Thursday, October 14, 2004

Conflicts of Interest

The past few months, there has been a lot of news on corporates not doing the right al. Moral dilemmas come are part of the score. David Lamont, my business management professor at school emphasized that "The primary responsibility of a company is to make money for its shareholders who are its owners". But what if this means it is not treating its employees well,
or if it is gouging its customers?

Its a difficult question to answer. Wal-Mart is supposedly doing the wrong thing by not giving its employees enough pay or benefits. Any company not paying its employees health benefits in the US should cease to exist, simply on grounds of cruelty.That includes some of our dear Indian blue chips, who send people to client projects, expecting to fend for themselves if they fall ill.

But,shareholders are happy, aren't they? comes the countershot. I read an article in the WSJ a few months back, which talked of how this was causing Costco, and other discount retailers to reconsider their benefits packages, because the stockmarket was not rewarding them enough as compared to Wal-Mart, which has better margins because of the poor benefits it offers its employees.

Where does this stop? Do we ever stop looking beyond the next quarter's earning results, and look to do the Right Thing (I'm sure there is a trademark on that phrase - I saw that somewhere). No one's talking of sinecures here - only reasonable benefits in this messed-up health system, where the costs of visiting the doctor are enough to give one an ulcer.

1 comment:

Jerold Holscher said...

There are a few books on the subject, some very