The corporate world, on the outside, seems to have many goals; release better products, outdo their competitors, delight customers, bring about positive social change, and so on. If one were to judge major corporations by the marketing material alone, they’d be forgiven for thinking that these companies run on happiness and sunshine, which they receive in the form of customer satisfaction. Ask any major corporation and they’ll tell you that customer delight is first, last, and all points in between, on their list of priorities. They live to make you happy.
This is obviously absurd bullshit. A CEO genuinely wants to see Joe Crock with a smile on his face? That’s the most stupid thing I’ve ever heard! Ask any real person (read: not a PR or marketing executive) and they’ll tell you that profit, growth. and the increase thereof, is all that almost any company cares about. Food and agriculture companies? They’re in the business of money, not nutrition. Pharmaceutical companies? They’re in the business of money, not treatment and cures. Car manufactures? Money. Video games? Money. Light bulbs and fixtures? Money. Very few companies are in the business they’re in because they want to make a better xyz. They do what they do because that’s how best they know how to make money.
So that has me thinking, and I’m sure some of you have thought the same; big companies want to male a profit above all else, but why? More money in a company’s account doesn’t automatically benefit anyone, and we’ve already established that companies make products to make money, not the other way around, so that’s not a good explanation. There has to be better one. After all, throughout history, up to and including the present day, companies have done disastrous and evil things in the name of increasing their profit margins. All of those links lead to stories about companies behaving appallingly in order to earn a dollar, which certainly does nothing god for anyone except for those getting paid.
So, after all this, all these terrible things and all these products and all this effort, why do companies do their very best to increase profits? In isolation, with no other action taken, no-one benefits when a company does well. No-one gets more money, because a corporation is its own entity. No one person owns it. No-one gets anything when their employer does well, that is, until their superiors praise them.
When Intel increases profits by 18% over last year, management gets showered in praise. When Chevron managed to outsell BMW this month, management gets showered with praise. Everyone gets praised by their bosses for a job well done, and they therefore get a little extra in their pay check. Lower management gets praise from middle management, and middle from upper, and upper from the CEO. The CEO gets praised by the board of directors, and that’s the crux of the issue. Why do companies want to make money at any cost, even though a richer company inherently benefits no-one? Two words; CEO bonuses.
CEOs, and therefore the rest of the chain of command, want to increase profits, because of the incentive of CEO bonuses. Why else would a company that makes boring (but useful) products, like nails or ply wood or glue sticks, care about doing well in the market place? Are we to believe that these companies are run by people who have a passion for the most mundane products on the planet? No way. They care about their bonus. There’s your answer. You may say that CEOs want to keep their jobs, but most CEOs have golden parachutes in their contracts that guarantee them millions of dollars no matter what happens to the company, so there goes that argument.