Virtuosity in Business - Kevin T. Jackson

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their nurture and occupations should be fixed by law; for they will not be painful when they have become customary. But it is surely not enough that when they are young they should get the right nurture and attention; since they must, even when they are grown up, practice and be habituated to them, we shall need laws for this as well, and generally speaking to cover the whole of life.39

      Moreover, Aristotle claims that “most people obey necessity rather than argument, and punishments rather than the sense of what is noble.”40 There is a suggestion here that, no matter how much importance we attach to moral virtue and character, attention still needs to be given to the question of the appropriate degree of legal regulation. The point is further spelled out when Aristotle, alluding to Plato's Laws, continues with this assertion:

      This is why some think that legislators ought to stimulate men to virtue and urge them forward by the motive of the noble, on the assumption that those who have been well advanced by the formation of habits will attend to such influences; and that punishments and penalties should be imposed on those who disobey and are of inferior nature, while the incurably bad should be completely banished. A good man (they think), since he lives with his mind fixed on what is noble, will submit to argument, while a bad man, whose desire is for pleasure, is corrected by pain like a beast of burden. This is, too, why they say the pains inflicted should be those that are most opposed to the pleasures such men love.41

      Intellectual Virtues

      The intellectual virtue of phron

sis, normally rendered as prudence or practical wisdom, concerns steering conduct through what we would today refer to as moral dilemmas. Just being aware that virtuous action is found as a mean between extremes leaves us with a certain vagueness. But prudence is what enables us to see what the right course of action is by taking all of the relevant specifics into consideration. A prudent person regularly renders correct judgments promoting all dimensions of the good life, from money and health to personal relationships and virtue.

      Now it is thought to be the mark of a man of practical wisdom to be able to deliberate well about what is good and expedient for himself, not in some particular respect, e.g. about what sorts of thing conduce to health or to strength, but about what sorts of thing conduce to the good life in general. This is shown by the fact that we credit men with practical wisdom in some particular respect when they have calculated well with a view to some good end which is one of those that are not the object of any art. It follows that in the general sense also the man who is capable of deliberating has practical wisdom.42

      Aristotle observes that prudence will be exercised by a statesman and the head of a household (oikos) alike. As he expresses it, “We think Pericles and men like him have practical wisdom, viz. because they can see what is good for themselves and what is good for men in general; we consider that those can do this who are good at managing households or states.”43 The type of prudence exercised in these instances is especially praiseworthy to Aristotle, as compared to self-focused applications of this virtue. The reason is that overseeing both households and public associations impose stepped up demands and duties, that is, helping others and not just oneself. Today's stations of leadership within business enterprises provide a myriad of chances for exercising this type of prudence in connection with social and economic affairs.44

      The other intellectual virtue is wisdom or sophia. Wisdom engages the part of reason equipped to apprehend necessary truths as opposed to the contingent ones that prudence grasps. Wisdom deals with theory rather than practice. A wise person has intuition along with scientific knowledge. Through intuition one discerns first principles upon which scientific results rest. Scientific knowledge enables one to make deductive inferences in reaching conclusions in theoretical science. “Therefore wisdom must plainly be the most finished of the forms of knowledge. It follows that the wise man must not only know what follows from the first principles, but must also possess truth about the first principles. Therefore wisdom must be intuitive reason combined with scientific knowledge—scientific knowledge of the highest objects which has received as it were its proper completion.”45 In contrast to narrowly technical or industrial ways of thinking, wisdom is not motivated, as, say, Thomas Edison and Henry Ford surely were, to bring new inventions and improved gadgets into existence.46 Wisdom seeks knowledge for its own sake. It undertakes the search by adopting a contemplative stance. The philosopher, or lover of wisdom, embodies this quest. By “philosopher,” Aristotle does not mean, as we do today, a person engaged in formal scholarship in the fields of logic, metaphysics, aesthetics, epistemology, and ethics. Aristotle's philosopher is the person in search of a complete reckoning of principles behind all reality—spanning human, natural, and divine spheres.

       Contemporary Focus Point for Virtue: Executive Compensation

      In the wake of the financial crisis, allegations of injustice stemming from apparently undeserved rewards for untalented performance have come to the forefront in discussion about executive compensation on national and international levels.47

      Many would say top executives are siphoning off a disproportionate share of the fortunes generated (or worse, not generated) by the organizations under their watch. Studies document a meteoric rise in CEO compensation.48 During 2008, which ushered in dwindling corporate earnings along with sinking share values, most CEOs got compensation hikes, not downgrades.49 In the face of the economic downturn, average CEO compensation for 2008 was only slightly diminished.50 The economic downturn did not inhibit financially distressed firms from granting supersized payouts to high-ranking corporate chiefs.

      Who are these corporate leaders who, with the backing of boards of directors that set their pay, are rewarded with ostentatious rewards, so out of step with what everyone else struggles to eke out? What drives their acquisitiveness? Reflection on such questions is absent in all but a handful of studies on executive compensation. Let's drill down into the details of some of these individuals' remuneration arrangements.

      At the summit of CEO earnings in the United States for 2008 was Sanjay Jha of Motorola. Despite the firm's precipitous 71 percent drop in shareholder price, he received US$104.4 million.51 Robert Iger, Disney's CEO, was awarded US$51.1 million in 2008. That payment weighed in at almost twice the size of the US$27.7 million it had extended to him the year before.52 The huge rise in pay appears especially openhanded having come about in the same year that Disney's profits experienced a 5 percent decline. At the helm of American Express, Kenneth Chenault, received a reduction of 14.6 percent—dropping from US$50.1 million for 2007 to a paltry US$42.8 million for 2008.53 Yet the reduction did not quite mirror the 29 percent overall fall in profits his company had suffered.54

      When AIG started channeling taxpayer bailout money it had received into its executives' paychecks, the public became outraged.55 AIG's former CEO Martin Sullivan, who ran the company into the ground, was set to receive US$47 million in severance when he was fired, prompting New York State Attorney General Andrew Cuomo to place a stop on US$19 million of it.56 In response to the granting of performance bonus awards for AIG top management, Charles Grassley, senior member of the Senate Finance Committee, proclaimed, “The first thing that would make me feel a little bit better towards them [is] if they'd follow the Japanese model and come before the American people and take that deep bow and say I'm sorry, and then do either one of two things—resign, or go commit suicide.”57 Elaborating on the comments, Grassley's spokesperson Jill Gerber clarified that “clearly he was speaking rhetorically—he meant there's no culture of shame and acceptance of responsibility for driving a company into the dirt in this country. If you asked him whether he really wants AIG executives to commit suicide, he'd say of course not. Point being, U.S. corporate executives are unapologetic about running their companies adrift, accepting billions of tax dollars to help, and then spending those tax dollars on travel, huge bonuses, etc.”58

      In directing the Treasury Department to pursue all available legal means of reclaiming the funds, President Obama described the bonuses as an “outrage.”59 Ohio Representative Dennis Kucinich called upon the SEC to launch an inquiry after the financially distressed

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