The starter said the three guys were business colleagues and good golfers when he assigned me to play with them. I knew that he was only half right when we hit our tee shots on the first hole. The first two, subordinates to the trio’s third member, Mr. CEO, were there solely to serve as fans of Mr. CEO and praise his golfing superiority. The next four hours would be painful for them. Mr. CEO would trounce his hapless mates, even with a swing that made him look like a badly wounded chicken.
As we strolled down the first fairway, I quickly learned that Mr. CEO loved to brag about himself and his company. He was the President, Chief Executive Officer and 80-percent owner of some kind of distribution company that apparently was quite successful and employed about 150 people, the great bulk of whom were low-paid, blue-collar workers. As we approached the first green, he was telling me about his company’s shrewd defined benefit retirement plan that socked away big tax-free dollars for the top dogs in the company every year.
He was explaining that the real key to the plan was an unwritten policy that only 15 percent of the company’s employees remain with the company for more than seven years. All other employees were to be cycled out of the company to protect against wage growth and limit any vesting under the retirement plan. As Mr. CEO spoke, his two fans smiled and gleefully shook their heads in agreement. Obviously, they were part of the protected 15 percent.
By the time I was standing over my four-foot putt, I had grown to hate Mr. CEO. When the putt lipped out, I hated him more. So as we walked off the green, I couldn’t help asking, “How do you feel about doing such an ugly number on all those employees who work hard for your company with the hope of permanence and stability?”
Mr. CEO’s inane, defensive, knee-jerk response said it all: “Well, well, it’s not about me. It is a policy of the board of directors, a matter that our corporate board feels is very important for the long-term stability of the company.”
Presidential hopeful Mitt Romney claims that “Corporations are people.” Is Romney right? The point he tries to make is that the economic benefits generated by corporate activity ultimately make their way to people – shareholders, employees, vendors, and all who deal with the corporation. But Romney’s economic benefit point, while accurate, should in no sense imply that a corporation can ever be viewed the same as a human being.
Sure, a corporation can own property, borrow money, sue, be sued, commit a tort or a crime, spawn offspring subsidiary corporations, and do just about anything that a human being can do when it comes to money and business. But, no matter how you cut it, a corporation itself has no values, no conscience, no ethics, no still small voice, or any other similar descriptor applicable to human beings. It’s a shell that is completely dependent on the values and ethics of the human beings who run the show.
And the sad reality, as my pitiful interface with Mr. CEO demonstrates, is that many human beings have no problem parking their values and ethics outside the door when they enter their corporate world. They will bust their tails to always insure political correctness, but the entity itself often provides a solid cover, a justification, even a compelling desire, for doing things that they would never feel comfortable doing as individual human beings. The entity is viewed as a separate being whose profit motives must always be served and never subordinated to matters of conscience. I’ve seen it more times than I can count. That’s why I always have a visceral reaction when anyone, like Mr. CEO, tries to justify personal actions or decisions for the sake of the corporate good or pass the buck to artificial corporate machinery.
What this means is that the corporate world, while not inherently evil, is inherently dangerous. Personally, I would never say the same about human beings, but I suspect some might.
So we really do need corporate regulation. But it’s foolish, and dangerous, to expect too much from such regulation. No amount of regulation will crack down on all the Mr. CEOs.
Smart regulation needs to be balanced and not driven by ideologies that push it towards an extreme. If there is no leash or the leash is useless, history has proven time and again that it’s only a matter of time before unrestrained greed will take its toll. If the leash is being pulled too tight, as it is today, the corporate world, like a scared dog, will sit tight for fear of the pain, and all will suffer as a result.
The U.S. Chamber of Commerce recently claimed that over-regulation is “the single biggest challenge to jobs, global competitiveness, and the future of American enterprise.”
The regulators are the key, far more important than the actual legislation that authorizes them to regulate. With all the talk of the consequences of Presidential elections – potential new legislation, new Supreme Court appointees, and the like – the ability to choose the regulators, and the regulator of the regulators, is one of the most compelling consequences. What we badly need are tough, business savvy regulators who can get the job done with a smart, balanced approach that’s consistent with robust business growth.
April 16, 2012