Dear Friends,
It seems to me, the purpose of a corporation, is to provide a return on the shareholder’s investment, it is in the accomplishment of that goal where confusion might come in. There are as many opinions about how a company can get the best returns for the shareholders as there are people. In most cases, the executives of a corporation have a different opinion, than someone who owns the firm himself. While there may be legitimate differences in opinion about the best way to get profits, there can be none about the purpose of a corporation. It was started, grown and matured to make money for the entrepreneur who created it, investors put money into it to get a return, and the employees work for a wage, the executives do not work as charity nor would they. It’s fundamental purpose then is to earn money.
How is getting a high and sustained return on investment best done? The way an owner runs a business is far different than the way a professional executive runs one. We can see this clearly by examining the life cycle of a company. They are born by entrepreneurs, who nurture them into empires of commerce, by rewarding hard work, keeping costs low, streamlining processes, worshiping customers and bending over backwards to meet their needs and wants, along with other outdated and inefficient ways to make money. Wall street is where companies go to die. Once the entrepreneur is too old or wants to move on, she will sell the firm to Wall street. If she continues running it, it usually does fine. If she steps aside or is forced out, for more “intelligent” management though, the company eventually fails.
Apple is just one such company. Steve Jobs and Steve Wozniak built the firm into a cutting edge technology company. Then sold it to Wall street… and were promptly forced out for more “wise” executives. Soon the company was teetering on the edge of bankruptcy, despite having such “smart” people running it. Jobs was brought back to take the blame for it’s ruin. Instead, he changed the corporate ethos back to innovation, valuing employees, especially the creative ones, and cherishing customers, then amazingly, the company rocketed back to the top. Steve Jobs has been dead a few years now, so Apple has changed back to a professionally run firm. Soon, it will be another once glorious company, become a zombie corporation, sustained by cronyism and eating the brains of smaller firms.
Drawing from company histories, it seems clear that when a firm is run by it’s owner, who has a stake in it, it’s reputation, and it’s profits… great care is taken to get and maintain quality employees, be a good neighbor in their communities, provide quality products and services to customers, who are valued and know they are valued, innovate by cherishing and nurturing creative people, etc… in other words, earning their profits. Corporations run by professionals, on the other hand, have a totally different idea how a company is profitable. They squeeze the employees, until all the best people leave, lower the quality of the goods, shrink package size, knowingly sell defective products, commit fraud, and seek cronyism… they embezzle, defraud and rip off for their profits. So progressive!
Today the people who run our corporations make millions, even when the companies they run lose money and pay huge fines for criminal fraud. Playing Three Card Monte, CEOs (who are agents of shareholders) have signed a new statement of the purpose of a corporation. Shockingly, it is not to provide a return on investment to shareholders, it is to establish the premise the shareholders are of secondary importance. The flowery language, that mirrors the way the bourgeoisie usually run businesses, is nothing more than a red herring, the firms purpose is still to make money, for the executives and employees, else they will leave… just not for the investors. How psychopathically self serving of the new class progressive elite!!!
Sincerely,
John Pepin
