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CORPORATE GREED AND ETHICAL MANAGEMENT

By Engr. Ped Salvador, Ph.D. Professor of Mathematics and Management International Academy of Management and Economics November 10, 2011

Corporate Greed Milton Friedman, the noted and famous American economist before a live interview in a television show before his death, had mentioned that capitalism as an economic system would never succeed unless this would be based from a foundation of greed. He also emphasized that other forms including socialism, communism, and fascism were all together based on the fundamentals of greed. Mr. Friedman who died in 2006, unfortunately did not see and experienced the effect of the so-called capitalism based on greed as the world is now experiencing a global economic and financial crisis which many believed may continue in the coming more years. This bad economic scenario incidentally, further aggravated with the collapse of housing and automotive industries in the late 2000s that created havoc on the life of not only ordinary American individual but also affected countless middle class families in the United States. Today, the problem advanced as Europe is battling an unprecedented debt crisis that they never experienced in the last so many years. The boom and bust of Dot Com companies in the United States in the late 1990s has provided already some symptoms of weak economic management and further became more pronounced with the collapse of Enron, WorldCom and Andersen Consulting among others at the start of 21st century. Many Filipino financial analysts believed that the Philippines was spared from the effects of this financial crisis, mainly, the reason being is due to the fact that financial systems and controls of domestic capital were more stringent and tight compared with that of the American systems. Many international economists also, believed that the effect of 911 disaster in 2001in New York City has triggered the American financial system to be more lenient for borrowers that catapulted the economic disaster. Greed as a motivator for capitalist to accumulate exceedingly wealth in the form of profit can be very devastating , specifically when fruits are not equitably distributed to everyone who labored. When a worker has run-out of savings and
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disposable income became nil, he would live and survive on a level of subsistence effecting a very slow growth on the economy due to low consumption creating a population inequity and poverty thus resulting to widespread social problems. The Philippine society is filled with so much social problems, primary of which is poverty both urban and rural, which borne out of due to lack of economic resources not only because of unemployment and underemployment, but more of due to exploitative nature of labor-management relations provided by socially irresponsible capitalists, entrepreneurs and managers. Labor contracting is very predominant to countries, Philippines in particular, where there are more supply of labor than demand. When just wages are given to workers and employees and salary adjustments are based on merits, the salary gap between labor and management will be manageable. However this scenario is being defeated when corporate management introduce and implement the so- called 5months contractual system and renew hiring eventually offering the same old wages and salary. Direct labor cost which is variable then became fixed since the cost of labor would be the same throughout unless there is an intervention from the government through legislation mechanism. Unless a good portion of the profit generated will be invested to human capital, working condition and facility improvement including safety and business expansion to generate more employment, one can say that this accumulation of so much profit on a continuous basis is the worst form of the so called corporate greed. Ethical Management I believe that corporate management can be ethical. One analogy can be cited to expound this exposition. In sports like tennis, badminton, bowling, basketball, boxing, etc. paying spectators and patrons would only be fully satisfied if the players are well prepared both mentally and physically thus inducing so much excitement during the process of competition making the game of sports truly encouraging to watch and patronize continuously. However, if the rules of the game are inadequate or not fully defined or not fully implemented, there are big chances that results would not be coherent with the spectators' expectations resulting to dissatisfaction and later non- patronage to the sport.

For sure, there would be loser and winner, but it is the competitive process usually the one that would remain in the hearts and minds of the spectators. To quote " It is not winning or losing the game ,it is how did you play the game". In this light they would be willing to go back again and again to patronize the sport because they were fully satisfied especially for those players which would always display their never- say- die efforts in playing the game. If the players would continue their great efforts to become a world-class athlete and imbed and set to their minds the nature of competitiveness, more and more fans would be encouraged to watch and patronize the sport. This definitely would be a high gain not only to players, spectators, and producers but also to the economy in general. Ethical management focuses more on quality and reliable goods and services for total consumer, customer, and client satisfaction. Business players would prepare themselves by reducing their production cost and eliminate all forms of wastes and inefficiencies in their operations. The efforts are geared towards lowering the price after the elimination of all types of wastes. Profit is not compromised and low -priced high quality products and services will be patronized thus increasing and maximizing the market share. If the business players are ethical and continue to display this concept, more and more high quality products and services would be available in the marketplace for customers to enjoy and mass consumers would thus be more satisfied and very willing to continuously spend money to get these products. Economic growth will then continuously evolves without recession, provide employment, reduce poverty and improve the quality of life of everyone. Inside the company, when top leaders are ethical, employees and workers would be greatly motivated to do more since just- management principles are predominating the working atmosphere. Bayanihan system or helping each other would be the primary norm making the labor-management relations more bonded and stronger. Profit would be utilized wisely and everybody has the fruits to share equitably. This is the true essence of ethical management.

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