Wednesday, November 2, 2011

Corporate Responsibility

One of the themes of the Occupy Wall Street demonstration and its offspring demonstrations around the nation is “Corporate Greed”. There are also complaints about the unfairness and abuses of the capitalistic system. Can we do better than the capitalistic system?

As of now, capitalism is the best economic system devised by man. However, it has its risks, so that’s why we have laws and regulations. A totally unregulated economy will result in abuses. Despite our system of laws and regulations, “corporate greed” has resulted in all kinds of problems, including our current economic crisis. On the other hand, the economy can’t be over-regulated or it won’t work as efficiently. What we need are more enlightened and socially responsible corporations and labor unions.

What does an “enlightened” corporation look like? Right now, corporations are all about maximizing profits, paying their top executives very well, increasing market share, and striving to prevent more regulations from being enacted. An “enlightened” corporation realizes it has multiple constituents and many responsibilities that it must take into consideration and serve. So it must balance these priorities effectively. Who or what are these constituents?

Shareholders: at the heart of the capitalist system is investments made in a business by investors, which can be pension funds, mutual funds, individuals, unions, etc. For the capitalist system to succeed, there must be a fair return on investment. One way to improve return on investment is to not pay top executives outrageous salaries, bonuses, and granting overly generous stock options.

Employees: the employees must be given a fair wage, must be provided with competitive benefits, and must be treated with fairness, dignity, and respect. The employees must, of course, give a fair day’s work for a fair day’s wage, not demand wages that are out of line with the industry, not go on strike, and follow company policy.

Customers: without customers, a business will quickly fail. Customers must be provided with safe, good quality, and innovative products that deliver what the company’s salespeople promise.

The Nation: the corporation has responsibilities to the city and country in which it is located, and these include no polluting, no exporting jobs overseas, payment of taxes, following regulations and laws, and generally being a good citizen.

An “enlightened” corporation, following these guidelines, would minimize “corporate greed” and make a positive contribution to society. Employees would feel secure and have more loyalty to the company.

You can’t legislate this, but hopefully companies will see the error of their ways and become more enlightened. Let’s pray it happens soon.

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