November 10, 2019 at 07:10 pm
Gemma U. Reyes
What makes for a successful business? There is no doubt that organizational leadership has a lot to do with it. This has been proven by Juan Roig, the president and majority owner of Mercadona, a supermarket giant that has over 1,600 stores and enjoys about 25 percent market share in the retail sector in Spain. What is his secret? He follows an ethical management model that provides value to all stakeholders. The company is known for quality products always at low prices. Employees have permanent contracts, receive high-quality training and above industry wages, as well as 25 percent of the company’s pre-tax earnings. Roig believes that happy employees make happy customers. This strategy has earned for the company the continued patronage of loyal customers.
Virtue and happiness
I do not know if Juan Roig ever read Aristotle. But the way he runs Mercadona exemplifies the virtuous man who for Aristotle is a happy man. And not only is Roig happy, he has made many other people happy as well. But how do we become virtuous? How do we become happy and make others happy? Aristotle wrote in his work Nicomachean Ethics: “He is happy who lives in accordance with complete virtue and is sufficiently equipped with external goods, not for some chance period but throughout a complete life.” Now, virtue is a good habit that can be developed through practice. We become what we repeatedly do. If we keep telling the truth, we become honest. If we constantly overcome our fear we become courageous. Through the continuous practice of the virtues, we develop our moral character, we achieve the excellence proper to human beings. Our happiness then is in our hands, it depends on our choices. Every time we choose to do the right thing, we grow in virtue and as a consequence we become happy.
Virtuous leaders and business success
Judging from the experience of Juan Roig, being a virtuous leader does pay. Why then do we see many business leaders following the vicious and not the virtuous path? The simple answer is that to be virtuous requires more effort. One must try to overcome the pull of the easy life, (which is not necessarily a happy life) in order to choose to be virtuous and eventually find true happiness. Roig did not always have it easy. When he acquired Mercadona in 1981 from his father and implemented his ethical business model with particular focus on quality products at affordable prices, business did not pick up immediately.
But with perseverance, the company was able to get their customers’ trust and eventually began to grow their clientele. Building and sustaining trust among all stakeholders is key to long-term business success. This is not easy as it requires consistent effort to deliver value even in difficult situations which could justify relaxing certain standards. Only virtuous leaders will stand their ground and those who do (as well as the whole society) are all the better for it.
We need more ethical business leaders who will put the good of the stakeholders ahead of the company. Just like Juan Roig did. With more virtuous leaders, we could achieve the good life that Aristotle envisioned for all.
Gemma U. Reyes is a Doctor of Business Administration student of the Ramon V. del Rosario College of Business and is an assistant professor at the Department of Agribusiness Management and Entrepreneuship of the University of the Philippines Los Baños. She is currently on full-time study leave. Her research interests are sustainable entrepreneurship and organizational development. She can be reached at [email protected]
The views expressed above are the author’s and do not necessarily reflect the official position of DLSU, its faculty, and its administrators.