 | | Heinrich Deichmann | Hilmar Schneider |
As part of the events surrounding IZA’s 10th anniversary, the IZA Tower Talk took place for the 20th time in its five-year history at the Post-Tower in Bonn. “How much ethics can the economy handle?” was the topic of the invited speech given by Heinrich Deichmann, CEO of Europe’s largest shoe retailer, on September 17, 2008.
In the face of mass layoffs and the current financial crisis, Deichmann warned that “excessive greed” threatens to alienate citizens from the concept of a social market economy. In his view, companies should be more concerned with the “stakeholder value” that combines the interests of customers and employees alike. This would also imply a reorientation from short-term towards long-term profit goals. Although he conceded that this would be easier to implement for a privately owned business than for listed companies, he did not accept that the forces of globalization provided an excuse for business models focusing solely on profit maximization. He cited his own company, Deichmann-Schuhe, as an example of how an ethically motivated business model could be highly successful also under strict cost-benefit considerations. Ethical and economic motives actually formed a productivity-enhancing synergy, he claimed, pointing at his employee’s strong identification with the company or the strikingly low employee fluctuation resulting from voluntary healthcare and social programs provided by the employer.
Moreover, Deichmann said, his corporate code of conduct defined clear minimum standards in terms of working conditions and safety regulations for its predominantly Asian suppliers. He rejected the notion of exploitation sometimes associated with the fact that wages in many Asian counties are very low by western standards. On the contrary, he argued, denying these and other regions the opportunity to use their comparative advantage in global markets and engage in international trade would be wrong, since this would deprive them of the foundations of future prosperity. To illustrate his point, Deichmann used Taiwan as an example of a former low-wage country that successfully evolved into a producer of high-tech goods.
Deichmann also presented some of his company’s charity projects, such as “wortundtat”, an aid organization helping poor people in countries like India, Tanzania and Moldavia. In cooperation with IZA and other institutions, Deichmann-Schuhe also supports the fight against youth unemployment by awarding a cash prize to employers who have undertaken extraordinary efforts to promote young workers. Since many other German family-owned enterprises are engaged in similar social projects, Deichmann called on economic policymakers to concentrate more strongly on their ideas and needs. For the real question was, as Deichmann concluded, “How much ethics does the economy need?” |
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