When we think about living our faith, we certainly think of loving our neighbor in the context of our family, friends, and church community. We give charitably to worthy causes, or maybe volunteer in some fashion. Or perhaps we extend our understanding of living our faith to the political realm as it informs our discussions of how best to structure society.
But what of the corporate structure? Does Catholic social teaching have anything to say about how to best structure a company? The answer to this must be a definite yes.
If our faith is to influence all parts of our life we need to look to the teaching of our faith when creating a business model. The notion of subsidiarity which is found in Catholic social teaching is one such idea that can be used to drive how a business should be organized.
Pope Pius XI stated in an encyclical addressing the dangers in both unrestrained capitalism and totalitarian communism:
It is a fundamental principle of social philosophy, fixed and unchangeable, that one should not withdraw from individuals and commit to the community what they can accomplish by their own enterprise and industry (Quadragesimo anno, 79)
a community of a higher order should not interfere in the internal life of a community of a lower order, depriving the latter of its functions, but rather should support it in case of need and help to co- ordinate its activity with the activities of the rest of society, always with a view to the common good. (Quadragesimo anno, 184-186.)
This is the essence of subsidiarity, which along with solidarity forms the two pillars of Catholic social teaching: We start by first recognizing the God given dignity of the individual human and then concern ourselves with the pursuit of the common good.
So how can the CEO or business owner structure their company according to subsidiarity?
First and foremost, employees, customers and vendors must be treated with the dignity that is inherent in them being created by God. Provide where possible flexible schedules so employees do not need to compromise their family life. Provide goods or services that meet true human needs that improve the common good, as opposed to marketing to unhealthy or destructive desires (in theological terms: sin).
Secondly, where possible, empower employees with the authority to make as many decisions as can be allowed by their capability. Provide training to employees to enable them to become more involved with the mission of the company and provide opportunities for advancement. Doing this will allow middle and upper management to have more time to work on higher level tasks and create a corporate structure with fewer layers of management.
It is important to note that subsidiarity works both ways. Tasks which cannot be managed at the lower level still require and even demand an upper-level manager to make these decision for the better of the entire organization. Small businesses more naturally fall into a Subsidiarity organization.
A small medical practice, for example, outsources bookkeeping, IT, and billing to outside small local businesses expert in these areas and empowers the medical providers to act independently. Another example is a mid-sized company that has several business units including nursing homes, home health, and technology services that each function independently but have a separate sister management company that provides accounting, Payroll, IT, and HR sharing the expertise across several related companies. This can also work in the very large organizations, an example of which is Koch Industries, Inc., which created what they call Market Based Management (MBM), a system that rewards individual employees based on proven contribution, empowers employees with decision rights, and leaves each division to manage almost all day-to-day operations as long as it is consistent with the overarching principles of MBM that drive the company.
Insofar as Catholic teaching is the truth, it has something to say about every aspect of life including the company org chart.