The Perils of Corporate America

Over the course of the past 6 months, we've all heard stories of multi-billion dollar "recovery packages" and corporate "bailouts" that have been put in place by our government to lessen the impact created by stupid lending and overly-conservative business practices. But what do we, as the citizens do with this information?

Well, for most folks, we have done one of two things. 1) We have thrown our hands up and said "Okay Obama, here you go. I'm going to trust you because you got given this mess by Bush and his bush-league friends, and I believe that your large government programs will help us out of this mess." Or, like most people I know, say something like this: "Obama and Bernanke are destroying this country. By the time they are out of office, China and Japan are going to be foreclosing on US!"

Okay... As most of you know, I'm a pretty hardcore libertarian. I don't believe in publicly funded education or the FDA, much less a $700 Billion bailout, but sometimes, we've got to do something good with what we've been dealt. We've got to remember to vote--not just nationally, but in our local and state elections as well. These are the people whose governance you're actually going to feel directly.

That said, I often face an inner struggle about how my libertarian beliefs line up with my hatred for the US "free-market" economy. I am fed up with how corporations have no legal responsibilities on an individual level, how the money is retained at the top, and how shareholders have more power than the employees. When profits are down, workers are cut, rather than executive salaries. In order to encourage outside investment, some corporations cut worker benefits or paid time off, and mandate salary-freezes just so that the numbers show that their profits were up this quarter. I'm sure you know all of this! So, hypothetically, in a highly competitive marketplace, this wouldn't matter--the free market would balance itself out.

The problem, however, is that our marketplace is becoming less and less competitive. Local groceries are being forced to close down because they cannot compete with larger Wal-Mart type stores, whose nearly limitless financial backing makes it possible for them to stay open for long periods of time without profiting (enabling them to keep prices low), until they've driven out the competition. Likewise, small banks are being bought up by bigger banks, who can give larger interest rates on accounts, smaller loan interest rates and more practical access tools like online banking--something that some small banks cannot afford to do without extensive corporate financial support.

If you talk to any small business owner, they can describe these issues to you in much more detail and with much more passion. (Trust me...) They'll tell you that in order to compete and profit, you have to cater to a niche market, gain incredible customer loyalty and offer prices on your goods or services that will keep people coming in, even during an economic slowdown. And you have to be willing to work a ton of hours and be willing to make scant wages from time to time.

So, hypothetically, how would I get repeat business if I entered a community already dominated by large, big-box corporations? How would I maintain a steady profit stream and offer incredible competition to the places that would normally be forcing me to close my doors?

In my mind (which is a bit simple, I suppose), I would start with the community. In order to actively recruit business from people in the community, you have to be willing to show the community how much you are willing to give. If that means closing the store on Sunday evenings so that all employees could do voluntary community service, or offering free delivery to widows, orphans, the ill and the elderly, something would need to be done to show commitment to the community. I would run my business like I run my own personal finances-- giving back 10% of my store's income to charitable organizations, churches and mission groups. I would offer discounts to all customers who paid in cash, rather than credit, and would offer weekly freebies to individuals who pledged to do most of their shopping with us.

Next, I would move to the employees. It is important not only to compensate employees well, but exceptionally well. This includes offering full benefits, paid time off, and retirement plans EARLY on in the course of their employment, and being willing to split profits like a team would split profits. As the "CEO" of the company, I would create a rule establishing that at no time can any person make more than double the pay of any other person in the organization. This means that if I were making a salary of $100k/year (full-time), the cart boy and the janitor would each be making $50k minimum (if they also worked full-time). I would establish a salary-based pay scale where everyone would make a predictable weekly paycheck for their efforts. Full time would be 35 hours, half-time would be 20, and quarter time would be 10 hours/week. Any hours over 35 up to 45 would be paid time and a half, and holidays would be paid double in the form of an extra check at the end of the month. I would not allow any employee to work over 45 hours in a week. Because of the nature of the financial structure, increased company success would result in more capital coming in, which would be split evenly among all members of the company, according to time spent at the company. These bonuses would be distrubated annually, based upon how many years an individual had spent at a company (1/2 year being the lowest awarded). So, basically, if the business had been open for 5 years and me and two other employees had each worked there the whole time, one employee worked there for two years, and another for six months, we would divide the money (in this example $50k) based upon the years worked total:

Me-5 years
Employee 1- 5 years
Employee 2- 5 years
Employee 3-2 years
Employee 4-0.5 years

Total: 17.5 years

50,000/17.5= 2857.14/year

Me- (2857.14)x 5= 14,285.70
Employee 1- (2857.14)x 5= $14,285.70 bonus
Employee 2- (2857.14)x 5=$14,285.70 bonus
Employee 3-(2857.14)x 2=$14,285.70 bonus
Employee 4-(2857.14)x 0.5= $1,428.57 bonus

Whoa! That's a lot of money!

Additionally, a commitment would need to be made that no employee would be terminated based upon company financial hardship until the following events had occured:

1) All executive board members (CEO, President, COO, CFO, etc.) must take a cut in pay equal to the lowest full time salaried employee before any low or mid-level employee is terminated.

2) All executive board members must retain this status for at least six calendar months, until financial hardship is overcome.

3) If within six months, the company still needs to eliminate a job, it can do so, but cannot increase executive salaries for at least another six calendar months.

This would give a level of unparalleled accountability to the company by ensuring that everyone had a decent living wage, as well as giving the low and mid-level employees the security in knowing that their employer would rather make personal sacrifices than make lay-offs.

As a final incentive, employees who eliminated all revolving credit accounts (all credit cards and loans with the exception of the house) from their credit report would be given a "debt-free" raise of 5% of their salary, so long as they kept these accounts closed. Members of the team who pledged to exercise an hour a day would be given free access to a full gym, as well as a 5% "good health" raise--incentives to keep our employees healthy, both physically and financially.

Maybe, if we can implement some of these ideas into a new era of corporations, we can finally restore consumer confidence, boost the economy, and help people live healthier, more fulfilling lives and have more rewarding careers.