This is the third in a series of articles about the model corporation, one that doesn’t exist in real life, or at least doesn’t exist as a corporate member of the corpocracy. In the previous article a model corporation was described as one not being tall or big. In this article three more features are added; responsible ownership, governance and leadership. Having a model of a great corporation matters if, and when, the opportunity arises for self and/or externally imposed corporate reform.
Responsible Owners, Not Just Investors, Especially Not Speculators
Corporate members of the corpocracy are public corporations, “owned” by investors. The quotes are intentional. Most investors trade their shares in a particular corporation in a few days or months. These investors are like renters of vacation units caring little about their long term upkeep. Long term investors in the stock market aren’t much more responsible, even those who invest in so-called “socially responsible corporations” (show me one).
Aristotle told us long ago that making money from money was “unnatural” and an immoral form of economic activity. Unless, and until, Wall Street is dismantled we will continue to have CEOs of public corporations driven to unethical decisions by the pressures of quarterly earnings, quite apart from the temptations offered by their government patron. Ironically, most big corporations are cash cows that do not really need Wall Street (but desperately need the government), and start-up companies can go to bankers or private investors for loans.
But a model corporation would not be a public one, or at least it would be a very different kind of public corporation. Ideally, a corporation would be privately owned by its most important stakeholders. The cooperative comes closest to being a model “corporation.”
Responsible Governance, Not Warped Boards
One meaning of “warp” is to guide a ship, and boards that let their owners’ corporate ships run afoul are not all uncommon. A warped board, in short, holds the wrong view of what corporate performance should mean; lets the wrong CEO be chosen; lets the corporation be misled and mismanaged; and allows lavish rewards for negative successes and even negative failures. With this kind of board in place short performance, or negative manner of doing business and negative failures and successes, gets a head start and never looks back.
Straightening out warped boards requires getting the right directors and adopting the right board process. There can’t be one without the other if a public corporation is to look and to act like a model corporation. More on that point in the last article
Responsible Leadership, Not Imperialistic CEOs,
The highest proof of virtue is to possess boundless power without abusing it.
— Thomas MaCaulay, UK Historian, author, statesman, 1800-1859
Imperialistic CEOs of public corporations, having already been pre-chosen usually by outgoing CEOs, are hand stamped by their boards. CEOs of large corporations have boundless power. It can be a heady power, and “if you’re not careful, you’ll be seduced,” said a former CEO in an interview. 1 That observation was made over 20 years ago but is no less valid today.
What makes CEO power dangerous is the CEO being in the deadliest industries, most particularly, of course, the “defense” industry and the CEO’s psychological makeup, to wit: moral frailty; materialistic; ambitious/greedy; narcissistic, and, if that isn’t enough, to make the CEO rob America, add his (almost always male) being narrowly educated (meaning steeped in financial management).
But wait just a minute. There would be no CEO at the top of a lowerarchy. First, the top would be glued to the bottom, not separated by value-subtracting layers. Second, the lowerarchy would not be leaderless, but the leadership would be starkly different and better. The leadership would be a team made up of rotating members of self-managed teams; more on that point in the last article. Sound unrealistic? Maybe in a public corporation, but not in a private lowerarchy.
We are picking up speed for the moment. This article is shorter than the first two. The fourth and fifth on corporate culture and corporate performance management may be a bit longer, and the sixth on corporate reform will probably be the longest.
- Byrne, JA., Symonds, WC., & Siler, JF. (1991). “CEO Disease: Egotism Can Breed Corporate Disaster”, Business Week, (cover story), 52-60. [↩]