Random Musing About Corporate Nature

I find myself wondering, this morning, how feasible it is to manage what I consider to be a more socially responsible business. Also wondering what that even means to begin with.

It’s something I keep coming back to as I watch the overall flow of corporate behavior both as a citizen observing from outside and an employee observing from inside. I suppose it’s worth pointing out that I have no education in business management, nor do I have significant experience in management other than the lowest level which really isn’t the same scale I’m talking about here. So it’s rather likely that I am extremely misguided in my opinions. I do know, however, that most of what I speak of here refers specifically to publicly traded companies. Privately owned is a slightly different situation.

As I watch, though, it seems to me that most corporations exhibit very animal like behavior. They claim and protect certain territory that they operate in, market and market share. They actively pursue self preservation, usually seeking to maintain the status quo where possible. They also constantly strive to expand, to increase value. This isn’t to imply that any of these are wrong or bad either, just an observation.

A lot of it seems to be an outgrowth of human nature. Let’s face it, everyone involved, including the all important shareholders, are human. It’s no real surprise that the institutions we create reflect our own tendencies.

They make poor choices, they get desperate when times are tough, some are even willing to lie, steal, and/or cheat when it gets down to it. Enron comes to mind, as do the tobacco and oil industries in general.

It’s really easy to chalk this up to general greed on the part of CEOs and shareholders, because those are the people we tend to see benefit from the more inconvenient actions. Why are we constantly asked to do the same amount of work with less resources? Lower bottom line means more profit, more profit makes you more valuable to investors, more value makes the shareholders feel like they made a good choice. A lot of it does boil down to the shareholders. Collectively they hold the real power, though I can’t imagine they really cooperate any more than a herd of cats.

The big question becomes though, given the amount of power these large “organisms” have, do they have an obligation to affect positive change? If I spend years of my life building a successful business, what obligation do I have to share the love, so to speak? If you spend years of your life building a successful business, what obligation do you have? What obligation do the shareholders have?

Traditionally I think these obligations were imposed and tolerated in the form of taxes. The theory being that giving a share of you income/profit to the government to fund and maintain projects that benefit society. In theory, maximizing profit should also be increasing tax revenue and allowing higher wages. An old fashioned “trickle down” sort of idea that helping The Man ultimately helps you. This really hasn’t panned out in reality and I personally tend to think of “trickle down economics” as The Man peeing on me.

Assuming that a corporation is trying to be “socially responsible” or whatever, is that economically viable? Your irresponsible competitor is going to have a financial advantage over you in the market place and have a more attractive bottom line. Is it even possible to remain competitive like that? I suppose you could, if you manage to market it properly, but it doesn’t sound like an attractive business plan.

I think I need to spend some time fleshing out the idea of what “social responsibility” even means to begin with. I’ll add it to the list of post ideas. I’m only thirty minutes away from my rather loose “deadline” of 10 AM and that’s not enough time to flesh that out in a coherent manner. If any of these sort of posts can be considered coherent to begin with.

10 thoughts on “Random Musing About Corporate Nature

  1. My wife is pursuing her Bachelors in Accounting, she has had several courses dealing with business accounting. With what I have learned from reading along, is that running a successful business is in itself a full time job. That CEO we think is ripping off their employees, look at all the money they make. Certainly they make huge salaries, but it’s the unseen, the landscaping company they employ, the local arts company they support, the fund raisers for the local schools they chip in hundreds of dollars without thought. It is fascinating to learn the downside of that level of employment.

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    1. There was a “Secret Life of a CEO” series on the Freakonomics podcast a while back that went into some of this. It certainly shows a much different side than popular opinion currently holds. I simply don’t want to put in the kind of hours they do. I can barely manage life working 10-11 hours five days a week. I can go home and it doesn’t follow me.

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      1. I work for a small company. I see what my boss ha to deal with. Spending a week every year trying to weigh out what health insurance we can afford to have. When jobs are behind schedule being here at 3 in the morning. Wondering if we can make payroll next month. There is a lot more than him coming to work and collecting a paycheck. Sure there are years we do well and he gets a decent pay at the end of the year. But years we don’t? He might not collect a paycheck for months.

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      2. Oof, yeah, that’s rough. Similar to why it’s on my mind too, though my employer is much larger, 1500ish people? Not sure on the exact number.

        Insurance changes are in the wind though. We get a choice this time, same coverage for higher premiums or less coverage for the same premium. Combine that with an unpopular wage structure, a draconian attendance policy, labor shortage, high turnover, and a less personal form of management. Morale is… bad. Even some of the upper management folk have bailed.

        At the end of the day though, I’m not sure the business can really help it. They’re self insured, so they’re getting eaten alive by medical costs. Changing the unpopular wage structure would dramatically increase operating costs or drive the old hands out the door.

        Yeah, they should make some improvements to their attendance policy, but they barely have enough people to operate as it is.

        I don’t honestly know if they can even afford to fix these problems and I don’t know if that’s reassuring or concerning. I could probably ask, but I don’t know how much they would be willing to divulge. The wrong words to the wrong people would make things so much worse.

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      3. Yeah. Many years ago self insuring was a way to get around state and federally mandated insurance coverage rules. It’s come back to haunt many companies where the insurers are denying compensation for claims the company has paid out.

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      4. How many years ago? As far as I know they’ve always been self insured. At least as long as I’ve worked here, which is around 12 years.

        Also not sure how denying compensation for paid claims work, as I assumed the business just paid whatever bill the insurer passed along, but medical billing is… different, so that may be a factor.

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      5. As I understand it from my wife’s company. The company has Aetna as an insurer. Claims are paid by the company, and they submit them to Aetna for payment. She has heard over the years where people have gotten procedures done they thought were covered, the company paid, but was not fully reimbursed. I know the last 10 years there have been so many changes to what levels of coverage employees have to choose from it has gotten really complex.

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      6. Ah, gotcha. My understanding of ours was that the company pays everything, with no reimbursement, and BCBS is paid to do all the paperwork and administration.

        On the user side ours has been fairly simple, only on medical plan until now and only difference is deductable and out of pocket maximum. Unfortunately my per week premium is pretty much going to double. Think I’m going from $60/week to $105. I can’t access payroll at the moment because it’s switching hands also and the old login info is known only to my wife.

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      7. My wife’s plan is middle tier, and it’s costing her $75 a week. Mine in work is about as cheap as you can get, with high deductibles. But 0 out of pocket. The company had always maintained anything over $750 deductible for the year they would make up because the savings was so much. This year we got notice our rates are going up 40%. I was going to have to pay $75 a week, plus not get a raise. I am going on my wife’s plan as a spouse and my boss is going to raise my pay to cover the cost because it’s saving the company thousands.

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      8. I honestly don’t know what our deductible is, out of pocket maximum is around 2k with $60 copay for primary care and $75 for specialist. Spouses are required to be on their employers insurance as primary. My wife isn’t employed though, so that hasn’t been an issue. At least you got to help your boss out though.

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