Wednesday, February 11, 2009

Post No. 86: A Few Thoughts about Corporate Responsibility Elsewhere


© 2009, the Institute for Applied Common Sense

Earlier today, on Public Radio International, we heard an interesting discussion between a public radio talk show host and a New York Times reporter. They were talking about corporate responsibility in Asia.

The broadcast reminded us of how self-righteously myopic Americans can be. We tend to view our way as the right way, believing we’ve attained the right to call ourselves the greatest country in the history of humankind.

We often fail to take into account that our history was preceded by several great empires, many of them strong enough to last hundreds of years.

We suspect that this hubristic attitude may have contributed, at least to some extent, to our current economic difficulties. That is why we frequently suggest that we “step outside of ourselves” in analyzing issues.

We stumbled upon this broadcast after it started, and at a point where the discussion was about corporate responsibility in Japan.

Apparently base Japanese CEO pay is only 15 times that of the average Japanese corporate worker, whereas in America CEO pay is 40 times higher. While sitting CEOs in Japan do receive other benefits, such as company vehicles, there is nothing even remotely close to bonuses in the 20 million dollar range. Moreover, corporate jets are a rarity.

When Japanese CEOs are relieved of power, according to the broadcast, a ritualized script is followed, and it is ceremonial in nature. It is recorded for the citizens to see. The CEO bows and transfers the reins of power. Although formally relieved of responsibility, he or she is kept on as a consultant, never actually leaving the fold. In the background, they continue to be of value to the company.

The reporter told of a Japanese CEO who stepped down last year, after only a couple of months in his exalted position at the top of a company. He had been brought in to turn things around, but was unable to do so in the short time allowed.

While addressing the public in his farewell speech, he began weeping. He asked that some other company take just 1 or 2 of his workers, inasmuch as it was his people who would bear the brunt of the company’s difficulties. The Japanese public noted his sincerity, because his gesture was apparently unprecedented in Japanese corporate circles.

(We recall an earlier PBS program about the differences between businesses in Japan, Germany, and America. It was noted that major Japanese corporations, during the Japanese heyday in the 1980s, continued to acquire loans from Japanese banks, even though they were flush with cash. They wanted to thank the banks for assisting them while they struggled to emerge from the ashes of World War II.)

During the public radio conversation, the reporter switched the discussion to China. He began, “The Chinese, well…” and realizing that he was trying to sugar coat it, simply said, “It’s pretty well acknowledged that they execute CEOs who fail.” He was referring to the executions of CEOs associated with the poorly constructed school buildings, which collapsed during the massive earthquake last year, not to mention the heads of companies who paid for the recent tainted food scandal with their heads.

The reporter noted that South Korean practice was a blend of what we see in America and Japan.

It occurred to us, as we thought about the whole issue of corporate responsibility, that while we here in America think of ourselves as being the best at most things, it’s quite likely that the one thing we may be better at than any other country is pointing our fingers at others. We choose to blame others for what has and is going wrong. It’s always the other guy. The last CEO. The last president. The other political party.

As our regular readers well know, this is not a religious blog. Still, the admonition in Proverbs 26:18 is worth remembering: “Pride goeth before the fall.”

If we weren’t so arrogant, and if we opened our eyes to the world beyond our borders and finally paid more attention to the practices of other cultures, might we not benefit, even just a little?

All systems have limitations. None is perfect. None is or can be all things, to all people, under all circumstances.

All approaches to solving problems have limitations, too. These days, with the world spinning topsy-turvy on so many fronts, and the economy being the most urgent issue on the table, “tried and true” solutions are as valuable as yesterday’s newspaper.

As our leaders go forward, searching for good answers, let’s hope they remain flexible and open to change if and when circumstances warrant it, which they no doubt will. If they wed themselves to rigid philosophy or point their fingers accusingly at the other side in their discussions, we’re all sunk.

That’s only common sense.

© 2009, the Institute for Applied Common Sense

20 comments:

  1. Before I comment on the differences and their value, I'd like to specifically address the issue of our being the "greatest country" vs empires that lasted "hundreds of years." Basically, apples and oranges. While we do have some of the trappings of an empire, we do not dictate how countries allied with us function nor do we extract tribute from those we have conquered. In fact, quite the opposite. We do not have an emperor, nor a king. In spite of the "no blood for oil" mantra shouted by those opposed to the first Gulf War and the second, we do not take over nations in order to exploit their resources. We do, after a war, occupy countries. But, instead of extracting payment from them to support said troops, we pay them for that privilege. I like what Colin Powell once said "And when all those conflicts were over, what did we do? Did we stay and conquer? Did we say, "Okay, we defeated Germany. Now Germany belongs to us? We defeated Japan, so Japan belongs to us"? No. What did we do? We built them up. We gave them democratic systems which they have embraced totally to their soul. And did we ask for any land? No, the only land we ever asked for was enough land to bury our dead. And that is the kind of nation we are."

    So I would say it is difficult to compare us with the empires of the past.

    Now, to compare our business culture to another nation's business culture is also quite difficult. Because each social culture has a large influence on how their business culture forms and evolves. What you see in US business culture with its huge "Golden Parachutes", it's incredibly high pay and perks advantages for high level execs is a result of the culture of free enterprise we have developed in this country in our culture.

    I see a bit of hypocrisy in that there seems to be a great outcry about corporations who provide jobs in the tens of thousands, good paying jobs, and provide a climate for tens of thousands more in small businesses who provide goods and services related to the corporations getting twenty million bucks a year and the adulation of, say, a George Clooney getting $15 for a dog of a movie that entertained a few people for a couple of hours and bored ten times as many. I won't get into sports stars...

    Yes, I would say our values are somewhat skewed.

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  2. I am sorry, that should read "$15 million for a dog of a ..."

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  3. I believe your statement that US CEOs get 40 times the employee salary is short by 10X. I read it is about 400 X.

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  4. Thanks Dan. We were just communicating what we heard during the broadcast. Our initial response was also to the effect that the figure was too low. However, after thinking about it further, we realized that this was probably for corporations of every variety and size throughout the nation, and not just the largest, most prominent ones about which we hear so regularly. It was also supposed to be the base pay, not the bonuses and incentives.

    Your concern regarding this point was actually the primary impetus for our effort to locate the actual transcript or podcast of the interview.

    This may not be a bad time also to mention something that occurred to us in the process. We recently heard a news analyst speak of how the public perceives their tax dollars are being spent. She noted the wide disparity between what the public perceives based on numerous factors, and what the analysis actually reveals, to the order of 5.

    The CEO pay disparity would be an interesting thing to research. Any of our readers out there have some time to dig around on this subject? We'd appreciate it. One thing which we always envisioned with this site is that it would be forum for all input, and not one where we stand on high putting out our interpretation of things. Thanks all.

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  5. Douglas: Several points.

    1. We did not suggest that we were the greatest country or that we were not, simply that some rabble rousers had, and we questioned the "value" to society of making such a blanket assertion. We weren't making the comparison. By making reference to the length of time that other empires reigned, we merely sought to suggest that there are other ways to measure greatness. We suspect that there are at least 100 other measures. And thus we are in agreement with you, that an apples and oranges comparison might be put forth. Our concern is the absolutists and the lines which they draw in the sand.

    2. An inquiry should be made of those (like Sean Hannity, Rush Limbaugh, and many puffing politicians), who argue that this is the greatest nation in the history of humankind, why they make that assertion, and on what it is based. To some extent, we strongly sense some arrogance there. We can't imagine telling anyone that we're the absolute best in history with respect to anything. How would they really know? They did not live back then, and history only goes back so far, before we have to call it "pre-history” where the evidence is sketchy, and of a different nature.

    3. Check out the history of Hawaii and the US's involvement with it. http://en.wikipedia.org/wiki/Hawaii

    4. Although the US did not occupy post-WW I Europe, historians generally agree that the Allies, the US included, did not build up the war torn areas which were defeated. The failure to do so is often cited for the rise of Hitler, and having learned that lesson, the Allies adopted a new approach following WW II.

    5. One can always compare cultures. You need only specify the differences from a factual perspective. The problems arises when one starts to perform a subject, qualitative, or even quantitative analysis, and starts using superlatives, such as best, better, worst, good, bad, etc., simply to suit their purposes and arguments. That's one of our problems today. People have a seemingly difficult time just respecting the positions of others, without have to suggest that one is better, or more moral, or more right minded, or more effective, than the other. How about just communicating without the value judgments built in?

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  6. I guess I have no real problems with the CEO pay IF THEY PERFORM. I do however really get ticked when these guys who lead their companies down the drain get that kind of money. You have to understand tho who votes the pay for the CEOs are members of the Board. These members of the Board are other CEOs from other companies probably some of which that particular CEO whose pay is being set also sits on. So one hand washes the other.

    I also have a real problem with companies not being held responsible for the work they do or the contract they signed. Bids are placed and contracts awarded then all of a sudden half way thru the job more money is needed. The cost over runs are common and should be outlawed if need be by legislation calling for honesty in business. The bid when given by a company should hold up unless it can be shown without a doubt that unforseeable circumstances arose. This just isn't the case in the US today and "cost over runs" are accepted as the way business is done.

    My next beef is companies being held responsible for the work they do. If roads don't hold up then the company that initially did the work should have to redo or repair at no additional cost. Companies should be held accountable. This works well in Europe and they have excellent roads as a result and seldom do new buildings fall down or need to be revamped. That cost even less than ours I might add.

    Now for Americans. So true, so true. We Americans do think we are the greatest. But it is not arrogance, but simply that we are unaware of the rest of the world. The rest of the world is very much aware of what is happening in America; all you need do is read their news papers to see this. I often get US news first from the Australian newspapers! And I believe I mostly get an unbiased story from the foreign papers concerning American affairs also, which is probably sad and says much about our MSM.

    But getting back to my main thoughts: Americans are simply unaware of the rest of the world and this is what gets us in trouble and why so much resentment is generated against Americans. It is a case of "Do anything but don't ignore me!" It is quite innocent and not meant as disrespect, it just is. Perhaps it is our size and with so much going on here that we don't have the energy or time to look elsewhere. I don't know, but I will debate as to its being arrogance.

    American, or the United States, was meant to be. It was I firmly believe Divine Intention that we exist at this time and place in history. How else explain how a rag tag small band of citizen-soldiers defeated the most powerful country in the world at that time? How else to explain how a Constitution and Bill of Rights such as we have was hammered out by a diverse group of men with no background that would lead them to making the kinds of decisions they as a group made. Ours was a form of government not known in the world at that time. In fact, not known at any time in the past except on a very small scale with the Greek city states. When you take the time to really read our Constitution and Bill of Rights and know something of the history at that time it is quite simply amazing. What's more, it is more than amazing that both are living documents and can be used to apply to today as well as yesterday. In fact, when we are colonizing outer space our form of government with our Constitution and Bill of Rights will still be a workable model. Just IMO BB

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  7. You have a lot of stuff there Brenda, a lot of with which we agree. Very nice analysis covering lots of factors. We'll get back to them in snippets. We will say this at this point: We believe that you are absolutely dead on with respect to America's lack of awareness or interest in things abroad. We might concede that it was unfairly characterized as "arrogance" with respect to the common citizens of this nation who comprise the vast majority of our population. However, our concern is the rabble rousers who advance their own selfish agendas, and not that of the collective nation, even though they own some portion of the bully pulpit real estate through their access to the media. Perhaps we characterized it as arrogance because our concern is that they do a disservice to the general populace. Imagine a coach telling his individual players that they are the best to ever play the game.

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  8. I see no harm in anyone expressing an opinion about the country in which they live. I see no reason to judge that opinion based on the political bent (or pomposity) of the person opining. And, yes, by referencing the opinion against other possible ways to determine the value of a country is expressing an opinion about the worth of an opinion. In simpler terms; ignore them if you disagree and then you are not making a value judgment. In return, I can then not feel motivated to comment on the missing judgment. Arrogance, like beauty, is in the eye of the beholder, I suspect.

    Yes, we meddled heavily in Hawaiian affairs and, essentially, stole that land. We also offered it statehood which it voted for. We also received a number of lands as a result of the Spanish-American War. We liberated a few (Cuba and the Philippines, for example) and retained a few as protectorates, possessions, and territories. Oddly, we are open to plebiscites concerning their status in relation to the US.

    Yes, we did learn from the mistakes made at the end of WWI. And they were made, as I recall, because of an unwillingness of Congress to stay engaged in global affairs but a general public desire for isolationism (essentially, "let's not be an empire"). Many factors led to Hitler's (et al) rise. An strong argument can be made that the Treaty of Versailles and the post-war policies of France and G.B. had much more to do with it than our own isolationism.

    Isn't a value judgment being implied by the comparing of various rewarding or punishment of CEOs? Especially the implication that a certain country's CEOs are being overcompensated?

    You invite commentary and you try to eschew a position or bias. But, as I have said before, that is not possible. A perspective, a viewpoint, will be evident in phrasing, comparisons, examples used, and so forth.

    By the way, in your last comment in reply to Brenda can you imagine how some people are more important than the law? That they are so needed that breaking the law is less important? Isn't there a form of arrogance in that? How about a sense of elitism?

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  9. As with many things in life Douglas, at some point (which we are not in a position to define), the expression of emotion /opinion becomes simply too much for the intended audience of a message to handle. They begin to tune out and numb themselves to achieve some internal peace.

    We have noted that much of what Michael Savage has to share is indeed valuable, but that the delivery diminishes its impact.

    The Logistician is a major fan of Pat Buchanan, and is happy that Pat has mellowed somewhat in recent years. He had so much to say of value, but lost many because of his tone.

    We imagine that it just depends on what one is trying to accomplish, and how much value one places on sharing it (which arguably involves engagement), as opposed to just being heard (which can be purely unilateral).

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  10. Log, I think it is commendable that you strive to "step outside yourself" to examine things. But things do not happen in a vacuum. Cultures and traditions tend to dictate how a culture evolves. They set a pattern. What works in one society may not work in another, no matter how much we would like it to. I have come to believe that we do examine how other societies approach problems and issues and that we do try adapt those things to our methods and our problems. Not all of them work.

    How our economy runs has evolved according to our culture and our traditions. It has evolved by the influx of various other cultures and their impact on our overall culture. We are not a homogeneous society. People do try to adapt other ways. I, who have worked for a large corporation that was dragged into the competitive market from a regulated monopoly saw it first hand.

    I do not see a crisis at this point. I do not like that we have Very Influential People running about stating that we do and only they have the solution or only they are behaving properly in approaching a solution.

    I agree with you that we do have a tendency, as a society, to point fingers, assess (usually on political or social terms) blame, and demand that "heads must roll." That does not make it right. Nor, ironically, does it make it wrong.

    We have a tradition, enshrined in law and court rulings, of freedom of speech. That means one may not especially agree with the ideas nor the method of delivery but they serve a purpose. We toss ideas out into the "marketplace" and we pick and choose which parts we accept and which parts we do not.

    If we try to dictate how those ideas may be expressed, we are likely to dictate what ideas may be expressed. I know that you actually do agree with that. I also know that want to have people work together to achieve a goal. I, however, think that working together in the wrong way, or for the wrong goal, is not a good thing to do. Competing ideas and concepts need to be examined.

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  11. Trying to change the view of upper echelon American corporate officers will require a fundamental change of character. That is not something that can occur overnight if ever. At present the best we can do is to ensure that they are subject to the same or similar consequences experienced by the rest of the corporate ladder and indeed the rest of the population. To date one of the most egregious violations that upset the general populace is the insulation from consequences that is "enjoyed" by people at the very top. For unto whomsoever much is given, of him shall be much required: and to whom men have committed much, of him they will ask the more.( there I go quoting from the Bible again)

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  12. Two points Douglas: (1)People ought to at least try to be objective; (2) when one enters a situation where people with divergent values and positions have to hammer out some form of agreement to advance the interests of the entire organization, and not just their own interests, and they remain fixed to their position or philosophy, it does not advance anyone's interests.

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  13. June, apparently the disparity in treatment is one of the issues about which the American public feels most strongly. However, something tells us that some significant criminal prosecutions are going to flow from this collapse, in the same way that the Tyco and Enron CEOs were pursued. We're not sure whether a legitimate, well-founded legal case can be mounted against them, since it is not entirely clear at this point whether any of them broke any laws, other than playing fast and loose with other people's money. However, the mood of the country is such that district attorneys around the country will be filing complaints once the dust settles.

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  14. Politicians represent us, the people. They are also representative of a party position. We elect these people because they represent what the majority of people in their state or district want. We do not elect them to be objective. Nor, I think, to be bi-partisan (though we seem to chant that mantra from time to time). the entire organization is not a monolithic entity, just as the various ethnic groups and political blocs are not monolithic entities. We often disagree amongst ourselves. We disagree about the paths the country should take on various issues. We disagree on what goals the country (or group, or bloc) should strive for or are desired. We determine those paths, those goals, through debate. That debate is not always pretty and does not always determine the right path or goal. And, finally, it does not always turn out the way some groups and blocs wish.

    If one does not stay true to one's principles, what honor does one have?

    Beware the country that speaks with one mind. It often means that many minds have been silenced or made irrelevant.

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  15. Douglas: We elect them to get things done. If an elected official's rigid adherence to a position detracts from his or her ability to get something done, then that official has become an obstructionist and contributed little to achieving society's goals. If that works for that elected official, so be it. Let the voters decide.

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  16. Log. "Let the voters decide" Exactly. But I might differ on the "to get things done" part since sometimes we elect them to stop things from getting done. As in "If elected, I will bring our troops home in the first 6 months of office." Eisenhower campaigned in a similar vein, by the way. I think we elect Representatives to represent our local interests, Senators to represent our state interests, and presidents to "get things done". Sometimes, our local interests and our state interests clash with our national interests.
    Is it not in our interest to make sure our tax dollars are spent wisely and frugally? Is it not in our local/state interest to make sure we get our fair share of those tax dollars when they are spent domestically?
    Seems to me that some politicians may have tried to take advantage of this interest in getting things done to steer dollars toward certain projects and long term goals that are not what we need done. This is what we elected them to do. Others are trying to block that selective and non-essential spending. This is what we elected them to do.

    We did not ever elect Senators and Representatives to rubber stamp the manner in which the president we elected to get things done wants to do them. Otherwise, we'd just do away with Congress and elect a dictator.

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  17. Douglas: It is our view that far too much unwarranted attention has been directed toward the POSITION of the President in this discussion on economic stimulus. The President "presides" over the government, and "executes" the laws promulgated by Congress. The person occupying that position does not make the laws. The position of the President has two significant recognized powers: (a) the bully pulpit in terms of getting his ideas out to the public and others; and (b) the power of the veto pen.

    In the eyes of many the Executive Branch is far weaker than the other two branches of government. That is purportedly why Dick Cheney and others sought to increase that power. It also explains much of what FDR tried to do in an effort to pursue his goals.

    Simply put, a President can not make law. This resultant bill is not his bill. He may be "associated" with it in terms of popular sentiment, but he essentially ask Congress to get something on his desk. Did he suggest what he would like to see? Sure, but they sure did not have to follow it in any way.

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  18. Rightly or wrongly, the president gets the credit or the blame. It is how the game is played, it is how the public perceives, it is how politics is done.

    If a president champions a bill, it is his.
    If a president signs a bill, it is his.
    If a president presides over a weak economy, or a booming one; if he presides over domestic turmoil or a period of tranquility; if he presides over a war or peace, each of these becomes a part of his legacy.

    We do not change the rules with the party.

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  19. As Douglas said, "Politicians represent us, the people. They are also representative of a party position. We elect these people because they represent what the majority of people in their state or district want. We do not elect them to be objective. Nor, I think, to be bi-partisan."

    To this I say Amen! Bi-partisan in our government usually means accepting the bad in order to get something you want. The problem with this is the possibility of giving in to something that is truly bad for the whole country to get a piece of sugar candy for one little section.

    What I am saying is bi-partisan is compromise and not all compromise is good. Understanding the other persons point of view is good and necessary but then he must show you the same respect, and if he does not then you need to stand firm. Sometimes doing nothing, or grid lock, is better than doing the wrong thing. We just had three Republican Senators who did the wrong thing and used as their excuse that well something had to be done. BB

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  20. You have a lot of stuff there Brenda, a lot of with which we agree. Very nice analysis covering lots of factors. We'll get back to them in snippets. We will say this at this point: We believe that you are absolutely dead on with respect to America's lack of awareness or interest in things abroad. We might concede that it was unfairly characterized as "arrogance" with respect to the common citizens of this nation who comprise the vast majority of our population. However, our concern is the rabble rousers who advance their own selfish agendas, and not that of the collective nation, even though they own some portion of the bully pulpit real estate through their access to the media. Perhaps we characterized it as arrogance because our concern is that they do a disservice to the general populace. Imagine a coach telling his individual players that they are the best to ever play the game.

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