Tag Archives: stewardship

Confusing ownership with stewardship

The concept of a steward is a sensibility badly needed in today’s business world. For several years, business news has been rife with reports of men (yes, they have all been males) who were charged with looking after the welfare of public corporations but who behaved like robber barons, brutalizing millions of stakeholders by raiding and robbing the assets of the very corporations they were entrusted to protect and grow.

What is the problem? At the obvious level, it involves greed. These men’s lives are models of insatiable appetites gone wild. At another level, these crimes are rooted in pride, for as some of the culprits have admitted, accumulating personal riches and indulging themselves in unspeakable extravagance was how they kept score in the game of success – which they mistook for the purpose of life.

But at a deeper level, their wanton criminal self- indulgence seems to be the natural expression of a flawed understanding of reality. They handled the assets with which they were entrusted as if the assets were their own. That is, after all, the prevailing metaphor we use to describe the very top officer in a public corporation. The company is his. He has the power to make its final decisions. We regard him – and he comes to regard himself – as the sole owner of the corporation.

If that were really the case, CEOs would wallow in self-indulgence until either their assets or their hearts gave out. But because this is not the case, many end up having to hide their skewed view of reality by cooking the books or otherwise lying to investors and other stakeholders. Eventually, reality bites: they have to forfeit their power, fortunes, reputations, and in some instances, even their freedom.

The reality is that the power the top official has in a corporation has been given to him by its rightful owners, who hold the company’s stock. They are free to take away the power they have given him if they decide it is in their best interests to do so. With that in mind, perhaps we will find a newfound emphasis in business schools on the notions of steward and stewardship at all levels of the corporate ladder.

Excerpt by Owen Phelps, Ph.D., from Chapter 9, “Called to be a Steward,” of his book The Catholic Vision for Leading Like Jesus (Huntington, Indiana: Our Sunday Visitor, 2009), pp. 107-08 – “Guys Gone Wild! Confusing Ownership with Stewardship.”

OWEN PHELPS, PH.D., a writer, college professor, master catechist, and trainer, is director of the Yeshua Catholic International Leadership Institute (Durand, IL). Likewise, he is author of three other books: The Believer’s Edge, The Secret of Wealth, and A Steward’s Journey: The Early Years.

On faithful stewardship of ‘talents’

Although his media soundbites sometimes sound like sweeping condemnations, Pope Francis has merely “underscored the anthropological errors of capitalism,” according to Father Robert Sirico, president of the Acton Institute, a think tank on liberty and religious principles. “The most critical statement [Pope Francis] has made is about the idolatry of money” rather than wholesale rejection of free markets.

In his 2015 visit to the United States, Pope Francis praised capitalism in his address to Congress. “Business is a noble vocation,” the pontiff said, “directed to producing wealth and improving the world. It can be a fruitful source of prosperity for the area in which it operates, especially if it sees the creation of jobs as an essential part of its service to the common good.” Further, in his referencing the fight against poverty, the pope said, “Part of this great effort is the creation and distribution of wealth.”

Capitalism often is wrongly equated with consumerism or idolizing material wealth, added Fr. Sirico. “The economic question with regard to its morality is a subset of a broader theological question: Is human freedom compatible with religious beliefs?”

Reality of capitalism

Simply stated, in a capitalist system the means of production of goods or services are privately owned and operated for the purpose of turning a profit. Businesses hire workers for wages, and they offer goods or services in competition with other providers.

In theory, a pure capitalist economy involves a free market unregulated by government — meaning production, wages, and consumer prices are driven by the market itself through supply and demand. In a purely socialist economy, all capital assets and means of production are owned collectively; private individuals own nothing, and the government controls production, distribution, labor, and prices.

In practice today, most are “mixed” economies. All capitalist economies are subject to some government regulation by way of tariffs, taxation, antitrust laws, price controls or labor laws. Meanwhile, some countries that follow a “socialist” model nevertheless allow for significant private initiative and market competition.

Catholic social teaching and capitalism

Catholic thought on economic systems has roots in the 4th century, when St. Augustine and St. Basil contemplated issues like the private ownership of property and the charging of interest on loans. In the 13th century, St. Thomas Aquinas’ deliberations on natural law, human dignity and the primacy of the common good laid the foundation for modern Catholic social teaching.

That accelerated with Pope Leo XIII and Rerum Novarum (“On Capital and Labor”), his 1891 social encyclical. The Industrial Revolution had then given rise to an expansion of labor and mass production of goods, even as the principles of socialism and communism were beginning to take root in Europe.

Rerum Novarum was “the first major application of Christian principles to the modern economy,” said wealth-management attorney Tim Busch, founder/CEO of a hotel development and management company and Legate of the Orange County, CA Chapter. “Pope Leo XIII’s ideas have been broadened and deepened by Pope Pius XI, Pope St. John XXIII, Pope St. John Paul II, Pope Francis, and many other thoughtful advocates of a just economy.”

Catholic social teaching developed over time to address new global realities and challenges to human dignity.

To mark the centenary of Rerum Novarum, Pope St. John Paul II wrote Centesimus Annus, arguably the most comprehensive treatment of Catholic social teaching on economics to date.

At the encyclical’s release in late 1991, the Berlin Wall had fallen and the U.S.S.R. was in the final throes of dissolution. “The Marxist solution has failed,” the pope pronounced, “but the realities of marginalization and exploitation remain in the world,” leaving many people “living in conditions of great material and moral poverty.” He warned against the spread of “a radical capitalistic ideology” that “blindly entrusts their solution to the free development of market forces.”

The Church, he affirmed, “recognizes the positive value of the market and of enterprise,” but “at the same time points out that these need to be oriented towards the common good.”

Pope St. John Paul “took Rerum Novarum and gave it a modern focus,” Busch said in an interview. “Pope John Paul clearly attacks communism and socialism, for example, which for decades had suppressed the Church and freedom of religion as well as private property. He also defends private property and markets, while calling for the defense of the rights of the poor and needy. I believe that’s what Catholic social teaching is all about — striking the right balance between the two, while looking at the common good and society as a whole.”

Good capitalism vs. bad capitalism

“Sometimes what is done under the auspices of capitalism by certain capitalists deserves a bad name and is much maligned,” said Anthony DeToto, president of Legatus’ Houston Chapter and senior vice president of an investment management firm. “While capitalism is deeply flawed as you unpack it, it is better than the alternatives.”

He identified “extremely unequal distribution of wealth, price gouging, conspicuous consumption, fraud, and waste” among the potential excesses of free-market capitalists — sins that result from greed, competitive fervor, and a “win at any cost” mentality.

Tom Heule, a Denver Chapter Legate and partner in a private equity firm, agreed. “Competitive pressures can make a series of small decisions lead to discounting the values we cherish,” he said. “Given the pace of business today, it’s imperative to demonstrate to those we interact with at all levels of the enterprise the ‘why’ behind our actions.”

Firms must regularly take stock of their employment practices, vendor relationships and accountability with all stakeholders to review how they align with core values and to assess plans and policies “in the light of the impact on individual persons,” Heule explained.

“Good” capitalism requires governments, business leaders and workers to behave in an ethically responsible way.

“Free markets only work within a moral culture,” Busch wrote in the Wall Street Journal in 2014. “When business is unmoored from a concern for the common good, capitalism can slide into cronyism and corruption—exactly what Pope Francis has critiqued…. It is such perversions of a free-market economy that do not fit Catholic teaching.”

Businesses, he explained, play a central role in advancing Catholic moral principles.

“Business leaders have a moral duty to increase opportunities for the poor to provide for themselves and their families through dignified work—such ‘co-creation’ is a direct reflection of God himself,” he wrote in Forbes magazine last year. “The poor benefit the most from economic progress.”

GERALD KORSON is a Legatus magazine staff writer.

7 Themes of Catholic Social Teaching

The U.S. Conference of Catholic Bishops has identified seven key themes gleaned from the body of Catholic social teaching:

  1. Respect for the life and dignity of the human person
  2. Support for marriage and family, along with the right and duty to participate in society
  3. Protection of human rights, and fulfillment of duties to family, community, and one another, with government practicing the principle of subsidiarity
  4. Fundamental option for the poor and vulnerable
  5. Respect for the rights and dignity of workers
  6. Solidarity in the pursuit of justice and peace for all people
  7. Stewardship of God’s creation

Connecting business and stewardship

The Church teaches that work is a form of participating in God’s creation. Similarly, a business is more than a way to make a living — it’s a way of serving people. Pope Francis affirms this idea: “Work is fundamental to the dignity of a person. Work, to use an image, ‘anoints’ us with dignity” (May 1, 2013).

Richard Todd

A company’s culture is defined as the shared values and practices that align that firm; it’s the glue that holds a company together. The more successful the company, the more its leaders tend to care about its culture. Perhaps less successful companies don’t have the priority or longevity to define a corporate culture, but they certainly have one and it’s likely negative.

Catholic business leaders should consider a culture of stewardship. I’m the CEO and co-founder of Innovest Portfolio Solutions. Our mission defines our culture: “We are not just an investment firm. We are stewards to our clients, professionals, and the community.” Father Pedro Arrupe, former superior general of the Society of Jesus, popularized the phrase for those following an Ignatian path: “Men and women for others.” Stewardship is not only a concrete concept for all Christians, but a powerful culture for businesses.

Why a stewardship culture? Employees who are “for others” are great teammates; they strive for the best outcome for clients and work together because they truly care. Low employee turnover. Employees recognize the value that they add, the quality of friendships, and are proud to be at the firm. The firm will become known as a great place to work that high-quality individuals ask to join.

Individual character. Monsignor James Shea of the University of Mary, an expert on business and leadership, speaks about “linking Sundays and Mondays” or having character stay consistent throughout the week. Stewardship becomes a way of life and does not turn off. Such a culture also leads to greater employee responsibility and accountability. It’s easy to delegate when employees are eager to add value. Often business owners (like me) struggle with control, but when they finally relent, they create a better organization.

How to create a stewardship culture? Flatten the corporate structure. It’s hard for entrepreneurs to let go; I know from experience. Consider forming committees and task forces to spread responsibilities and tackle issues. Employees thrive with responsibility and accountability. 360° reviews. Teammates should formally review each other. The reviews should be weighed heavily by their supervisors in overall performance evaluation and compensation, especially bonuses. Celebrate small successes. “We Love Mondays at Innovest” is a weekly communication that I send to the entire firm. Only positive announcements are highlighted, with special recognition of great service to clients or colleagues. We also give awards and rewards throughout the year for outstanding service to others.

Encourage philanthropy. Consider forming a committee to determine service work on behalf of the firm and financial stipends to charities. Volunteerism generates team building, camaraderie, and a great sense of accomplishment. In the last year, Innovest employees worked at homeless shelters, built trails and painted houses. Character first. Make strong character the most important characteristic of a new hire. If your firm has low-character employees, replace them. Hire only stewards. When interviewing, look for a multitude of demonstrated examples of stewardship in their life. Arrogance and narcissism are the opposite of the virtue of humility.

It starts at the top. Leadership must be involved in philanthropy and the community. Getting involved in the Catholic community is easy. Innovest’s philanthropic mission is inner-city education. Our greatest gift is employing four inner-city students through a work study program. Build community in your firm. To avoid any finger-pointing between departments, work to develop camaraderie within the firm. We sponsor a weekly lunch for employees, but only if they attend the whole lunch hour. Further, participants are not allowed to discuss work or a minor fine is levied.

Family first. As an employer, you want your people to do whatever it takes to get the job done — for the client and your colleagues. We acknowledge family accomplishments. We especially encourage our employees to attend their children’s events, even if they occur during the work day.

Opus Dei founder St. Josemaría Escrivá tells us that a business executive’s obligation is to “build a better society,” which “involves putting the needs of others first.” By forming a stewardship culture, an organization is healthier, customers are better served, and society greatly improves.

RICHARD TODD is a member of Legatus’ Denver Chapter. He is the principal and CEO of Innovest Portfolio Solutions, an independent provider of investment-related consulting services and work on a fee-only basis.

Offering the gift of your talents

Tom Monaghan encourages Legates to use their business talents for the Church . . .

Thomas Monaghan

Thomas Monaghan

From my experience and conversations with other Legatus members around the country, most of us are regularly approached (i.e., solicited) to contribute financially to many causes. I assume that most members are generous — especially toward Catholic and pro-life causes.

As good and important as it is to support such causes with your financial resources, have you ever thought that something even more valuable than your money might be your talents? Why not put all of that training and those many years of management experience to good use by serving Catholic and pro-life causes?

This might mean joining the board of a local or national organization — or perhaps volunteering to serve as the board chair and really getting involved by helping to cast a long-term vision and using your corporate experience to serve the organization. It also might mean helping the leadership (president/executive director) by becoming a sort of mentor or sounding board for them. Simply by virtue of meeting with them regularly and encouraging them, you may be an invaluable resource.

You might have a particular gift for marketing, fundraising or you name it. In addition — and maybe most importantly — Legates are CEOs, so you know how to help access needs, create action plans, and get things done. These are greatly needed talents and not to be taken for granted.

Some of the big questions are: What should I do? How do I choose an organization that might need my talents? How do I identify what their needs are? Start by asking your chapter’s chaplain if he knows of a need for your talents; you could also speak with your bishop or your parish pastor. And once you get involved, your business instincts will kick in. Most importantly, pray for God’s will as to how He wants to use the talents He gave you; He will always answer that prayer.

This is one of the things that I thought would come out of Legatus when I founded it. And certainly many Legates are already making things happen!

THOMAS MONAGHAN is Legatus’ founder and chairman. He is a member of Legatus’ Naples Chapter.