Sunday, 8 March 2009

Companies aren't bad creatures

Companies in general, seem to be disliked by the public. The larger the company, and the more global it is, the more it is disliked. Have you noticed how often somebody rails at "multinational corporations", with the word multinational being said as if it were some highly distasteful object. Why ? Do companies deserve this hate ?

There is a broad coalition of opinion against global companies. Politicians have a love hate relationship with companies. They love them when they open a plant in their constituency. They love them when they are successful. They hate them when they announce redundancies. They hate them when they get up to mischief. However, on the whole, over the last two decades, politicians, and governments, have tended to be much more favourable to companies.

NGOs and activists tend to hate most companies. To many, they are the embodiment of evil. The average Joe Public also does not like companies, although he may be employed in one. He often rants and rails against multinational corporations doing bad . There is often instant suspicion of a large company. He is much more tolerant of a small company, but a large company is usually seen as not good. Public opinion is not in favour of companies.

Why is this so ? I think the main reason is plain jealousy. Large global companies, are by definition successful and rich. Human nature invites jealousy of the rich. Companies can do very little about it other than to grin and bear it. Some humility can help. Unfortunately the word arrogance, rather than the word humility, comes easier to them.

A second reason is that companies are very public figures, just like political leaders and sportsmen are. All public figures will be held accountable to a higher standard than Joe Public. That's the law of nature. Witness how its perfectly acceptable for the average man or woman to commit adultery, but its an absolute no no for Bill Clinton to do so. Companies have to accept that they have to be as clean as possible, even when examined under the brightest lens.

A third reason is that most companies have failed in communicating effectively the good they do. Companies create jobs, they pay taxes, the enable you and me to enjoy products and services that would otherwise be impossible. The PR garbage they churn out is often unreadable, and more importantly, not believed. A much better communication strategy is in the company's own interest.

In 2004-05 Oxfam and Unilever jointly conducted a detailed study of the economic impact of Unilever’s operations in Indonesia. The conclusions were eye-opening, especially for Oxfam. Unilever in Indonesia supported the equivalent of 300,000 full-time jobs across its entire business, created a total value of at least $630m and contributed $130m a year in taxes to the Indonesian government. The lesson for firms is that they have been far too defensive about their contribution to society

A fourth reason is that in the past, companies have often solely focused on their mission - to generate profits. While this is no doubt their main mission, they haven't paid the same degree of attention to their other stakeholders. This is rapidly changing. Corporate social responsibility is now accepted as a very important area for companies and many companies have started to have good programmes in this area.

A fifth reason is that global companies have got caught in the crossfire of the battle for and against globalisation. Companies are the one institution that have truly gone global. Being a pioneer in globalisation, they have got caught in the debate as to whether globalisation is good or bad. Hence the anti globalisation protesters against companies. The defence for companies can be that while they are global and think global, they act local. They must be seen as true citizens in the communities they operate in. Without the deep bonds with their local communities, they will be seen as outsiders, and as we all know, when there is trouble its always the outsider on whom the first stone is thrown at.

I am hardly suggesting that companies are the bastion of virtue. They are not. Just like any other group, there are the good, the bad and the ugly. Many companies are guilty of appalling conduct and deserve the brickbats that are thrown at them. Some are out rightly criminal. But they can't be the representative of the corporate community as a whole. Its not right to paint the whole group with the same brush. There are many outstanding global companies. In fact there are more good than bad. They deserve a fair hearing. And a cuddle or two !

11 comments:

goooooood girl said...

your blog is feel good......

Prince said...
This comment has been removed by the author.
Prince said...

Ramesh, I am not a Corporate basher but I do like to lift the veil. Corporates were, in a manner of speaking, born in sin. The emergence of the joint stock company was to reduce civil responsibility and with it, accountability. This was done under the concept of artificial legal entity accountable for selective actions found in its memorandum and articles of association. Liability beyond this is ultra vires the corporate. The larger the company the greater was the ability to use a corporate veil. Over time I dare say the veil has been extended to cover the entire corporate being. What a member would fain to do singly, the corporate does without qualm of conscience. I believe the time has come for good folk to charter a corporate conscience which would place it at par with an individual member's personal liability in public domain and not an internal code of conduct. Beyond the occasional good deed of an MNC (which incidentally had exploited the resources globally in its time), we need sustainable corporate integrity and this will start when we all cease to hide under the corporate veil; to quote a much loved poet :
"Ill fares the land, to human ills a prey,
where wealth accumulates and men decay"
I have grown rich in worldly goods and reviewing life in the evening of my life, I dare say I have sold the values of my youth and I am in the corporate majority.

Writer from Hell said...

I agree. Like Benjamin Franklin said, "No nation was ever ruined by trade". But in our world globalisation, corporates etc. are hated. You have rightly enumerated all the reasons. People tend to be emotional and not rational in their judgments and usually suceess is begrudged and envied.

Writer from Hell said...
This comment has been removed by the author.
Ramesh said...

Prince - you are right; corporates have a lot to answer for. You have made an interesting case as to this being linked to their very origin. However, I fee that the case against them has been well made and possibly too well made. This post was to present the other side of the story as well.

Ramesh said...

Writer - Thanks for your kind comments

athivas said...

The prime reason for bashing of multi-national organizations is pure jealousy. Not only the organization, every employee is looked upon with an eye of doubt. Sigh, that's the way we are forced to believe, everything rich is bad and filthy.
But, companies are neither saints! Satyam was celebrated for the oppurtunities it created, it sure did!! It has gone a long way in uplifting really poor families. Their social responsibility was also commendable. But, what was happening within blew up only years later,though, one still does not deny the good it did!!

Ramesh said...

@athivas - Incredibly wise comment. In five lines you've captured some profound thoughts. Yes jealously drives such public perception. Yes, many companies are indeed crooks and yes, the Satyma fraud does not undo the good that it has also done. You must be a Prof, Savitha :)

Athivas said...

Oh, flattered!!I am only a student,yet!!

Ramesh said...

@athivas - Not a student. I believe you are a true Prof - as your passionate defence of teaching shows !!

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