Five I's for Business Economists
Small, Lawrence M., Business Economics
In many organizations, the Economics Department is regarded as an ivory tower; a staff function on the periphery of the organization, populated by intelligent, highly educated, articulate people who are often interesting to listen to but fundamentally not a part of the mainstream operation of the enterprise where they work. And while Economics Departments abound in the corporate world, they are rarely regarded as senior-level, critical functions deserving of key spots in the top management structure.
In my view, that is unfortunate, because many trained economists possess extremely useful skills that can provide real value to business organizations. But trained economists rarely have a significant impact on the organizations where they work if they are part of an enterprise's Economics Department. Almost always, the economists who have a real influence on institutional strategy are those who have left the Economics Department and gone on to other jobs. And plenty of economists have done just that. What can be done to change the common perception of Economics Departments, what can be done to heighten their importance and enhance their abilities to contribute to top level decisionmaking?
USERS' VIEWS OF ECONOMIC INPUT
My views, admittedly strong ones, on this topic, are based on thirty-five years of experience in the corporate world. I have served on the boards of directors of five New York Stock Exchange companies. As a banking and financial services person, I have been appointed to many investment, budget, finance and planning committees, not only of those boards but of the dozen or so nonprofit boards on which I have served as well. All of these committees have been the recipients of hundreds of presentations by economists, and I have been privy to the hundreds of conversations that have been held about those presentations and, naturally, the economists who gave them, after the presenter left the room.
What has always troubled me is that, more often than not, the behind-the-back comments about the very obviously intelligent, thoughtful, higher educated economists making those presentations are generally lighthearted, but mildly sarcastic, somewhat cynical barbs suggesting that what one has just heard should be taken with a grain of salt, is available from any number of suppliers of the same commodity, is "nice to know but not something we can or would act on" and other such obliquely (and sometimes, not so obliquely) critical statements. When you hear that kind of thing over and over for so many years, you have to say to yourself, "If this type of report is treated by its audience in such a cavalier way, why do they bother to continue to request it? Is it just some form of entertainment, an interlude provided to lighten things up or to fill space?"
Unfortunately, I don't believe I have the perfect answer to that question. However, I think what's going on is that people believe it's appropriate to seek interpretation of economic events, and they think it's appropriate to try to figure out what influence those events might have on the future. They also respect the fact that, to carry out the task of interpreting economic events and trends, you really have to have the appropriate brain power, education and experience. On the other hand, they do not seem, in most cases, willing to attribute enough credibility to economists who do not have hands-on business experience so that they react in a truly serious way to what economists say.
Obviously, that is not always true. There are any number of economists whose words are taken to be very relevant. But the number of meetings I have attended in my life where that was not the case has been quite significant. Consequently, I believe that business economists should be very serious about the serious question of whether they are being taken seriously. And if they discover they are not, and they are not doing what they are doing just for the occasional quote they get in the local paper, they should be asking themselves why not and, to the extent they can figure that out, they should then decide what to do about it. …