TiasNimbas Graduation Speech by Professor Sylvester Eijffinger on December 16th, 2011
Introduction
Dear Deans Dixon and O’Callaghan, Dear Graduates, Dear Guests:
Welcome and Good afternoon. As Fellow of TiasNimbas and President of the Tilburg University
Society, I am very honored to be here, and to give this year’s Graduation Speech. I welcome the
opportunity to talk about some important benchmarks in your careers. But first let me begin by
extending my congratulations to you all for your great academic achievements. Graduation from
a prestigious business school as TiasNimbas is one of those key milestones that will mark your
lives. As you advance in your careers, your business school years will remain a reference point, a
beacon that helps measure your progress and that guide you as you choose your path through
life. You are the bearers of human capital, hope and honour. I would like to discuss in my
Graduation Speech these H-words and what they imply for your future career.
Human Capital
All established companies nowadays have a staff department, which is often called Human Resource Management. They know the importance of human capital as the critical success factor of
our information and services economy. Many CEO’s of companies and politicians in office do
not consider the benefits of investments in human capital because of their short horizon. Although the financial crisis showed us the risks of focusing on the short term, the effects of investments on the long term still are not included. Why is it so difficult to see the crucial importance of human capital in times of savings? We mostly speak of capital when we mean material or financial matters. You hope for a positive return on keeping the capital and the investments you made in it. That usually means that the profit comes after the costs that are initially
made. Our ancestors of the VOC – the first multinational ever - knew already that ‘de cost gaet
voor de baet uyt’. You would wish that both CEO’s and politicians would treasure investments in
knowledge and skills, in education and research as capital: a controlled stock which has a certain
value. Unfortunately, they forget qualitative aspects such as the effects of the investments in education and human infrastructure on the development of productivity. They seem to regard things
like education, human infrastructure and research as consumer goods. Their models certainly do
function for the short, but not for the long term. Concerning the ageing population we only focus
on the costs, not the benefits such as the expected growth of the productivity. In addition, future
generations inherit a production potential in the form of capital, knowledge and intangibles. And,
they capitalize on better technological development. Should countries invest more in education
and research to promote economic growth? To answer this question you have to measure the effects of education and research on growth. Harvard economist Philippe Aghion clearly showed
how strong investments in education and research contribute to the growth of productivity. For
highly developed countries education investments – especially in higher education – foster technological innovation, thereby making capital and labour more productive and so generate more
growth. With the tendency of outsourcing and the world-wide division of labour becoming more
virtual Western economies have to create production processes of high quality. Otherwise, they
cannot face the competition, for high productivity development is crucial for future development.
. In our modern economy and our technologically more advanced world, skills conferred by
business school education have become more important. Modern economies depend upon modern technology. What do you need to build these technologies? Human capital! And only with
good human capital you can effectively utilize the technology. The technological processes
change continuously. This means that there is an ongoing need for investment in human capital
by education and research. To quote the Red Queen in ‘Through the Looking Glass’ by Lewis
Carroll: “It takes all the running you can do, to keep in the same place. If you want to get somewhere, you must run at least twice as fast as that”. Welcome to this new world of running!
Hope
Famous for their Dutch spirit of commerce and broad outlook, the Dutch merchants crossed the
world in the Golden Age looking for new foreign connections. Almost four centuries later, globalization is a process tangible in every Dutch living room. But instead of giving the people of
today the chance of discovering the whole world, the intangibility and the lack of certainty within the process have made the Netherlands and other Western democracies more inward-looking.
World-wide economic cooperation is possible, enrichment of people of all continents is attainable with only one click. But the globalization also made old certainties disappear. Think of the
big changeability in the business world with dissections, outsourcing and reorganisations? New
threats have arisen. The cross-border character of the activities makes them less tangible for national governments. Governments and the business world seem to hardly communicate with each
other. The political landscape has become fragmented and instable. The middle parties are no
longer able to give clear answers. The extreme parties to the left and the right have drained off
the electorate from the middle, although they do not offer realistic solutions. How can we interpret this political instability economically? And, where can we find a way out? Looking at society we see the middle classes being afraid and insecure. It feels itself threatened and unprotected
by the political and economical elite – whereas the lower classes still do have the security of the
welfare state and the higher classes can protect themselves by their strong positions on the labour
market. Tax increases do hit the middle class most. They do not accept this anymore. The political and business elites fail to win the trust of the classes. So, that they begin to mutiny, what we
see in several Western democracies. A lack of trust and a surplus of fear within society are fatal
for social cohesion. People seem to be satisfied about their own lives but unsatisfied and even
worried about Dutch society and politics. Because the worries of the people are not on the political agenda, dissatisfaction and unrest emerges. Many politicians and business leaders do not
seem to know what is going on in what used to be called ‘main-street’ and lack good stories. The
economic elite created the growth of profound distrust in them even more by themselves: by living in an abstract world that was dominated by money and information, an own cosmopolitan
culture with the footloose adage: money and information without any link to the worries of the
people around them. The political and business elites give little direction to the largest worries of
people: the challenge of the multicultural society, the rise in the ageing population and the question if we can actually afford the welfare state. People react conservatively and reach for existing
certainties. Disorder and uncertainty in society makes people yearn for structure and clarity. That
can be find in stereotypes, pigeon-holing someone creates clarity. The extreme political parties,
both to the left and the right, do have simple, clear mantras for social problems. As the French
used to say: “Les extremes se touchent”. The middle classes turn to these extremes of the political landscape, although that is opposed to their self-interest. What is needed to prevent these stereotypes? To quote the sociologist Max Weber we need ‘Hoffnungsträger’, leaders who can give
the citizen direction and hope. Hope can lead people to a common perspective bigger than themselves and can stimulate unselfish behaviour. Bearers of hope can interpret the current upheaval,
dare to name problems honestly and give meaning to the anxiety by offering meanings with perspective. When society asks for that kind of perspective, it is the responsibility of the elite to
show social engagement and to voice the intuitions and fears of the people with great perspec-
tives. Universities have the chance to train these future bearers of hope well. When they additionally increase their relevance for the city and the environment, they will boost the cohesion
and certainty in society too.
Honour
What would you prefer: striving for money and fame, or striving for ambition and honour? Perhaps, the answer depends on the culture of the company or institution to which you belong. The
financial and economic crisis has shown us that the current ‘what’s in it for me’-culture does not
foster honourable behaviour. It should be noted, however, that both moral and immoral behaviour can work contagiously. Furthermore, within the world of morals, an assessment of the behaviour of others plays a part. Bad example is followed by bad behaviour. When people become
calculating individuals, codes are needed to maintain checks and balances. What does this mean
for professors and students of a business school such as TiasNimbas? When the confidence in
people is high within an organisation, the organisational processes run smoothly, the results are
good, and the atmosphere is pleasant and dynamic. People feel they are to an increasing degree
part of the community being constructed by the organisation. Here at TiasNimbas, our community should be a place where people accept their commitments to the group and where well-defined
governance procedures guide behaviour for the common good. The introduction of a code of
honour could further encourage the development of this kind of business school community. A
code of honour makes the values and standards of the community more explicit. It defines what
constitutes honourable behaviour. It contributes to the debate on the campus about the importance of integrity. It fosters social discipline. Such a code not only protects the rights of everyone in the community, but also signals the importance of basic moral obligations and strengthens the habit of ethical behaviour. Those who do not act honourably could be subject to various
sanctions. In the worst case, students not keeping to their word and thereby breaking fundamental norms could even be expelled from the institution. Of course, a code has to be part of a process of thinking about the code. As the Rotterdam business ethicist Muel Kaptein puts it: “A
code is nothing, coding is everything”. Members of management too have to communicate about
which principles everyone wants to tackle. Professors as well as students are part of the business
school community. Organisational citizenship can likewise be expected from students and it is
with them that this citizenship and the leading organisational values have to be discussed. In No-
vember 2009 the present Academic Dean of TiasNimbas, Professor Philip Joos and others argued
quite vigorously for ethical education in their note “Do the right thing”. It appears, however, that
a wake-up call is still needed about virtues, values and standards. Virtue is based on the expectations of someone else’s virtuousness: when you expect other students to behave more or less according to the rules, you will be inclined to do so, as well. When other students observe the rules,
it is easier for you to comply with them, because you can be confident that the other students will
not commit fraud or other acts of non-ethical behaviour. Conversely, when others are not so very
particular, why would you be? Wouldn’t you feel treated unfairly when only you observe the
rules they do not take to heart? Therefore, a robust code of honour would be Utopia for every
business school or university, in particular in light of its ambition to transfer more than professional knowledge only. Recently, the Rector Magnificus of Tilburg University, Professor Philip
Eijlander spoke at the opening of the academic year about the University imparting to students
more than just knowledge and insight: both TiasNimbas and Tilburg University want to give
their students a sense of responsibility, the power of judgment, and ultimately wisdom. How
would these aspects flourish when they would be fully rooted in a students’ code of honour!
Conclusion
This is what I have learned about the three H-words - human capital, hope and honour - during
my career as an academic and policy advisor in the last 25 years. But now let us bring it back to
you, and the great achievements you are being honoured for today. Your experience here at
TiasNimbas has given you many of the intellectual and practical tools you will need to move
forward to the next step in your career. You are the real bearers of human capital, hope and
honour for the future. You have, as the honourable graduates of TiasNimbas the power to
empower the powerless in society!
Congratulations to you all!
Thank you.
Utrecht, December 16th, 2011