In the last decades of the 20th century management as a profession has fallen into a deep crisis. The preceding decades had revealed a promising development: From the beginning of the 20th century, companies hired professional managers who supervised companies on behalf of the owners. As dedicated professionals they took into consideration the long-term interests of all stakeholders.
However, the rise of neoliberalism – in politics and science ā put shareholders in the role of the owners of listed companies. Increasing shareholder value became the primary task of a company’s management.

The income of top managers – worldwide – increased explosively during the last years of the century because their remuneration package consciously consists of a large part of shares (options). The idea is that shareholders’ interests were guarantied if they coincided with the financial interests of managers. Professional managers sold – so to say ā their soul[1].
Recently, a prominent business school has disclosed the unsustainability of this view. Cass Business School, part of City University of London, initiated for two years the Purpose of the Corporation Project[2]. This project was completed in Brussels on 28th September 2016 in a meeting of scientists, politicians and business leaders from Europe and the US.

Maximization of shareholder value is inherently a short-term policy. It has several effects that harm the profitability and even its existence in the long term:
- Declining investment in research and development
- Irresponsible risk-taking
- Externalities like loss of confidence from society, undermining monetary stability and exploitation of the environment
- Cost reduction resulting in restructuring and related closure of business establishments (mergers, acquisitions, buyouts)
- Tax evasion, limiting the resources for investment in infrastructure
The only viable perspective is a “corporate purpose” in favour of the creation of value for all stakeholders and to contribute to social welfare and environmental quality.
The final report is build on five so-called Modern Governance Statements regarding business law, management, accounting, economics and public policy. These statements are based on an extensive review of literature. A significant number of scientists have discussed and approved each statement.
Here is a selection of edited quotes from the five statements:
- Almost in any country, the answer to the question ‘who owns a company with a legal personality’ is ‘the company itself’. By no means shareholders do.
- Companies can raise capital, for instance by issuing shares. Shareholders are entitled to receive dividends and to raise their voice in a number of clearly defined subjects.
- In almost all legislations the fiduciary duties of the management of a company include its long-term survival.
- No law requires management to pursue maximum profits for shareholders. If they do, it is because they succumb to pressure from activist shareholders or for their own gain.
- In the ’90s monitoring the reporting of companies passed from national governments and parliaments to the International Accounting Standards Board. As a result, the focus of the reporting narrowed to the provision of information to investors and the calculation of the assets based on market value.
- The idea of a social partnership between civil society institutions – including businesses – went lost.

The final report of the Purpose of the Corporation Project[3] kept two options to managers and shareholders: Whether persisting the current direction, which will ultimately result in the disappearance of the company or redesigning the company as a social institution serving the interests of all stakeholders.
How? Here is a selection of the recommendations in the report.
- Values (“Purpose”)
- Companies explain their values and goals and define their responsibilities with respect to all stakeholders such as employees, customers and shareholders and society and nature al large.
- Management establishes the implications of the purpose for strategy and (investment) policy and also how to reduce associated risks.
- Companies accentuate their intentions with regard to the achievement of social objectives by adopting the status of B(enefit) Corporation.
- Operating as a community
- The intensified control of the employees has resulted in loss of their engagement and quality of their work as well.
- Employees who organize their work independently perform better and feel more satisfied. After all they have product and market knowledge and maintain relationships with suppliers and customers.
- New organizations deploy less hierarchy, reduce of the number of managers and transfer management tasks to employees.
- Revision income stimulus
- Top management will receive a fixed salary that is part of the remuneration structure of the company. All incomes are transparent.
- Variable remuneration applies to all employees and is linked to the achievement of long-term objectives and the satisfaction of the customers as well.
- Participation of stakeholders
- Representation of employees, clients and shareholders in the board and in the General Meeting will strengthen the relationship between the company (management) and its stakeholders
- Search for patient capital
- Distinguishing between different categories of shareholders will stimulate stewardship by shareholders with a long-term interest.
- Making shareholders’ rights dependant from the duration of their involvement in the company.
- Protection from hostile takeovers
- In order to protect their long-term policy, companies deploy mechanisms to prevent hostile takeovers, for instance by transferring shares to a foundation.
- Reporting
- The method of reporting is geared to long-term policy. The Integrated Reporting Framework is an alternative for common accounting rules who intend to inform investors in the first place
- The main goal of reporting is disclosure of value creation in the broadest sense, including in relation to non-financial capital.
The Purpose of the Corporation Project has provided a new benchmark for corporate governance, the financial world and professional managers. But it is also a new benchmark for the relation between society and business. Finally, it is a signal for shareholders to avoid short-term thinking.
[1] In 1993 CEOās of the top 25 companies in the US earned 195 times the salary of an average worker. In 2012 their salaries were raised to 354 times the salary of an average worker. Institute for Policy StudiesāØ1112 (16th Street NW, Suite 600)āØWashington, DC 20036
[2] Overview of the background of the project: https://goo.gl/vNJQjr
[3] The final report reads like an up-to-date introduction to corporate governance: “Corporate Governance for a changing world: Final Report of a Global Roundtable Series” https://goo.gl/bdEaQp


At first sight, students’ and employers’ interests are opposed. The recent Reimagining Education Conference at Wharton University revealed quite a different perspective
Luckmann and Prange compare the current approach to learning in universities with the development of enterprise software. The implementation of massive all-embracing software in companies seldom results in satisfying solutions. The same applies to a curriculum that has to serve hundreds of students at once. In software development the agile approach is gaining ground, which in essence is based on interaction between developers and customers, taking customers’ needs and wants as starting point.
In the same way, agile universities will put the interaction between students and teachers in the centre. Therefor they rely in a large degree on self-organization. A rich variety of teaching-learning interactions appear, mostly based on co-design. Students are getting acquainted with a broad range of disciplines and learn to search, apply and deepen relevant knowledge in projects, favourably in collaboration with parties outside the university.
Knowledge has become ubiquitous. The same applies to stupidity, greed, fundamentalism and the quest for power. Definitely, it applies not to peace, happiness or wisdom. In spite of undeniable progress with respect to income, medical care, education and technology last decades the world did not become a better place. The ubiquity of knowledge has not been very helpful. On the contrary, knowledge has been a steady accomplice in the decline of the earth.
Printed or electronic sources in which knowledge is stored are ubiquitous too. The sheer number of scientific publications is doubling every 9 years since 1950
Many teachers assume that students have to be saturated with disciplinary knowledge first before its application can be practiced. This outmoded idea has proven not to work because of the abundance of scientific knowledge, the blurring of disciplinary borders and the situated character of ‘real problems’. In stead, students acquire meaningful knowledge only if they learn to deal with unstructured problems from the first day they enter university. The development of a more structured knowledge base can wait and might be reserved for students who aspire a career in academia. Disciplinary bachelor programs might be replaced by the study of societal problems like environment, migration and integration, healthcare, energy and the like.

The majority of contemporary universities are realizing these outcomes only partially. Research in the US has revealed that about 40% of college students did not make any progress with respect to analytical and critical thinking skills in four consecutive years
Universities can economize by flipping their classrooms radically and supporting their students in choosing appropriate open educational resources like MOOCs (= massive open online courses). At this time, MOOCs cover any part of scientific knowledge. The best scientists are involved in their development and educational technologists have designed the best visual support. The only expenses relate to delivering feedback at student’s assignments.

Hierarchical personnel management and extensive planning and control systems enabled late 20th century companies to produce massive volumes at low prices for relatively stable and continuously growing markets. Nowadays, the environment is changing at high-speed, requiring flexibility and development of new products in short notice. The labour force is well educated and prepared to take or share managerial responsibility. At the same time most workers feel disengaged under conditions of vertical control.
Ask any university teacher who is her or his boss. Some – probably those who have been employed the largest number of years – shrug their shoulders as though the answer matters. Others might count ten bosses at least: the chairman of the department, the head of the school, the managing director, the program director of the bachelor, the program director of the master, the director of education, the director of research, the chairman of the faculty council and the dean. Not to forget the chairmen of the education committee and the board of examiners. And we’re only talking about bosses at faculty level.
The strong increase in complexity of higher educational institutions is accompanied by the diversity of tasks that academic personnel are performing simultaneously. Ask any university teacher to write down her or his tasks during an average week. The result: six to ten lectures or working groups in bachelor and master programs spread over three to five courses, the development of new courses, supervision of bachelor and master theses, meetings of committees, discussions with PhD students, delivery of information to prospective students, participation in teacher training, attending meetings and consulting colleagues, regional contacts, deliberations with foreign universities, tutorials with students, answering emails, and joining social media forums. They also do research, which involves various activities as well.











