In a premodern world, hard work and skillful work on a farm or in a carpentry shop typically produced increased income for those doing the work. This is not the case in most modern organizations. Profit is assigned to only a few at the top of the organization, or those who have taken a financial risk in the investments they have made in this organization. The nonalignment of work and benefit yields not just financially based resentment and despair, but also psychological despair related to a sense of helplessness and hopelessness–and a sense of “worthlessness.”
Short-Term Perspective, Control, and Delays
There is a second important point about profit in a capitalistic system. This point concerns the time scope engaged in determining profit. Is profit determined on an annual basis? This is the typical time scope used by governments when setting taxes. However, quarterly profits are often afforded primary attention by those running organizations (especially corporations). Stock prices can even shift from day to day, though stockholder returns are usually determined on a longer-term basis.
The organization’s focus on either short-term or long-term profitability is typically determined by those running the organization (rather than the board). Immediate financial decisions are often unrelated to formal fiscal policies and procedures regarding profit. The subsequent distribution of funds is itself rarely based on the formal determination of profit. Worth determines how profit is distributed. And Worth, as an arbitrary criterion of value, is often based on your role in the organization and who you know. Any assessment of actual contributions made to the organization’s bottom-line profitability takes a back seat to position and referent power (French, Raven, and Cartwright, 1959).
In many contemporary societies (especially American), short-term profitability is the key marker of organizational success. Moment-to-moment reductions in costs and increases in revenues are important. While this short-term perspective might be embraced by the executives who run the organization and by those who speculate day-to-day in the Wall Street marketplace, it is often damaging in terms of the actual financial viability of the institution itself. At the heart of the matter is the vulnerability of any organization (or any system) that embraces a short time horizon.
We are increasingly aware of the delay function operating in all complex systems (Meadows, 2008). Events operating inside and outside any system (including organizations) might not have an immediate impact, though when these events occur and are observed, the longer-term impact may be profound. The wave of required change often must travel a long distance before it crashes on the shore of a contemporary organization. The world might be flat, but there are still major barriers in the movement of powerful events from one part of the world to another.
It is not just a tangible resource (such as a machine part or bushels of grain) that must travel from one location to another. Information can also be delayed, even when it is flowing within an organization. Information coming to the organization from an external source often does not arrive immediately. Both sources of information might significantly influence decision-making in the organization when they arrive. There are not just delays in the transmission of information, but also neglect of the information upon its receipt. Compounding this neglect is the subsequent misunderstanding of the message delivered after the information is reviewed. The information (and message) that arrives too late for the decision-makers to make a smart choice is frequently an actor in the drama of defeat.
