View Point
November 24, 2006

Further business trends

Today’s companies and organizations are now moving into situations where they are gradually becoming communities of people. Power and authority are becoming less hierarchical. Where it was once easy for an organization to say that the top man does everything and the bottom man has limits to his authority, as orders were passed down the line, you no longer have dictatorship at the top. By courtesy of ‘corporate governance’, the Chief Executive Officer (CEO) increasingly does not have total power to set the rules. It has to be done by a representative body and that body has to represent other interests than just the shareholders. People talk about the community but it also has to represent employees and other members of the alliance who then enable the CEO to do what he or she has to do.{{more}} The CEO has to take cognizance of the views of these groups. When a Board is changing its CEO, the tendency has been to canvas opinions outside of the organization, but increasingly the search is focusing on talent within the organization. Why should this be so? The simple reason is that in order to exercise authority in the modern organization, it is not enough to hold the position of CEO, you have to have the acceptance of your authority – your right to rule – in order to get people to do anything. Non executive directors and trustees of charities are beginning to realize that they too are liable and will therefore have to pay close attention to what is going on. Employees, Boards of Directors and other members of the “community alliance” within the small corporate sector of St. Vincent and the Grenadines are not immune from these developing trends particularly in a globalized environment.

In the past decade or so, shareholder value has become the dominant measure of corporate performance and the benchmark for CEO success or failure. As shareholder value has become all pervasive, CEOs have come under increasing pressure to lift their companies’ share price at all costs. It is an unfortunate development that the quest for shareholder value has made quick profits the only way for CEOs to operate successfully. Not only do they have their performances measured on a quarterly basis by analysts, they are also paid bonuses on the performance of their shares. If our newly developing Eastern Caribbean Securities Market could foster the growth of an environment and the development of a corporate culture that avoids these excesses, it would be a signal achievement for this young market.

Another growing trend is that while we are responsible for our own lives to a greater or lesser extent than we were in the past we need to think of ourselves much more as independent agents rather than as a cadre of entrepreneurs. We may be currently working for, employed by or assigned to a corporation but that’s not a guarantee of permanent employment anymore. When organizations decide to get rid of 10,000 or 20,000 people, a lot of those people are going to be very surprised. They may get a good pay-off but they have to realize that a particular stage of their life may have come to an end and that nobody is going to look after them in the way they used to. In that sense we are all independent agents. More and more we will see a career with an organization as an apprenticeship – rather like going to college before you set out on your own career. We would be very rash to think we can set up on our own without going to college and without the experience of the business world. The apprenticeship may go on for 15 or 20 years but even then you would be still quite young. When one decides to part company with an organization two things may come as a surprise

You may discover skills you did not know were saleable e.g. writing and speaking which had nothing to do with your first career. (2) you may discover or would need to discover someone to market your skills. Sometimes you would need someone to help you. Indeed to do everything on your own could prove to be counter productive. You may actually need a partner to help you think things through and to complement your own skills.

If we are successful in business we will make money, but we can only go on being a successful business if we continue to do something that is more useful to more people than other businesses are doing. So the purpose of business should be seen as not merely making money, but doing something that is more useful to more people than anybody else (the competition), and doing something more worthy with our lives. Bill Gates seems to be doing this with the announcement that henceforth he will be devoting more time to his charities. We have got to find a better way to reward people who actually make the wealth and that could entail a little shift away from the shareholders. It may involve putting shares of the company into trusts for workers etc. If you or your co-workers are responsible for making the wealth then a suggestion which is fast gaining currency is that you should have as much of a stake in the future direction of the corporation as the people who finance it. This idea of ownership could gradually broaden to reflect the new thinking that the financiers will become less powerful than they are today while the employees become more influential.