Morality and public companies…..can they really coexist?

September 18, 2010

I’ve been thinking about personal responsibility and how this ties in to those of us who run businesses, large and small.

I find that most of the time those who run and own their business will operate with much more integrity, authenticity and morality than those who run businesses for others, but are not major shareholders in that business.  Public companies are a great example of businesses that often are run with anything but integrity.

I believe the reason for this is the lack of personal responsibility and accountability that exists in most public companies.  At the end of the day those who are in senior management rarely if ever have to pay for bad decisions on a personal basis.  In fact, many times they are sent away with a huge golden parachute that allows them to move to their next venture being financially independent.

We have a problem with morality in large organizations whether they be in the private sector or government.  Both are charged with working in the best interest of the shareholders or the public.  Too often we find the leaders of these organizations did not work in the best interests of their stakeholders.  In the financial management world we often are asked to be a fiduciary for our Clients.  The same is or at least should be true with public corporations as well as government.

Unless there is a personal price to pay, we won’t see any significant changes.  When the leaders of these organizations get caught doing unethical things, they usually don’t pay a personal price  If they ruin their company, they just leave and sit on the sidelines to re-appear in another company within a few months.

Greed is not good, although many in our society think it is.  Being morale pays off.  For those in small companies the owners know this from first hand experience.  If they don’t run their companies with integrity, eventually their business will go away and they go out of business.  If this happens the owner pays a huge personal economic and psychic cost.  In the public realm this doesn’t happen.

Until we can figure out how to hold the people who run pubic companies accountable personally for their actions, we won’t see any changes.

As always, let me know what you think.  Starting a conversation is always a good thing.

Josh Patrick

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Posted by stage2

Mistakes really are the road to happines…….or at least learning

September 5, 2010

One of my favorite Elders is Buckminster Fuller.  Yes, I know that he’s been dead for quite a few years.  At the same time he left a huge legacy of writing and thoughts on how we should live in this world.

One of the statements I really like have been attributed to him, “you don’t learn less”.  I’ve lived my life with that credo, even before I heard the statement.

For me, not learning less means getting out there and doing it.  If you’re fortunate enough to do it correct the first time, push the envelope till you make some mistakes and then take stock and figure out what you learned.  If you start making mistakes immediately, take responsibility for those mistakes and figure out what you did wrong so you can start making adjustments.

In my opinion mistakes are not about the corrections as much as they are about taking responsibility for your actions, and learning to modify your behavior to get different results.  This modification should come from both actions involving people and actions involving systems.

Mistakes are also the food that one uses when creating experience.  Having done the same thing over and over is not experience.  It might give you a certain competence at doing a particular thing, but you’re not expanding your horizons and developing the ability to bring more value to you and those around you.  Trying new things is where the fun is.  It’s where you get a chance to experience new things and live from what those new things bring to your life.

Many times we’re afraid that what ever it is we do will be so “embarrassing” that we won’t be able to stand the humiliation that comes with trying something new.  In most cases the rest of the world doesn’t notice and you just get to shrug your shoulders and move on to try again with more refinement.

For me, making mistakes is just the way I live my life.  I find that very few mistakes can’t be corrected easily as long as I’m willing to take responsibility for my own actions.

What do you think.  Please leave a comment and let me know your thoughts.

Josh Patrick

Oh, if you’re an owner of a private business owner we’ve posted a good questionnaire that gathers information on why or why not you’re getting the success you want.  Click on the link and it’ll take you to our questionnaire.

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Posted by stage2

It’s not too big to fail, it’s too dumb to lead

April 12, 2010

I just finished reading Too Big to Fail by Andrew Ross Sorkin.  Another title for this book could have been Too Dumb to Lead.  It’s hard to believe the lack of understanding of what our financial institutions we’re packaging.

If my Clients ran their business the way the large banks and financial institutions run theirs, they wouldn’t last very long.  Decision count…..Understanding the risk in your business and finding ways to manage it is important.

In the private business world, the owners net worth is on the line.  In the public business world, there is no financial responsibility for the decisions the leaders of the companies make.

No one in their right mind would use a debt to equity ratio of 3o to 1 in running their business.  But, the leaders of our largest financial institutions did and do this on a regular basis.  Their risk management people don’t even to seem to understand how dangerous this ratio is and the apparently don’t care  because there is always Uncle Sam to bail them out.

It looks to me like there is going to be nothing that is done to rectify this issue.  I believe this means those of us on main street need to watch our big brothers very carefully.  If we see the bubbles getting too big, we need to find a place to hide until the land mines that are being put in place are defused.

Until we put personal responsibility or real oversight back into the system, too big to fail will remain the biggest economic risk we face.

Josh Patrick

Leave a Comment » | Asset Management, Capital Structure, Ethics, For Business Owners, Risk Management, Wealth Management | Tagged: , | Permalink
Posted by stage2

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