Page 172 - Performance Leadership

Chapter | 10

THE SOCIAL ROLE OF

ORGANIZATIONS

For many centuries, business and society were highly intertwined. Take,
for instance, the city of Utrecht in The Netherlands, where I live. For
centuries, business was organized and regulated by the guilds. In the
“guild letter” of 1304, a total of 21 of these guilds were instituted. Given
the central location of the city and the high levels of trade, the guilds
quickly gained power and influence. The guilds, professional
organizations in which various craftsmen organized themselves, had
important tasks. They took care of insurance and health care of the
members, and they also acted as a social network. Additionally there
were public tasks; every guild was responsible for defending a part of the
city walls. This was in the best interest of everyone. A safe city leads to
higher “consumer confidence,” which leads to more trade, more wealth
for the guilds, the citizens, and the church, and thus more money to
invest in safety for the city. Creating value was a virtuous circle.

The Social Dimension
Business can only grow and prosper if the economy is allowing the
organization to do so. A good economy leads to consumer confidence
and a willingness to spend. Organizations benefit from a community’s
investment in security and infrastructure. That’s why organizations pay
taxes, as households do. And many organizations, like many house-
holds, feel that this is enough to cover infrastructure, security, social

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