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Out of Our Minds
Tuesday, September 06, 2005 3:25 PM
What Should Great Companies Do?
Eric McNulty on Business

To take Kevin's recent posting about who's doing what in the wake of Katrina in a slightly different direction, I'd like to ask what great companies should do. Harrah's has announced that they will pay people for up to 90 days and cover their health insurance premiums. Wal-Mart has said that they will pay for three days but will try to find work for its employees at stores in neighboring states. Chevron is one of the companies still trying to locate all of its people and has undertaken its own relief efforts for its employees.

What is the duty of a company to its employees at a time of massive disruption such as this? Do responsibility to shareholders and desire to help workers come into conflict -- or will companies that do the most for employees now reap greater dividends than those who play it tight?

What will separate the great companies from the adequate and the sub-par? If you were an employer in the affected area, what would you do?


D Harris - 9/10/2005 1:07:21 PM
However we frame the argument, business leaders must always do what is best for the company. In a short-term, pump-and-dump scenario, it may be best to abandon employees in need, and focus on investments that yield immediate returns. But for a company with a business plan that reaches beyond the next fiscal year, some sort of assistance can be a sound long-term investment. Building loyalty in good employees can yield benefits in reduced turnover and improved productivity, and the positive PR such assistance provides may yield higher returns than the same dollars spent on advertising campaigns. The companies that achieve sustained greatness have leadership that can see beyond the spreadsheet.
EM Sky - 9/8/2005 2:07:03 PM
It is a common business and legal practice to ask questions such as this in terms of 'duty' and 'constituents': employees and shareholders. It is how we are taught to think about almost all business issues. But as soon as we frame the question in this way, we have limited the answers we can give. We have already chosen to see the problem as one of conflicting interests. From here we must choose to serve one interest or the other, or try to 'compromise' between them, or try to 'balance' them against each other.

Why do we choose this framework for analysis? Because of certain assumptions that make this framework inevitable. But change the assumptions, and the whole analysis changes. The key assumption that seems to set the interests of shareholders against the interests of employees is the assumption that shareholders have invested in your business solely to make money. Does that seem like a reasonable assumption? Well, the way a lot of the world works right now, maybe it is. But then again, maybe it isn't.

More and more people are coming to understand that investing in a company is about more than just making money. It is about investing in a vision. Companies spend a lot of effort in defining who they are and what they believe in, and investors are paying attention. If you have a solid, defined vision for your business that includes caring for each and every member of the company network, then shareholders can see that the help being provided to employees in need of disaster relief is a direct result of that vision. The truth is that the company can afford to help the disaster victims largely because of the investment that each shareholder has made in the business venture, and because of the compay's success in managing that investment. The shareholders are not suffering from the assistance provided to displaced employees. They are participating in it, and they are choosing to do so because they believe in your vision.

The answer to every such dilemma is to have a strong vision for your business and to send that message over and over to investors. Ask the investor to become a partner in your vision. Show them what their investment is helping to achieve every year. No one is willing to lose money on a profit-making venture forever, but you might be surprised at the patience and even support you will receive from your investors if you have treated them as partners in a higher vision. Include them in your vision, share with them your sense of purpose and community, and you will find that investors will treat employees as part of that community as well. If you treat your business as a shared community with a higher vision, then in times of stress that community will come together. And over the long run, you will reap tremendous benefits in both profits and good-will.

- EM Sky
Anthony Baker - 9/7/2005 2:13:07 AM
The government should make a request of businesses -- particularly lending institutions -- to give a grace period of at least 90 days for victims of the hurricane. No payments due, no interest, no penalties.

Currently, of course, this isn't happening (at least across the board) and, frankly, I find it criminal. To expect people to continue paying their bills on time is nuts.

Time to ask for some sacrifice...
Janet Auty-Carlisle - 9/6/2005 9:51:24 PM
Well with a negative spin on this idea I know what I wouldn't do. I wouldn't gauge people for food and water and I wouldn't try to keep share holders happy by jacking up the price of gas by more than 50 cents a litre.
Let's see who steps up to the plate on this one.
Again I mention Magna. They have relocated 350 families to their facility in West Palm in Florida. They are feeding them, clothing them and providing them with shelter. Then Mr. Stronach is buying 1,000 acres of land in Louisianna and is building a trailer park to house all those families for five years. That was the latest news I heard on this project.
If I were an employer I would be in there, sleeves rolled up, trying to help any way I could. I'd figure out a way to make sure everybody had work, maybe not for as much money, but it would be something to go to and something to do.Altruistic perhaps but what else is there at this point.... Where there's a will there's a way.
Living la vida fearless,


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