More than ever, Americans do not trust business or the people who run it. Pollsters, researchers, even many corporate chiefs themselves say that business is under attack by a majority of the public, which believes that executives are bent on destroying the environment, cooking the books and lining their own pockets. Even as corporate scandals like Tyco's recede, fresh complaints - over high energy costs and soaring oil company profits, planned layoffs in the auto industry, bribery and conflicts of interest in military contracting - fuel the antipathy. And every report of high-dollar executive compensation strengthens the feeling that business funnels money from the workers to the elite. "There is a sense that business is a zero-sum game, that if companies are making a lot of money, it must be coming out of someone else's pocket," said Michael Hammer, a management consultant who writes frequently about business. Executives ruefully agree with his assessment. "This is a challenging time for big corporations," said John Hofmeister, who runs the US operations of Shell. The modern feeling, he said, is "big is bad." It is not clear whether such views will bring significant change, but it is clear that the disaffection is spreading. In a Roper poll conducted from July 28 to Aug. 10, 72% of respondents felt that wrongdoing was widespread in industry; last year, 66% felt that was the case. Only 2% checked off "very trustworthy" to describe the ceos of very large companies, down from 3% last year. Perhaps unsurprisingly, some politicians are picking up the anti-business scent. Representative Barney Frank, a Massachusetts Democrat, recently introduced a bill to require shareholders to approve executive compensation and force companies to take back bonuses that were based on faulty accounting. Even Republicans have joined the attacks. At a recent Congressional hearing, senators from both parties demanded that oil executives defend their record profits. And now some Senate Democrats, unsatisfied with what they heard, are clamoring for the oil executives to be called back again, this time to testify under oath.
In discussing the reasons for the rampant distrust, some executives concede that business brought the opprobrium on itself. "Today's companies are run not by entrepreneurs, but by traders who are increasingly preoccupied with short-term gain and profits," said Henry Schacht, the former chief executive of both Cummins and Lucent Technologies. (Schacht serves on the board of The New York Times Company.) But others say that middle-class Americans are seeking villains to blame for their losses in the stock market implosion of 2000, and for the high oil and gas prices today. Others point out that the gap between the income of the top 10% to 20% and the rest of the work force keeps widening. Still, many executives insist that society must share blame for the business practices it so despises. For example, they say that people who blame McDonald's for their obesity still order the large fries, and that those who complain about low wages still insist on low prices.
(New York Times 051209)
"Today's companies are run not by entrepreneurs, but by traders who are increasingly preoccupied with short-term gain and profits"
Funny...I was just talking about this yesterday. It's so true, and it's not surprising that trust levels towards public corporations are so low. So many of them have resigned their own destinies to the whims (and all-out short-term greed) of the investment analysts and traders. I mean, isn't the role of the Executive of any corporation to make these decisions and stand their ground when someone disagrees? Seems like they don't even want to do their jobs anymore (but have no problem taking the money for doing so). I would totally support shareholders having more control in the decision making process, from how much executives are rewarded and paid for their work, to what the annual guidance plan would look like. But that is sort reflective of how the election system is today. You can't even get people out to vote anymore since they're so disenfranchised from the political system and alienated by the politicians; how can you expect a majority of disinterested shareholders to shoulder some of the responsibility? In a perfect world, it would work out, but reality is far from perfect. Greed is good, and is what will kill us.
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