What is WRONG with business? Or maybe, me??

[lildreamer316]

(Look, I'm putting this in GD for the moment because I felt I would get more input here, but if it really needs to be in the Lounge, please feel free to move it.)


Ok. This has been frustrating the hell out of me for..years, really. So, I figured I'd put it to DU since the smart people here know so much about everything.
I don't even know how to go about asking this question simply. It's going to be hard for me to explain, but I will do my best to pare it down and clarify.

Why do owners and managers of business run said businesses in a manner that goes against ALL COMMON SENSE??

This is a very general question. At first I was just talking about the business models I have been in personal dealing with, but I have since come to realize that it seems to be a disease that many, many corporations and businesses of all stripes have. It's like a disease.

No, of course I have not taken any classes in business or management. My only claim to any intelligence or understanding in this field is that I am very observant and was raised by children of the 40s and early 50s. My parents were of that generation between the greatest and the boomer. They were very proper people, and very hardworking. They both lived the American dream for the most part: growing up poor (VERY poor in my father's case --in the Appalachians); finished school with honors, both first in their families to go to college. My mother even managed a couple of semesters at Duke. She became a teacher and an innovator of new college curriculum. My father joined the Army after college and then went to work for an insurance company. One that he stayed with for 28 years.

We lived next door to the home office and country club of this insurance company. This was an old-fashioned company that took GOOD, GOOD care of their employees. There were great benefits, and the company country club had a restaurant that was open every weekend to all employees. We would go there every sunday after church. Great food. The manager of the restaurant would greet every single person with a smile and a rose sticker.
Huge place, walnut and cherry everywhere. Christmas was ....magical. The company had an annual party and ball for the families, with a meal, movies, and on the porch that overlooked the company pools (PLURAL) and lake (also tennis courts, picnic shelters, etc.) were tables piled high with gifts for the children...each table a different age from one to twelve. Music. A live nativity scene that was drive-through and open to the public.

You get the idea.
They instilled in me the values of hard work, independence, personal responsibility, and to be professional an courteous. To always do your best, to always treat the people you work with and serve in business in a polite, professional manner.

My father worked hard and faithfully for this company for years, until in the late 80s, around 1989, the company was taken over by a Reganesque guy. You can guess what happened. My father was pushed into semi-retirement by 1990. He was 57.

Being a girl, I was not really so much educated by my father about business as I just kind of observed him and his colleagues(generational thing I guess). He strongly believed in fair and calm management. He was such a good manager that he was, during the mid 80s, moved around from dept. to dept. to bring things into alignment and up to better production levels. He did this in a very kind and fair manner. He was never one to yell or belittle an employee; he believed in second chances, and all his employees loved him. I attended many a party with people he worked with, who genuinely loved and admired him. At his funeral in '94; I had so many people that had worked with him come up and share wonderful stories about his firm but fair dealings with them. So I know I am not completely just seeing this from a loving daughter's point of view.

I tell you all this to give you the understanding that I was raised in a way that many today would call naive. I was given values that said that owners and managers had a set of rules that motivated them to treat employees fairly, because that in turn made for good customer service. It seems like common sense to me: if an employee is happy and feels valued and listened to, then they are more likely to work harder and more efficiently, be more productive, and treat customers better; therefore INCREASING THE BOTTOM LINE OF THE COMPANY.

Is this not correct?
Does not proper treatment ALL THE WAY DOWN THE LINE from owner to bottom employee, MAKE THE COMPANY MORE MONEY? (Don't the Japanese believe this..or they used to?)

Ok. Of course there are ways that cutting costs make the company more money in the short run. We all know about that, and many examples have been given. I DO get the basics of cutting costs to increase the bottom line for the quarter, so the results show to the shareholders, etc. etc.

HOWEVER..

In the LONG run, over a period of say, 10 to 20 years, do not practices such as that doom a company, or at the very least decrease it's long-term earning potential?

More bluntly: WHY the COMPLETE and UTTER disregard for customer service, and even COMPETENCE in management, on almost ANY level???

Please, explain to me WHY, time after time, incompetence, rudeness, and just plain out being a g-d ASSHOLE is REWARDED, promoted, held up for example, in businesses that purport to expect to have a long life?

I could understand this if someone is trying to make the quick money and get out, and/or they have a business plan that outlines such an idea. But these same people who behave the same way over and over, hiring inept, incompetent, inexperienced, unqualified, and just plain STUPID people for positions of power (management and basic infrastructure); THEN have the audacity to complain that they are always having to clean up a mess somewhere!! Or they complain that they are having to hire someone else all the time, or what have you...they complain that their job is taxing and stressful. Inevitably, they have one or more sections /locations of their business that are not performing up to par, and the few capable people they may have managed to hire into the higher positions are sent running all over the place (country sometimes) to fix this or that, stretching that precious resource too thin. This usually causes said competent one to burn out and leave earlier than they would have initially.

Inevitably, this translates into a profile of a company that is not working at peak efficiency, and not satisfying the maximum numbers of customers. Customer service is inevitably affected.

BUT; here is my question: does that also mean it is not working to its' peak PROFIT?

HERE is where I am confused, and am at a total loss. Common sense tells me that if a customer is not satisfied, they will go elsewhere. If they do not receive optimal customer service, the free market was made so that they may spend that dollar at a competing company. Therefore, if I can see with my own eyes that the optimal level of customer satisfaction is not being reached (why would you reach for anything less than the optimal level, then you know the competition cannot match it..probably); how on EARTH are two things happening:
1) These companies are staying in business, and
2)The aforementioned practices of promoting and hiring idiots (sorry!) continues and, it seems, is even quietly encouraged?

I can't even see the arguments for hiring incompetents because of reasons such as easy control, less demanding, etc. lasting long; because again, the owner/higher manager has to go and clean up so many messes, or the company sustains so much eventual loss of revenue through having to do something twice /buy what is not needed/fill in your own example here that this justification makes no sense to the eventual bottom line.

Someone please, for the love of god, tell me what on earth I am missing.

I obviously have no idea what the business model should really be, because it goes against everything I thought to be true, observed to be true, and my basic common sense. I have been trying to understand this for several years now, and ended up banging my head into a wall.

I swear, it is a sickness. One that I thought Enron was a damn good example of, but I guess I was wrong, wasn't I? (said in best Lewis Black voice).

Or am I just a dumb, naive blonde?

[PDenton]

1. Bubble thinking

People are looking to reap short-term rewards on Wal-Street more than long term profitability of a company. The stock market may be significantly overvalued in that fashion, if most of the corporate profits come from gutting their own companies and not actually producing anything of value.

[lildreamer316]

4. Please see reponse #3..

I wanted to ask you both the question. Thanks!

[Double T]

2. Extreme American Greed and the quest for ALL of the almighty dollars..........

has created a corrupt criminal business environment perpetrated by wall street, corporate ANTI-america and their investors. Ass kissing and promoting henchmen are promoted over competent, qualified individuals as the corporate management psychopath hierarchy must be sustained and maintained to do their dirty work. Do not attempt to rationalize a highly irrational business environment; it will drive you crazy. And NO, you're NOT dumb.

[lildreamer316]

3. Ok...

I can definately see what you are saying, but I still don't quite understand how this enables them to actually stay in business as llong as most of them have. If everyone is busy making money/stealing money/overvaluing the business, how on earth is any actual money retained; and how is it being re-invested (if the money is imaginary or diverted into other areas/personal accounts?) I mean, if they are not following the old "spend money to make money" (which it is obvious they are not,except the bare minimum to keep the lights on); how in the hell??

[PDenton]

7. Capitalism is just messy and ugly

That is the reality, no matter how much Demmings Total Quality Management stuff you put into it.

However, the government can step in and help insure the playing field is fair and that individuals are not harmed induely by business practices. Somebody who loses their job shouldn't be forced to starve to death simply because their skills are no longer needed by the market, for instance.

[Th1onein]

19. Oh, bullshit.

I run my company the "good old-fashioned way." I treat the people who work for me like the gold that they are. Without them, I wouldn't make any money. In return, I get loyalty and a lot of value. It's worth every penny I spend on them. They are happy, I am happy, and we all make a lot of money.

Plus, it feels good.

[Trillo]

21. Why do you think they need warrantless wiretapping?

You're not naive enough to think the main thrust is about terrorists, do you? (not meant as an insult, you wrote yourself that you were raised somewhat with naivete)

They gotta keep the 'one' corporatist in biz at any cost.

[Uben]

5. Not naive

Our business is ran just like yor father's model. We have had some employees working for us for 40 yrs! Doomed? Not hardly.
Our business is now worth over 6 million dollars! Fair and equitable treatment of employees is still the best model. Maybe not the most profitable, but nonetheless profitable. We hold employee appreciation dinners every year, supply them with affordable insurance (in todays terms), and even supply some of them with housing.

Could we make more money? Of course, but at what cost? We have no stockholders to appease or answer to, and that seems to be the factor that has changed the way business is done. Corporations do not see employees as people, just numbers. They are more concerned with stockholder happiness, not employee satisfaction or loyalty.

We are in a business dominated by the corporate world, apartment housing. we have had some teneants for over 40 yrs! We keep rates affordable, our occupancy rarely dips below 96%, and we are in a very competitive market, Dallas. It comes as no surprise that we have a waiting list for folks trying to get an apartment with us, mostly older folks who are downsizing, and they pay their rent!

Actually, it's easier to run a business this way. It may not be quite as profitable, but when tenants come to you and thank you for giving them a safe and affordable place to live, you are doing something right.

[deacon]

14. I agree, but i do think that horrible customer service will catch up to many

...it may be already in the start of the full swing now.

[EV_Ares]

6. First of all, you are not dumb or naive. You explained yourself well

& your questions are very legitimate ones. I remember those days you speak of. The days where trust and loyalty was there from management to the employees and from the employees to management. The days where hard work was rewarded, where you could feel safe talking to your boss if you had a problem and those things you spoke of that your father had with the company he worked for. There were the days when you could go to work for a company and know your family would be protected because you worked hard and was going to get a fair retirement for your wife and children and would be able to send your kids to college.

No, you are not naive, now yes, a total jerk and incompetent jerk can rise to the level where he can bully those beneath him and get away with it. Where he can steal the good ideas of those underneath. Why, you ask, I think a big part of it is due to Wall Street who always rewards companies when they lay off employees by driving their stock up when they do it. Nobody cares about the long term, nobody cares about the company, you sell it off in little pieces and send the employees packing and the greedy, incompetent leaders who follow the wishes of Wall Street get richer than they were. Companies are like toys to be played with as well as playing with the employees lives. The people who make those cold calculated decisions never see the faces of the lives they play with and tear apart so after the deal is closed, they and their partners go on down and get a huge celebration dinner with drinks and pat themselves on the back for making the money they got for breaking up the company and selling it off.

The employees are now looked at as nothing more than a costly factor they like to get rid of. You strip them of all the benefits employees used to get and tell them they are lucky to be working for such a fine and generous company. We are now living in a not so honest environment, greed rules over everything else. Just look at the incompetence of this White House who are friends of the people you are talking about. you don't want individual thinkers, they might cause trouble. You want a person that fits in with this corporate culture and for that incompetence is ok.

Sorry, didn't mean to make this long, trying as you to explain it best I can, it is in a nutshell, there are more complex issues but the old days of nice and trust are gone I am afraid.

[sam sarrha]

8. it is the Greene span requirement to grow 15% profit annually to stay in some rating, which requires

a corporation to grow 100% in less than 7 years. they can only do that by eating up and sending the smaller businesses to china and mexico.. it was a deliberate formula to destroy the middle class and treason to make China the next super power, Microsoft sent their computer chip business there knowing they will steal the entire business and we wont even make computers anymore when china can destroy the united states by stopping the shipping of just shoes.. we dont even make shoes here any more maybe 2 shoe factories, when reagan became president we had 485 shoe factories when he left we had 3. what is going to happen when we dont have computers or even food

i have friends that work for Sara Lee who are leaving because the New CEO changed the corporation mission statement to..'We will become the cheapest distributor of products in the world' which is totally INSANE... you can kiss that corporation good bye.. what happened to Quality and reliability. they have been reducing employee populations too.

[newportdadde]

9. Changes in ownership. For private business going from the founder to a grandchild.

Its always been my opinion that most of what you talk about happens during a change of ownership or control. The attitude that the new owner will run things better and has better ideas.

For a particular example of this I always think of private business going from control of the founder to control of the grandchild. If a business has been wildly successful and the founder became a millionaire or billionaire is goes something like this.

1) Original founder, starts out from scratch, tends to treat employees well as they are all in the trenches together.

2) Founder's child takes over grew up with some wealth but remembers the leaner times, grew up with the parent as they because successful, grew up with many of the employees. Got direct lecture from parent on whats important for the business.

3) Founders grandchild... millionaire, never worked with the business as it started, never worked the trenches was born already in the country club. Smoozes with other CEOs and they all get together and talk 'strategy', outsourcing etc. No general loyalty to the employee. Company hits a hard place.

[zeemike]

10. It all started with a book called Atlas Shrugged

By Ayn Rand that caught the imagination of the business schools and leaders.
With it came the philosophy of "the Virtues of selfishness" which was readily accepted by the business schools and people like Allen Greenspan.
The business schools started teaching that the only thing that mattered was the bottom line and just ridiculed the soft hearted business practices of the past.. Greed was good and caring for people was just plain stupid if you wanted to make it in the big business world of the corporation.
When Reagan was elected and gave huge tax cuts to the wealthy they used this money to take over the competition even in a hostile manner and the great consolidation began in earnest
So now the greedy and ruthless rule business in this country and there is little hope we can easily arrest it from there grip with out fundamental change.

[Selatius]

11. Firm decomposition. Nepotism, cronyism, and simple lack of care.

Often the original pioneers of the firm, once they retire or die, are replaced by people who do not have the same corporate culture or corporate vision. For example, Sam Walton of Wal-Mart fame was far more caring of his workers and hard working than any of his successor family members. Every morning before opening up shop he drove around in his beat up truck to deliver food and coffee to his workers before work.

I'm fairly certain now after looking at Wal-Mart for a while now that some of the things his successor descendants have implemented would not have been what Sam wanted.

There seems to be a problem dealing with the "iron law of oligarchy" in place, where a firm's structure given enough time breaks down into little more than a command-control oligarchy, which is truly disempowering for employees in addition to be alienating. Such a break down often leads to insular corporate culture, a resistance to change, and a resistance to face reality on the ground necessary to survival.

A good example of insulated culture is the current White House. Despite this, a firm can survive due to its sheer size, but may have trouble dealing with upstart competitors if it cannot erect extremely high barriers to entry to prevent upstarts from emerging.

[zeemike]

12. Ooops post 10 wes intended to reply to the OP n.t

[deacon]

13. We all work for someone who sells something. It's the nature of

the beast. Or, lead the way in creating a new way to sell that requires a workforce. Since most sell something similer, striving for an advantage is part of it. There's nothing more really to think about. Survival requires selling something or being part of moving goods.

To scale it is the trick. To step back and see how it works at all different levels - a code of ethics, what we decide to accept...matters.

[Tyler Durden]

15. Diamonds when they pay for Coal

The modern Neo Capitalist Business model says that you can tell the customer you're going to sell them diamonds for the price of coal, kidding them and yourself all along (both are carbon, hey if you pretend to believe us we'll pretend to tell you the truth.)

The empire is falling. It always happens in the private sector first; just not as easy to spot there.

[Odin2005]

16. It seems to me that the problem is investors that only care about the short term.

It seems like investors only care about the next quarter or two and don't give a damn about what happens to the company 5 years from now because they expect to have sold their shares by then.

Another problem is that there seems to be this stupid notion think that a company is some kind of profit-making black box and so a person that was a CEO in, say, the automobile industry can do equally well in other industries.

[Ikonoklast]

20. And Chrysler hired Nardelli to sell cars for them!

The same Bob Nardelli that lost out at GE, went to Home Depot with his authoritarian management style, no retail experience, and just about ruined their market share and stock price.

I never got over the notion that CEOs were just 'plug-and-play'.

Whatever happened to the notion that the erstwhile leader of your company should at least be vaguely acquainted with the product line? The current B-school think 'that it doesn't really matter, business is business' sure seems to be failing American businesses.

[lildreamer316]

23. Yes, but I have a further point about that...

What happened to the notion that, if you were a manager or a CEO hired in a different business than your expertise was in, you actaully tried your best to study it, ask questions, learn it as quickly as possible? AND..
the thing that SHOULD be consistant from company to company is being a fair and approachable manager/CEO; someone who treats others with professionalisim. People skills are universal, and customer service is customer service. Period.
The bottom line question should always be: What does the customer want, and how can we BEST serve them?
It can't be that hard.
I am reduced, sometimes, to thinking these people who continually mess up are either stupid or lazy. Or both. And I hate to think like that about people.

Thanks for responding..

[NMDemDist2]

17. kick for the morning crowd n/t

[KoKo]

18. A BIG K&R for your post! You Nailed alot of the changes that have taken place

since your Dad worked for a company that cared. Many of us could tell the same story and ask the same question. My quick answer is Reagonomics...where everything started to unwind. Supply Side Economics which focus on "Top Down" where if you loosen regulations and free up taxes on the top wealthiest the money will just trikle down to the rest. It made more sense to cut out little perks that some family owned companies did for all employees and just let the Top Brass Management get Huge Bonuses and Stock Options.

I remember when IBM had Country Clubs for it's employees...and lots of perks. I think that's pretty much gone, now, too.

[lildreamer316]

24. Thanks...

sorry so late in responding.

So this is really the result of trickle-down? I guess I never made the connection. Wow.

[tomreedtoon]

22. You were fooled. Business is a pagan religion.

It is not a way to get things done. It is an association of beliefs, with the true believers repeating the same nonsense to each other. It is not grounded in reality.

At least, with most religions, they call themselves religions. With this one, they claim it affects the real world, as if they were witch doctors chanting at a solar eclipse to make the sun come back.

You, and so many other people, have been fooled about the guys in pinstripe suits with huge wooden desks. Those aren't desks. They're sacrificial altars, upon which working people are slaughtered to the great god Trump.