Here’s a discussion with a journalist who has been covering corporate scandals since the late 1990s, and BOOM:
After years of writing about businesses gone awry, McLean has some ideas about what makes well-run companies. In those, she says, executives’ financial incentives are “aligned with the well-being of all stakeholders,” including employees and consumers, so that “you actually provide a safe and remunerative work environment for your employees and provide products or services that are really offering a value to the world.” A well-run business doesn’t drastically raise the price of an old drug or peddle loans to people who clearly will be unable to repay them, she says.
This should be a “no shit” moment for most people. Unfortunately, it’s not.
Another good quote from McLean
Would be this:
Haha, yea. Enron ring a bell? Most Pharma companies? A lot of banks? Sad.
But often true.
Why does this happen?
Short-term focus and greed is the main intersection.
Another culprit is “We believe the goal of work is profits,” which is in fact NOT true. The organizational actions that underscore work should create profits — in a for-profit, they essentially must — but profits are not actually the goal. I’d bet maybe 3 in 10 executives at big companies realize that.
Another problem is standard hierarchy — you make the most money possible by being furthest from the customer, so what incentive do you have to prioritize the customer’s needs, or the employee’s needs? Replaceable peons to many execs.
Still a different problem is how companies reinvest their money.
It’s all pretty fraught in white-collar enterprise. Thank God that’s not where most people work — although I’m not service/hospitality is that much better, honestly. (Certainly doesn’t pay it.)
When your leadership team always says “creating shareholder value,” it means…
… “we care about the money and the investors and that is it.”
That’s what it means.
Really the only thing it can mean, honestly.
These are horrible places to work unless you’re close with the power core or the salary is so good you can tolerate the shit.
Get out if you can.
Whenever you go a trade show and see a startup talking about this, it means:
- “We don’t really have a fully-formed business model or idea of what we’re doing.”
- “But we’re trying to placate those with the money.”
If a place like that pops and scales, it becomes a hellhole for Employee No. 32 — but Employees 1-10 are probably vacationing in Fiji, so fuck No. 32, right?
How do we fix this?
Short-term thinking and greed ARE at scale and won’t go anywhere, so it’s hard.
A few things we can try:
- Promote more women into leadership roles
- Try to hire for soft skills
- Understand the tie between “mission” and profits
- Try to be more compassionate as a workplace
- Care about your employees
- Pay people what they’re worth
- Change your bonus structures
Those are just a few ideas off the top of my dome. But this isn’t getting solved tomorrow. And somewhere, today, in a hotel ballroom, some SVP will whisper into the wind that’s he focused on “creating shareholder value…” and BOOM, the cycle renews…
You should also add to the list “long term thinking/goals”. I’ve seen too much ‘fire fighting’ mode in businesses scrambling to put things back on the track because of the failure to think long term. By their very nature, the thinkers who think of long term objectives , are not your flashy stereotypically extroverted sales guys. And we know that western ideals favour the brash in-your-fast quick thinking on-the-fly, shoot-from-the-hip person. So being a long term thinker makes it difficult to survive in our current western mindset. You’re just not exciting enough. We like to ignore the potential ramifications for quick thinking flashy hero leaders.
I’d concur with your observation Michael, and add from my perspective in the nonprofit world that this is a trait shared by many fundraising/resource development professionals (which roughly equate with sales in the for-profit world).
There is a tendency among many in the field to rush around to please donors to keep them happy (I know of one particularly egregious approach that uses the metaphor of a duck on water as an instructional approach to the profession — “look calm and collected to your donors and paddle like crazy under the surface to make them happy”), a culture that drives even those of us who are interested in long-term strategic planning/stability/sustainability to put out “fires”. It doesn’t give anybody the time to think things through, enervates otherwise intelligent, energetic people, and drives turnover/burnout. It’s my impression that turnover is especially rampant in nonprofit resource development, and I would proffer that this approach is a major culprit.
Now, maybe in the first stages of a startup business or nonprofit, rushing around/asking people to do the jobs of 3-4 staff members is an unfortunate reality of the situation, BUT the end goal is different—building capacity to get to the point where you don’t have to do that any more.
There is absolutely no good reason why established nonprofits (and by extension for-profit companies) with large budgets and years of experience should be continuing to espouse these practices aside from managerial/executive laziness (resorting to “that’s just the way it is” excuses rather than thinking about how to fix it) and a damaging tendency among senior leaders to emphasize “accountability” (read: “do this or you’re fired”) among their staff. In that regard, I’d offer that organizations frequently hire and promote people who are not suited for leadership roles, thus tacitly reinforcing bad behavior and promoting a poor workplace culture.
Cheers!