Insurance and Education & Workforce Development and Environment

EYE ON THE PIE: Brothers set example for today's execs

July 25, 2005

Most of us know the fabled heroes of Bean Town. They include the Adams cousins (John and Sam). Paul Revere. The Kennedy brothers (John, Robert and Edward). Ted Williams, Carl Yazstremski, Bobby Orr, Bob Cousey, Bill Russell, Larry Bird and Tom Brady.

Yet Boston's most significant business heroes are not well-known today, at a time when their example could be most useful. Two brothers, Edward and Lincoln Filene, inherited their father's department store in 1890. They spent the rest of their years creating an institution dedicated to improving the lives of their employees, their customers and their community.

The Filene brothers sought innovation in merchandizing techniques and in employee relations. They introduced the bargain basement to sell merchandise at lower prices. They established minimum wages for women. They developed employeewelfare plans and paid for winter vacations for their workers. They provided profitsharing for employees, developed health clinics and insurance programs, and opened an employee credit union.

Filene's department store offered employee discounts long before the auto companies thought of it. They were among the first to offer retail workers a five-day, 40-hour week. They helped pioneer workman's compensation laws in Massachusetts. They funded one of the first educational TV stations, now Boston's famous WGBH.

The Filene brothers believed in research. Edward established the Twentieth Century Fund to investigate social and economic issues. Lincoln sponsored research to improve retail efficiency, lower consumer prices, and develop scientific management techniques.

These business leaders built a multimillion-dollar empire while advancing the idea that workers should be paid "buying" wages, not the near-subsistence "living" wage advocated today. They saw the future of capitalism as dependent on the ability of workers to enjoy strong purchasing power. This would, in their view, avert economic recessions and social turmoil.

Compare Edward and Lincoln Filene to today's leaders of commerce. How many of the overpaid executives in business today have any social philosophy behind their actions? They seem more like automatons seeking to drive up profits and stock prices rather than serve the public good.

Many Americans are outraged at the salaries, bonuses, stock options and perks of CEOs. We should be outraged more by the lack of concern for their workers, suppliers, customers and communities. Some would call this indifference the result of greed, the desire for personal gain. It would be more appropriate to label it ignorance of any moral code for the conduct of business.

Today, politicians and pundits are battling over issues they claim stem from religious values. Where is the discourse on the expression of such values in the business world?

Many would tell you and me how to live our private lives, but they are not willing to examine the public behavior of corporate America. Abortion is held to be a sin while killing the environment is excused as a cost of doing business. Social responsibility is considered a left-wing concept where, in truth, it should be a vital aspect of liberal and conservative thought.

Waving the Bible or Koran, too, many would overturn our civil liberties and create a theocracy to satisfy their limited views of divine intention. But they forget the responsibility of charity, mercy and good deeds imposed on the faithful by their own religions.

The Filene brothers set an example for business leaders that should be studied and emulated by those in positions of corporate power today. Their philosophy would serve us all in these times of conflict over values.



Marcus taught economics more than 30 years at Indiana University and is the former director of IU's Business Research Center. His column appears weekly. To comment on this column, go to IBJ Forum at www.ibj.comor send e-mail to mmarcus@ibj.com.
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