One of the great shames in business today is the attitude of maximizing profit above all else. This attitude or principal started to leach into corporate leadership’s psyche in the late 1960’s and early 1970’s and continues to be accepted as a truism to the present time. This concept that corporations must put shareholder profits ahead of social responsibility has made many people very wealthy but put an even greater number of people into very precarious financial straits and in some cases in the path of physical harm.

We believe that a business is a whole entity with many components and a good business has all those components including service working at their optimum.

When a business starts up it requires 1) a good leader. An individual who has a mission and goals. That individual needs 2) start up capital (investors) in order to obtain 3) materials and 4) reliable employees who will help get the business off the ground. The next thing every business needs is 5) customers and the best customer is a repeat customer. The best way to get and retain repeat customers is 6) service, preferably personalized service that makes that customer want to come back.

Delivering good personalized service requires money. Money for quality products and money invested in time to develop customer relations. With the original owner that is not a problem because that owner knows customer service is an investment into future sales.

As the business grows the original owner will payout the first investors and bring in new investors and increase the management team in order to expand the company’s reach. It is at this point that things start to change. New ideas and values start to permeate the way the business is run. The management team views the business as a product rather than as a personal creation. The new investors are looking at the business as a money machine and expectations begin to change. Eventually the original owner will find it harder to run the company to his or her liking and more often than not, find themselves moved out of the business altogether.

Usually with new leadership profit becomes the main driver and this of course makes perfect sense but several other components of the business may be sacrificed in order to realize this objective if the objective is to maximize profit above all else. These might include employee security, increased production, lower compensation, quality may be reduced from highest to good enough, customer service and support may be streamlined and loose the personal touch, etc.

We believe this concept, maximize profit, was introduced by American Ivy league schools such as Harvard and Stanford and was quickly adopted throughout North America and Europe. This idea was also quickly embraced by shareholders who then began to pressure Boards of Directors to employ CEO’s and corporate executives who could best implement changes, policies and practices that ensured the shareholders pockets were filled before the customer was well served and company employee security ensured.

As the digital age matures executives with sharp pencils have found clever and often ingenious ways to cut costs by streamlining service, consolidating production, collecting and monetizing information obtained while doing business, often without the customers knowledge or permission.

Unintended consequences
The original intentions of industry leaders were well meaning. After all, it was their job to run companies that were profitable and provide security to their investors.

Once the idea of, profit above all else set in, the old chestnut.. greed, stepped in and the game changed. Secure and steady profit was no longer enough.
Startups in the digital world were making vast unheard of share profits and everyone wanted a piece of the action.

Even Blue Chip stocks came under pressure to increase profits and deliver more value to shareholders or risk loosing investor money to the competition. Boards of Directors began to look for new blood to run their businesses and find them they did. Even governments got into the game, enacting laws that made it a criminal offence if it could be proven that the heads of Corporations and their executive did not do everything possible to maximize the shareholder’s investment. And thus for the last 20 years corporate social responsibility has diminished.

Some general examples of how that responsibility has been discarded are; companies have moved production operations off shore to take advantage of extremely low wages in under developed countries thus leaving employees and whole towns to fend for themselves. Corporate executives have fudged the financial records to hide debt and losses while taking bonuses and stock options in the companies they are driving into the ground, employee pension funds siphoned dry to cover losses and pay bonuses for management as the bailiffs seize the capital assets and escort long term employees out the door with nothing but a two week pay check to last them a lifetime. Specific examples of this would take too long to list but there is not one person in North America or Europe that has not had a personal brush with bad corporate behavior.

This short essay on this important topic is taking up more space and words than we normally allow so it is time to conclude.

Conclusion:
We now have identified some of the symptoms that manifest when ethics are depleted from the business world. And we know there is not much value in our continuous ruminating on the wrongs that have been done. We also believe the best course forward is to identify a new set of standards. Standards that are high enough to improve the quality of life for the people and societies affected by business but not so high as to make it impossible for a company to run, set down roots and make the grade as a blue chip organization worth investing in.

Sullivan