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Jamie Dimon, President and CEO, JPMorgan Chase (AP Photo / Frank Franklin II)
On Monday, the Business Roundtable, an association of more than 180 CEOs of major US companies, led by JPMorgan Chase's highly respected CEO, Jamie Dimon, issued a statement that could radically change the mission of companies and the lives of their employees.& nbsp;
For more than 600 years, capitalism has reigned supreme. Companies had to generate the most profits for their shareholders. Employees, vendors and the communities in which they operate were of less concern. All that mattered was the end result and the shareholders' income on their investments. The pursuit of profits prevailed over everything else.
The Business Roundtable recommended that businesses change their business and focus on their employees, where they operate and their suppliers, to ensure fair treatment for all. This will come before the needs and wants of shareholders.
CEOs say that Americans deserve an economy that allows every person to succeed through hard work and creativity and lives a life filled with meaning and dignity. They believe that the free market is the best way to create good jobs, a strong and sustainable economy, innovation, a healthy environment and economic prospects for all. & Nbsp;
According to the press release, the group is committed to:
- Provide value to our customers. We will continue the tradition of American companies to show the way to meet customer expectations and even exceed them. & Nbsp;
- Invest in our employees It starts with fair compensation and significant benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We promote diversity and inclusion, dignity and respect. & Nbsp;
- Treat equitably and ethically with our suppliers. We are committed to serving as good partners to other businesses, large and small, that help us fulfill our missions. & Nbsp;
- Support the communities in which we work. We respect the inhabitants of our communities and protect the environment by adopting sustainable practices in all of our activities. & Nbsp;
Economists, such as the legendary Milton Friedman, argue that the only business goal is to generate and maximize shareholder profits. According to Friedman, "companies that adopt a responsible attitude would face more restrictive constraints than others, which would make them less competitive. This new statement of the country's leaders rebels against the traditional economic doctrine. & Nbsp;
If this actually happens, it will be a boon for the workers. Management will reward employees as much as their profits. This should translate into more vacations, greater maternity and paternity leave policy, in-service training, real retirement plans, flexible working conditions, better coverage and more. insurance and a voice in the management of the company. These are noble goals. Cynics can argue that it is acceptable that giants, such as JPMorgan, Amazon, Google or Facebook (the latter two have not signed the statement), act magnanimously and make touching and socially conscious statements, because they own a treasure of war and dominate their industries respect. When a company, such as Amazon or Facebook, has a near-monopoly, it is easy to provide care to their employees. In competitive markets, small and medium-sized enterprises do not have the same financial resources. This could lead to a situation in which the largest companies will implement the new plans and the best and brightest companies among the smaller ones will move to larger ones. These larger companies will become even larger and their competition will weaken, dwindle and fall apart.
Interestingly, the astute CEO group has neglected to include details on how their bold statements will be turned into action plans. They left out clauses that claim that the plan will be open to public scrutiny. There is no mechanism to indicate whether a third party will keep these promises alive.
Human nature is not taken into account either. Will a CEO, leaders and executives really sacrifice their multi-million dollar compensation plans to provide additional benefits to their employees? They also ignore the important role of investors. If profits are not valued, investors will sell their shares and look elsewhere for opportunities that reward their capital. If enough investors flee, the company's share price will collapse and management will have no choice but to cancel their newly promulgated benefits, which hold employees accountable.
It is easier to present oneself as caring people fighting income inequality in an environment characterized by a record number of jobs and a booming stock market. During the first decline of the economy or a recession, businesses will likely retract in order to save resources. It does not make them bad. They will face a Hobbesian dilemma of maintaining generous commitments to all employees and risking bankruptcy, or skimping on their promises and firing staff to stay afloat and competitive.
Skeptics see it as a blatant moral smoothing, appealing to the growing wave of social responsibility demanded by consumers and not causing any significant and significant change. However, the CEOs made a noble statement and it would be wonderful for everyone if they really commit to it.
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Jamie Dimon, President and CEO, JPMorgan Chase (AP Photo / Frank Franklin II)
On Monday, the Business Roundtable, an association of more than 180 CEOs of major US companies, led by JPMorgan Chase's highly respected CEO, Jamie Dimon, issued a statement that could radically change the mission of companies and the lives of their employees.
For more than 600 years, capitalism has reigned supreme. Companies had to generate the most profits for their shareholders. Employees, vendors and the communities in which they operate were of less concern. All that mattered was the end result and the shareholders' income on their investments. The pursuit of profits prevailed over everything else.
The Business Roundtable recommended that businesses change their business and focus on their employees, where they operate and their suppliers, to ensure fair treatment for all. This will come before the needs and wants of shareholders.
CEOs say that Americans deserve an economy that allows every person to succeed through hard work and creativity and lives a life filled with meaning and dignity. They believe that the free market system is the best way to create good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunities for all.
According to the press release, the group is committed to:
- Provide value to our customers. We will continue the tradition of American companies in terms of satisfying customer expectations, or even exceeding them.
- Invest in our employees It starts with fair compensation and significant benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We promote diversity and inclusion, dignity and respect.
- Treat equitably and ethically with our suppliers. We are committed to serving as good partners to other businesses, large and small, that help us fulfill our missions.
- Support the communities in which we work. We respect the members of our communities and protect the environment by adopting sustainable practices in all our businesses.
Economists, such as the legendary Milton Friedman, argue that the only business goal is to generate and maximize shareholder profits. According to Friedman, "companies that adopt a responsible attitude would face more restrictive constraints than others, which would make them less competitive. This new statement of the country's leaders rebels against the traditional economic doctrine.
If this actually happens, it will be a boon for the workers. Management will reward employees as much as their profits. This should translate into more vacations, greater maternity and paternity leave policy, in-service training, real retirement plans, flexible working conditions, better coverage and more. insurance and a voice in the management of the company. These are noble goals. Cynics can argue that it is acceptable that giants, such as JPMorgan, Amazon, Google or Facebook (the latter two have not signed the statement), act magnanimously and make touching and socially conscious statements, because they own a treasure of war and dominate their industries respect. When a company, such as Amazon or Facebook, has a near-monopoly, it is easy to provide care to their employees. In competitive markets, small and medium-sized enterprises do not have the same financial resources. This could lead to a situation in which the largest companies will implement the new plans and the best and brightest companies among the smaller ones will move to larger ones. These larger companies will become even larger and their competition will weaken, dwindle and fall apart.
Interestingly, the astute CEO group has neglected to include details on how their bold statements will be turned into action plans. They left out clauses that claim that the plan will be open to public scrutiny. There is no mechanism to indicate whether a third party will keep these promises alive.
Human nature is not taken into account either. Will a CEO, leaders and executives really sacrifice their multi-million dollar compensation plans to provide additional benefits to their employees? They also ignore the important role of investors. If profits are not valued, investors will sell their shares and look elsewhere for opportunities that reward their capital. If enough investors flee, the company's share price will collapse and management will have no choice but to cancel their newly promulgated benefits, which hold employees accountable.
It is easier to present oneself as caring people fighting income inequality in an environment characterized by a record number of jobs and a booming stock market. During the first decline of the economy or a recession, businesses will likely retract in order to save resources. It does not make them bad. They will face a Hobbesian dilemma of maintaining generous commitments to all employees and risking bankruptcy, or skimping on their promises and firing staff to stay afloat and competitive.
Skeptics see it as a blatant moral smoothing, appealing to the growing wave of social responsibility demanded by consumers and not causing any significant and significant change. However, the CEOs made a noble statement and it would be wonderful for everyone if they really commit to it.