In his testimony before the U.S. Senate in July 2002, Federal Reserve Chairman Alan Greenspan remarked that the problem of today’s free enterprise system is one of "infectious greed." He also observed that the quality of corporate governance rests on the character of the corporate leader.
Experience in the field of employee ownership and participation has taught that the long-term success of any ownership culture depends largely on authentic leaders who inspire others through their values, vision and actions. The leader defines a culture and transmits values throughout the organization, working with others to create systems that promote the shared values and vision of the group. The authentic leader also strives to create new leaders and institutions to sustain the culture beyond his or her tenure or lifetime.
Furthermore, the transition to an ownership culture requires that the organization’s leader and core leadership group gain input and buy-in from all levels of the company, and introduce structures and processes for:
- Ownership culture planning, implementation and renewal
- Company-wide ownership education and communications
- Employee-monitored risk-and-reward compensation
- Anticipatory planning and crisis management for business down-turns
- Stimulating and utilizing worker input and participation
- Governance, transparency and accountability
- Leadership development and succession-planning
- Conflict resolution
Wanted: A Leadership Philosophy and Management System for Building Effective Ownership Cultures
"Justice-Based ManagementSM" ("JBMSM") is a leadership philosophy and management system that was conceived by the Center for Economic and Social Justice (CESJ) to apply principles of economic and social justice within business organizations in order to build, maintain and continually improve effective and sustainable ownership cultures. Such ownership cultures, in our view, are not some kind of village democracy, but should have a representative form of governance with structured checks-and-balances, where leaders are transparent and accountable to all owners.
One JBMSM innovation, for example, is the Employee Shareholders’ Association (ESA), first introduced for the creation of the Alexandria Tire Company of Egypt. The ESA serves as an Employee Stock Ownership Program (ESOP)-type vehicle to replace a trust, which may not be recognized under the laws of certain countries. More important, the ESA represents an advance over a trust, which is typically created by management and may not be operated democratically or in the best interests of the employees. The ESA allows for involvement of employee-elected representatives to participate in the design of the ESOP and the establishment of an ownership culture, as well as allowing worker-owners to have a formal voice within the governance of their company. The ESA also serves as the vehicle for channeling low-cost credit to finance the capitalization needs of the corporation while building the equity stakes of its worker-shareholders.
To encourage the spread of companies and management systems that embody the principles of "Justice-Based ManagementSM", CESJ is working with groups like the Global Justice Movement and the Institute of Integrated Rural Development in Bangladesh to establish a JBMSM certification mark, marketing company, and international certification board.
Through an international collaboration, one of the first applications of the JBMSM certification process will occur with the launching of a prototype worker-owned readymade garment factory, to be located in Dhaka, Bangladesh. This prototype will demonstrate that the Justice-Based ManagementSM model can replace the sweatshop model now prevalent world-wide.
The Justice-Based ManagementSM (JBMSM) mark certifies that a company that displays this mark on its products is managed in a manner consistent with JBMSM standards and criteria as defined and approved by the Center for Economic and Social Justice (CESJ) and any licensing board approved by CESJ. This mark also certifies that a consultant or consulting group is qualified to provide JBMSM consulting and educational services, and subscribes to the philosophy of global justice and operates according to defined principles, standards and criteria of economic and social justice.
CESJ is now organizing an international certification board made up of corporate executives, labor leaders, academics teaching participatory organizational management and social morality, and social justice activists. The JBMSM licensing board will establish and promote JBM licensing criteria and an international licensing association to award JBMSM licenses and to audit, on a regular basis, all licensees.
Allowing for maximum flexibility and diversity by companies and consultants in how its principles are applied, JBMSM certification requires, however, that certain structures and processes be present in some form in order for a company to use the JBM mark. Among the requirements for full JBMSM certification are:
- Direct passthrough of the vote, on a one-share, one-vote basis, on all typical shareholder issues, particularly with respect to shareholder nominations and representation on the company’s Board of Directors.
- An ongoing JBMSM/ownership education program that promotes understanding by all worker-shareholders and other participating stakeholders of the principles of economic and social justice underlying Justice-Based ManagementSM, as defined by the Center for Economic and Social Justice (Washington, D.C.).
- A favorable interview by members of the JBMSM Certification Board or its authorized designees of the company’s chief executive officer and Chairman of the Board of Directors, to determine their understanding of and commitment to perform their functions in accordance with the philosophy and principles of Justice-Based ManagementSM.
- A plan and timeline for introducing and maintaining an ownership culture in accordance with JBMSM principles and criteria. Such a plan would outline the structures and processes being used to address issues of corporate governance, equity participation, compensation, risk-and-reward sharing, accountability and transparency, career development, information sharing and ownership education, participatory management, layoff policy, and grievance procedures.
- A program for maximizing ownership opportunities (i.e., equity sharing) among all workers, and if appropriate, other stakeholders.
- A formula-based program of regular economic feedback (profit-sharing) linked to the bottom line and awarded on at least a quarterly basis.
- Structures and processes of participatory management.
- An biennial audit by a JBMSM certification agency.
CESJ is seeking volunteers to become involved in the development of the JBMSM certification process, international certification board and marketing company. Those interested in participating in the JBMSM Certification Project should contact CESJ at email@example.com.