in the appropriate theories and skills of the field, along with "a thorough treatment of the moral teaching and social principles of the church." An "exaggerated emphasis" on one of these areas "cannot compensate for the neglect of another," it states.

6. What Business Prudence Is and Is Not

The practice of virtues is "an important part of the vocation of Christian business leaders," the handbook from the Pontifical Council for Justice and Peace says. It particularly mentions the virtues of wisdom, justice and prudence.

"Wise business leaders act virtuously in their practical affairs, cultivating wisdom in concrete practices and policies, not just in abstract mission statements," the text proposes. When business leaders deal with "particular problems which need specific solutions," their actions should be informed by a "prudential evaluation of the situation."

The handbook is at pains to explain not only what a prudential judgment is, but what it is not. It notes that prudence often has "been reduced to the clever actions of leaders that advance their own private interests." Yet, that would not be virtue at all. Rather, it would be "a vice separated from the requirements of justice."

The pontifical council views true prudence as a virtue that "informs the mind of the business leader by asking the right questions and discerning the best courses of action for building good and just companies which can contribute to the common good."

Practicing prudence in business can mean "recognizing the available resources of the organization and understanding its unique circumstances." Take, for example, considerations related to paying employees living wages.

No one is saying the wages that are paid need not be "sustainable for an enterprise," the handbook indicates. But it says that if living wages are "not immediately sustainable for a business, virtuous businesspeople do not stop there and simply defer to market forces." What do they do?

"They rethink how they are doing business and how they can change their situation creatively so as to be in right relationships with their employees. This could mean changes at the level of work organization or job design; it could mean moving into different product markets or rethinking pay differentials."

And, "if it is really not possible for a company to reach a just wage after having made such efforts, it then becomes the role of indirect employers such as the state, unions and other actors to supplement the company's efforts."

7. Checklist Prompts Business Leaders' Reflection

"Do I believe that taking seriously the dignity of the person in my business decision making will promote integral human development, while making my company more efficient, more agile and more profitable?" That is one of the many questions posed to business leaders and educators in an appendix to the newly released handbook on the business leader's vocation from the Pontifical Council for Justice and Peace.

This checklist might also serve as a resource for discussion groups in parishes, schools and other settings where church social teaching is being examined or where the meaning of work is being explored by students or Catholic employers and business leaders.

The challenges for employers in the checklist range from encouraging them to ask how seriously they take the church's social teaching to whether they view the sacraments as a support in their work.

One checklist question asks the business leader, "Do I place the dignity of all workers above profit margins?" Another question asks, "Do I see the responsibilities of my company as extending to all the participants who contribute to its life, not simply to the interests of the owners?"

The appendix is titled "A Discernment Checklist for the Business Leader." It includes an introductory set of questions, followed by sections subtitled "Meeting the Needs of the World," "Organizing Good and Productive Work," "Creating Sustainable Wealth and Distributing It Justly" and "In Summary.")

The text of the appendix follows:

Discernment Checklist for the Business Leader

-- Do I see work as a gift from God?
-- Is my work as a "co-creator" truly a participation in God's original creative act?
-- Do I promote a culture of life through my work?
-- Have I been living a divided life, separating Gospel principles from my work?
-- Am I receiving the sacraments regularly and with attention to how they support and inform my business practices?
-- Am I reading the Scriptures and praying with the will to avoid the risk of a divided life?
-- Am I sharing my spiritual path with other Christian business practitioners (my peers)?
-- Am I seeking to nourish my business life by learning more about the church's social teaching?
-- Do I believe that taking seriously the dignity of the person in my business decision making will promote integral human development while making my company more efficient, more agile and more profitable?

Meeting the Needs of the World

-- Do I see the responsibilities of my company as extending to all the participants who contribute to its life, not simply to the interests of the owners?
-- Am I creating wealth or am I engaging in rent-seeking behavior?
-- Am I engaging in anti-competitive practices?
-- Is my company making every reasonable effort to take responsibility for externalities and unintended consequences of its activities (such as environmental damage or other negative effects on suppliers, local communities and even competitors)?
-- Do I recognize the importance of strong and lively "indirect employers" to ensure the right levels of labor protection and community dialogue?
-- Am I sensitive to the fact that if corporate decisions are not deeply grounded in the dignity of the human person, they will be prone to instrumentalist and utilitarian constructs which fail to promote integral human development within business?
-- Do I regularly assess the degree to which my company provides products or services which address genuine human needs and which foster responsible consumption?

Organizing Good and Productive Work

-- Do I provide working conditions which allow my employees appropriate autonomy at each level? In other words, am I organizing human resources mindful of the subsidiarity principle in my company management system? (Am I assuming the risk of lower-level decisions to assure that this autonomy is genuine? Are jobs and responsibilities in my company designed to draw upon the full talents and skills of those doing the jobs? Have employees been selected and trained to be able to meet fully their responsibilities? Have these responsibilities and their scope been clearly defined?)
-- Am I making sure that the company provides safe working conditions, living wages, training and the opportunity for employees to organize themselves?
--Have I embedded a set of comprehensively defined values and integrated that into my performance measurement process? Am I honest with my employees about their performance?
-- In all countries where my company is engaged, is it honoring the dignity of those indirectly employed and contributing to the development of the communities hosting these operations? (Do I follow the same standard of morality in all geographic locations?)
-- Do I place the dignity of all workers above profit margins?

Creating Sustainable Wealth and Distributing It Justly

-- As a business leader, am I seeking ways to deliver fair returns to providers of capital, fair wages to employees, fair prices to customers and suppliers, and fair taxes to local communities?
-- Does my company honor all its fiduciary obligations to providers of capital and to local communities with regular and truthful financial reporting?
-- In anticipation of economic difficulties, is my company taking care that employees remain employable through appropriate training and variety in their work experiences?
-- When economic difficulties demand layoffs, is my company giving adequate notifications, employee transition assistance and severance pay?
-- Does my company make every effort to reduce or eliminate waste in its operations and, in general, to honor its responsibility for the natural environment?

In Summary
-- As a Christian business leader, am I promoting human dignity and the common good in my sphere of influence?
-- Am I supporting the culture of life, justice; international regulations; transparency; civic, environmental and labor standards; and the fight against corruption?
-- Am I promoting the integral development of the person in my workplace?