Monthly Memos

Common Sense And The Virtual Reality Of Numbers

Charles I. Mundale
Executive Director of MCCR

October 1994

"Cynic: someone who knows the price of everything and the value of nothing."

Given this definition, Elliot Lehman is certainly no cynic. Mr. Lehman knows the value of many things that he frankly and cheerfully admits he cannot put a price on. Coming from the former CEO of a company that has been making automotive gaskets -- and money -- for 76 years, this must be taken seriously. Is it not the business of business to create value and then put a price on it? Yet, there was Mr. Lehman telling an audience of 200 other business people at MCCR'S publication breakfast for The Work and Family Dilemma, that he had no idea how one could put a price on his company's many family-friendly programs. He knows what the programs "cost" in terms of direct outlays, but can he calculate a return on those investments in terms of increased productivity and profits? He cannot. There are no numbers for that.

Mr. Lehman, now retired, was the third generation in his family to head FelPro, Inc., a firm with more than 2,000 employees, in Skokie, Illinois. Two sons now head the enterprise, and they are continuing the policies which, Mr. Lehman said, just evolved.

To illustrate his point about the futility of trying to reflect all value in numbers, he told about a decision several decades back to install air conditioning in the company's factory. After struggling with the accountants to come up with an estimate of what increases in productivity might be expected, he gave up and asked a different question: Can we afford it?

His answer: Yes, we can afford it. Several weeks later, a strange thing was happening. People were coming to work earlier and staying later. The explanation? Their workplace was one of the few places they could escape the summer heat.

"Anything we can do to reduce the stress in our employees lives is bound to make them more productive. Can I 'prove' it with numbers? No. I just know it makes common sense."

Mr. Lehman's common sense is a needed antidote to our endemic obsession with numbers and its presumption that price is the ultimate verification of all value. The reasons for this obsession are complex and their origins often justifiable. Yet, an obsession is by definition a perversion of something reasonable in moderation. A proper concern for the numbers is obviously essential for business survival, but the numbers are an abstraction from reality, the reality of what real people actually do when they go to work or go to market.

The irony in capitalism is that money -- the air and blood of the system -- creates a virtual reality of numbers with its own dynamics of powerful incentives that can subvert the actual reality. In other words, for people in actual reality, money is a means to accomplishment; for those seduced by the virtual reality, money becomes a means only to more money.

Adam Smith's logic in defense of the self-interest of the local butcher has to be stretched pretty thin to justify the machinations in the virtual reality of our financial markets and the short-run imperatives they inflict on the actual one. We should not be surprised by the magnitude of cynicism this disconnection induces. Yet, the common-sense antidote of Elliot Lehman and his like remains a hard sell.

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