One obligation: To increase shareholder value…
by Dan Crawford
Sometimes I will post an article without much of my own comment to offer points of view to readers from other sources. I have yet to find an op-ed that so clearly defines several points of view so well and clearly, so will offer it to readers and frame it my way:
The man has a point of view that I believe is often underlying the pronouncements of political leaders on economic beliefs bandied about the media. It is refreshing to see the op-ed be so clear. I am sure such zeal is needed to compete in the environment in Beijing, and to form the sales platform for his company’s ‘success’ in the first place, and perhaps to be reflected in stock price and/or dividends as part of shareholders’ measuring values.
I use the word zeal in a religious sense, as devoting one’s life to a cause that overrides other concerns that might occur to him, as sometimes regrettable consequences of his actions but hardly part of the conversation in the planning room.
Hence any considerations of cost remain focused on the bottom line of the company and ‘costs’ is defined as the bottom line of the company, others (not shareholders?) paying the consequent price of actions by his company being solidly in line with that zeal.
My concern with this point of view is not the man and his company…but why on earth would you want him as your friend back home? A distant neighbor yes, even admired for his adventure, but hardly someone you would trust to watch your back unless he owes you something like shareholder value in his company (not his competitor I assume).
“Trust us for your welfare” is the political posture, and really convoluted stories are offered to assure people it becomes somehow true, but I fail to see much connection to voter well being except by accidental consequence. But I do prefer that he be honest with me than sugar coat his intentions with a lobby and political pretension.
One obligation: To increase shareholder value…
Companies that are multinationals with corporate headquarters in the States, regardless of size, have no moral or ethical obligation to do what’s best for America or Americans – unless directed to do so by their shareholders. MNC executives only have one obligation: To increase shareholder value. That’s it. It’s that simple.
If offshoring will improve a Company’s bottom line, then so be it. If a U.S.-headquartered firm’s American shareholders don’t approve of a decision to offshore, then they can raise their concerns in a host of ways.
Taking this a step further from an operational perspective, the smartest and best American executives will pit China and India against each other. And they should. I know that a lot of Chinese and Indians don’t like to hear this, but once again, it’s a best practice if a firm is trying to optimize their bottom line
We’ve all heard the phrase, “God & country.” But it should really be “God & company” (assuming you believe in God). And if “God & country” is more to your liking, well, you can always get a job as a civil servant. Multinationals need executives with vision – a futures-driven global perspective – not executives biased by any sense of Nationalism. McLuhan was right: We’re in a global village. Act accordingly.
A couple of quick comments.
a) do it within the rules and regulations
b) as Henry Ford I came to realize, the workers are also the consumers, and better paid workers are more active consumers
no grey type on my computer. maybe that’s why i am so confused all the time.
Offended? I don’t know why they would be, it is the road to hell. Or at least, the road to one of many possible hells.
This is why capitalism and Christianity have irreconcilable diffeences.
“Seek first the Kingdom,” comes to mind.
No wonder the Bible talks so much about money, second only to speech.
Money does have many ethical and moral implications that go way beyond the “bottom line.”
the corporation has a process than mangles 20 workers every year. these injuries could be prevented, but at a cost. the “company has only one obligation… the bottom line” so it does not install the protective devices.
i hope anyone can see that that would be immoral.
Milton Friedman used to argue from this perspective all the time. There’s a clip of him on YouTube talking about a similar example as it related to the Pinto. As he may say, let’s say, instead of a $20 protective device to prevent the mangling of 20 workers, the device cost $200 million. Presumably most risks can be reduced to an infinitesimal amount with unlimited resources. Thus, would you still view the lack of installation as “immoral”?