Wednesday, February 28, 2018

Business Ethics

I used to believe the purpose of a corporation, my corporation, was to maximize shareholder value. It sounded good when I read it first in Neal Stephenson and when you're dealing with a single digit net profit in a typical retail store with hundreds of thousands of dollars in sales, it's important to keep your eye on the ball. Maximizing shareholder value was a survival tactic. Later it became a way to avoid buying unnecessary stuff, what my investors referred to as "pimp value." I could justify a pinball machine or a van with a dragon on it through various logical gymnastics, but they eventually went away as they did not maximize shareholder value.

I don't believe my job is to maximize shareholder value now. Things have changed. This maximization was a tactic to obtain profitability, and with profitability, you discover strategy. My strategy, when I'm profitable, is when I have the chance, to make things better. It's amazing what happens when I'm not refreshing the checking account balance twice a day. There is time to think about long term goals.

Making things better might mean supporting a veterans group or giving vast amounts of games to Toys for Tots. It means having a zero tolerance stance on bullying and socially unacceptable behavior, even if it means banning long term customers. It means we have a succession plan in place to keep the community alive if I get hit by a truck. I can think of a dozen things I should be doing, but I'm not due to our just alright financial position. This is not to say I'm some great leader in the community, as I've spent most of my time hurtling towards the ground and just barely missing.  If I can do more, I will, and the reasoning is if I don't, who will?

We've got a federal government captured by crony capitalism who wishes to pretend the system isn't rigged, while rigging the system. We've got state government that wishes to legislate prosperity, even though they have no idea how prosperity occurs. They're happy to let the chips fall where they may, because they'll still be there, along with their high value donors. In other words, I've lost faith in our leaders, and the last leadership pillar left, the last ones not captured and corrupted entirely in this country, are small business leaders, who have their finger on the pulse of the community. I've essentially lost faith in humanity, lost the ability to believe that collectively, through government, we will act in our own best interests. Those who can make positive change, should make positive change.

I also can't handle the reality that if corporations are deemed to be people, with their own voice, and their purpose is to maximize shareholder value, then all corporations are essentially rapacious assholes. I suppose the key for a larger corporation is to express values and make sure leadership, including boards of directors, are on board with not being rapacious assholes. If you're just starting out, perhaps have this conversation. Thankfully, we know pursuing a strategy of ethical behavior, both in investing and business management, pays off quite well. It's just hard to put that strategy in place when you've spent years contorting yourself, trying not to hit the ground.

No comments:

Post a Comment