Managerial Capitalism: Being and Becoming

At first glance, Friedrich Nietzsche’s pro-capitalist stance on private property and the process of accumulating profit (or wealth) may seem to extend a vote of confidence to the business manager as a type. After all, managers manage the private property of stockholders (which can include themselves) with a fiduciary duty to do so to increase shareholder value by maximizing profit. The notion of profit-seeking by maximizing revenue and minimizing cost is arguably too simplistic. Squeezing a workforce too much, for example, can backfire in the long term. Nietzsche was concerned about such a thing happening even though he claims that the vast majority of laborers must be kept to subsistence wages for culture to be possible. He castigates petty, short-sighted managers who do not look out for the spiritual and economic welfare of workers, and yet holds that those workers must be slavish in the sense of being exploited by employers so culture can emerge and be sustained by the rich. To be for such exploitation and yet against petty cost-cutting managers renders Nietzsche’s socioeconomic philosophy interesting as well as useful in terms of keeping a capitalist economy from being reduced to the mentality of its bottom-feeder producers. I first discuss the matter of exploitation and then turn to how Nietzsche addresses his wider socio-economic philosophy more specifically to human-resource management. Within the wider subject-heading of exploitation, very different approaches, or mentalities, to human resource management can be discerned. In dichotomous terms, there can be said to be a pathos of distance between enlightened self-interest and selfish, short-sighted greed.

The full essay is at "Managerial Capitalism."

Executive Compensation Tied to Firm Performance: A Critique

With robust economies in America boosting companies’ sales, corporate tax cuts, and an increase in stock buybacks lifting stock prices in 2018, the default mantra in executive compensation circles that high CEO pay is justified if it is tied to firm performance could be questioned. Similarly, the typical assumption that high pay would have to get higher for a CEO to be motivated to do the basics of the job, including overseeing mergers and acquisitions, (or that doing the basics warrants a raise) could be questioned. Particularly in 2018, the comfortable, self-serving ways of the business elite in the U.S. were ripe for critique.

The full essay is at "Executive Compensation Tied to Company Performance."

How to Cure a Dysfunctional Company Culture: The Case of Uber

Valued at close to $70 billion and operating in more than 70 countries, Uber was giving traditional taxi companies a ride for their money in early 2017 when it came to light just how Hobbesian the company’s culture had become. In February, an engineer who had left the company two months earlier “detailed a history of discrimination and sexual harassment by her managers, which she said was shrugged off by Uber’s human resources department.”[1] Crucially, she claimed that “the culture was stoke—and even fostered—by those at the top of the company.”[2] Interviews with other employees and reviews of internal emails, chat logs, and tape-recorded meetings revealed incidents typified by one manager groping a woman coworker’s breasts at a company retreat, a director shouting an anti-gay slur at a subordinate during an argument, and another manager threatening to beat an underperforming subordinate’s head in with a baseball bat. The operative question is whether anything can be done about the accepted pathology.

The full essay is in Cases of Unethical Business, which is available at Amazon.

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1. Mike Isaac, “Inside Uber’s Aggressive, Unrestrained Workplace Culture,” The New York Times, February 22, 2017.

2. Ibid.

The Age of the Imperial CEO: The Case of Fred R. Johnson at RJR Nabisco

Frederick Ross Johnson, as CEO of RJR Nabisco, was known “for the fleet of corporate jets that ferried him to celebrity golf events and other luxurious perks he awarded himself.”[1] The key words here being awarded himself, for Johnson epitomized the sort of imperial CEO that made an oxymoron out of the notion that the corporate board is to serve as an overseer of corporate management in corporate governance. Awarded himself should be the oxymoron, for such a conflict of interest runs against the logic of any viable business calculus.

The full essay is at "The Imperial CEO."

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1. James R. Hagerty, “F. Ross Johnson,” The Wall Street Journal, January 7-8, 2017.

A Business Surtax on Income Inequality: Target the Proceeds

The medium compensation in 2015 for the 200 highest-paid executives at publicly-held companies in the U.S. was $19.3 million; five years earlier, the figure was $9.6 million.[1] CEO pay compared with the earnings of average workers surged from a multiple of 20 in 1965 to almost 300 in 2013.[2] “Income inequality is real, it is a national problem and the federal government isn’t doing anything about it,” said Charlie Hales, the mayor of Portland, Oregon in 2016 when that city passed a surtax on companies whose CEO’s earn more than 100 times the medium pay of their rank-and-file workers.[3] According to the law, set to take effect in 2017, companies whose ratios are between 100 and 249 would pay an additional 10 percent in taxes; companies with higher ratios would face a 25 percent surtax on the city’s business-license tax. Whether the new law would make a dent in reversing the increasing income-inequality was less than clear.

The full essay is at "A Business Surtax on Income Inequality."

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1. Gretchen Morgenson, “Portland Adopts Surcharge on C.E.O. Pay in Move vs. Income Inequality,” The New York Times, December 7, 2016.

2. Ibid.

3. Ibid.

On the Difficulty of Ethical Leadership after a Breach: The Case of Wells Fargo’s CEO

On September 20, 2016, U.S. Senators questioning Wells Fargo’s CEO, John Stumpf in the Senate’s Banking Committee “seemed unmoved” by his “attempts to explain why more senior bank executives had not been tied to the widespread illegal sales activity.”[1] Bank employees may have opened as many as two million accounts in customers’ names without those customers’ knowledge.[2] Senator Elizabeth Warren, a Massachusetts Democrat, “said the illegal sales were a big driver of Wells Fargo’s success as one of the nation’s most profitable banks.”[3] She called on Stumpf to give back a large portion of his compensation, resign and be criminally investigated. I contend that giving back some of his compensation and resigning from the bank would have been necessary for the CEO get past the scandal in being able to be a credible and trustworthy ethical leader. That the bank’s board acted independently from its chairman, the CEO, a week later in taking back $41 million of his compensation and $19 million of the stock grants from Carrie Tolstedt, who had led the bank’s retail banking division (and cancelled any bonus for either official) does not lend the CEO any renewed credibility.[4] Rather, the action made the bank’s board members look like they were trying to do what was necessary, given the CEO’s underperformance during the Senate hearing.

The full essay is at "Difficulty of Ethical Leadership."

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1. Michael Corkery, “Illegal Activity at Wells Fargo May Have Begun Earlier, Chief Says,” The New York Times, September 20, 2016.

2. Ibid.

3. Ibid.

4. Stacy Cowley, “Wells Fargo to Claw Back $41 Million of Chief’s Pay Over Scandal,” The New York Times, September 27, 2016.

Bank of America Board Ignores a Binding Resolution: Fiduciaries Seizing Power from Shareholders

Corporate board directors have a fiduciary duty to act in the shareholders’ financial interest. What if a board’s directors think they know better that the stockholders as to their interest? In such a case, the directors would be acting like elected representatives who vote contrary to the wishes of their constituents for their own good. While valid from the standpoint of representative democracy, I’m not sure the principle has legitimacy in the corporate context, wherein property-rights are being represented. Simply put, an owner gets to decide how his or her wealth is used, within legal parameters of course. The case of Bank of America’s board may suggest that directors essentially work for their managements while being shamelessly dismissive of even binding directives from the stockholders as a group.

The complete essay is at “Corporate Governance at Bank of America.” 

The man of the hour. Brian Moynihan, Chair and CEO of Bank of America as of 2015. His power exceeded even that of the stockholders, whose concentrated wealth he managed. Lest it be maintained that a CEO with such power optimizes corporate earnings, consider that his predecessor, Ken Lewis, had the bank purchase Countrywide, whose fraudulent mortgages played a vital role in bringing about the financial crisis of 2008. Perhaps CEO/chair duality is of value simply in reducing a corporation's systemic risk. Hence, Congress may legitimately intervene.(Simon Dawson/Getty Images)

An Ex-CEO on U.S. Presidential Leadership: Dissecting Ted Turner’s Pessimistic Stance

The founder of CNN and TNT, two American television networks, Ted Turner maintains that presidential leadership at the federal level is elusive. More particularly, the American electorate’s task is very, very difficult because the federal president must be an expert in so many areas. Ironically, Turner may be overlooking how upper-echelons leadership differs from leadership within organizations, including the U.S. Government.

The full essay is at “Presidential Leadership.”

Beyond Facebook’s Impact on Political Polarization in the U.S.

Any time “scientists” at a company purport to have done a study involving said company in any way, the public has good reason to be suspicious of the reported conclusions. Were the folks running the company really intent on providing credible information, they would use independent scholars (i.e., not being compensated by the company). Such a management would want to obviate even the appearance of a conflict of interest—their desire to provide the public with an answer being so strong. So the management at Facebook may not have been very invested in providing the public an answer to the question: how much influence do users actually have over the content in their feeds? In May 2015, three “Facebook data scientists” published a peer-reviewed study in Science Magazine on how often Facebook users had been “exposed to political views different from their own.”[1] The “scientists” concluded that if users “mostly see news and updates from friends who support their own political ideology, it’s primarily because of their own choices—not the company’s algorithm.”[2] Academic scholars criticized the study’s methodology and cautioned that the risk of polarized “echo chambers” on Facebook was nonetheless significant.[3] I was in academia long enough to know that methodological criticism by more than one scholar is enough to put an empirical study’s findings in doubt. Nowadays, I am more oriented to the broader implications of the “echo-chamber” criticism.

The entire essay is at “Beyond Facebook’s Impact.”

See: Taking the Face Off Facebook: Strategic and Ethical Issues

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[i] Alexander B. Howard, “Facebook Study Says Users Control What They See, But Critics Disagree,” The Huffington Post, May 12, 2015.

[ii] Ibid. I put the quotes around “scientists” to make the point that the conflict of interest renders the label itself controversial in being applied to the study’s investigators.

[iii] See, for example, Christian Sandvig, “The Facebook ‘It’s Not Our Fault’ Study,” Multicast, Harvard Law School Blogs, May 7, 2015.

A Biblical Basis for Integrity in a Business Leader

For Christian and Jewish business leaders, integrity can have considerably more depth than merely consistency between word and deed. In the Bible, a sustained adherence to substantive ethical principles is part of integrity. To be sure, this could be said of integrity from a non-religious, or secular, standpoint. The Bible adds a consistency whose nature transcends ethics, and thus adds a deeper dimension available to those leaders who are people of the book.

The entire essay is at “Christianized Ethical Leadership.”

Religion in Ethical Leadership in the Secular Context of Business

In Peter Berger's terms, the sacred and the profane are like oil and water. In Augustine's terms, the heavenly and earthly kingdoms are two distinct realms, a Christian being only a pilgrim passing through the latter, hence not to be "of it" while in it. I contend that such "white and black" dichotomies are artificial, and thus ill-fitting as paradigms in which to situate religion and ethical business leadership. Perhaps a devoutly religious CEO can unabashedly apply ethical elements of his or her religion without severing them from their theological underpinnings, and therefore without the need for subterfuge. I suspect that the legions of the CEO's subordinates would feel more, rather than less, respected. 

The full essay is at “Religion in Ethical Leadership in the Secular Context of Business”

President Obama as Legislator in Chief: Missing the VA Fraud

Buffeted with a whirlwind of criticism in the wake of revelations of widespread fraud in VA Hospital and outpatient clinic wait times, President Obama somewhat sheepishly admitted during a news conference on the matter that he had heard nothing of the practice on his travels around the country. With at least one instance of false scheduling at 65% of the facilities between September 30, 2013 and March 31, 2014 and 13% of schedulers being instructed in how to falsify wait-times,[1] it is odd that word had not reached the president’s ear. Maybe this is not so odd after all, for the president’s domestic trips tended to be oriented to campaign fundraisers and speeches oriented to proposed legislation. In other words, the president—and Barak Obama is hardly alone here—put his legislative role above that of his office as chief executive.

From: “President Obama as Chief Executive: Missing the Fraud at the Veterans Administration”

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1. Meghan Hoyer and Gregg Zoroya, “Fraud Masks VA Wait Times,” USA Today, June 3, 2014.