Managing your desires.
There are four basic levels of desire. The second level of desires includes wealth, power, and respect.
How do desires from the the second level specifically relate to corporations under the current economic conditions?
How should corporations manage these desires to remain successful in the current state of the economy?
Discuss these questions in the context of the Four Principles of Purposeful Action, with examples and appropriate links. Please review the accompanying video post on “Managing Desires.”
This post was written by Brad Renter, who will lead the blog discussion for the week starting March 3.
I believe that the corporations being heavy effected by the current economic crisis, especially those at the heart of the crisis, are being lead by the first two levels of desire. They are being driven by the desire for money, wealth, and power and are being lead by self-serving leaders. A company lead by the first two levels of desire will not be able to survive for long. In order for a company to survive through these trying economic times, they must put the customers first and lead the company with ethical actions. When the economy picks back up, customers and society will remember, for years to come, the actions of those companies that are at the heart of the economic crisis. They will the actions of the banking industry and the actions of those leading the companies. The companies who are doing what is right during these times will rise above the rest.
In a way it is almost as if the current market landscape us undergoing a kind of corporate Darwinism in which only the righteous (i.e. moral, ethical, and purposeful) will survive. The actions of these companies could only sustain them up to a point. The foundations of these companies may have been stable and solid at some point in time, but once they were being led by the second levels of desire the foundations quickly began to rot.
And you are right - even if these companies somehow do manage to pull through financially, their reputations are forever tarnished.
There are many things that go into the cost of electricity. The reality is that a decrease in gas prices has little to no effect on the cost to generate electricity. Most of electricity is generated by coal. Coal prices have continued to rise over the years. The cheapest means of generating is hydro but in a drought situation, hydro isn’t an option. Another reasonably priced option is nuclear which until recently has been protested against. The sad reality is it takes 10 years to get a nuclear plant built and running.
In the Tennessee Valley, the utilities are at the mercy of TVA and TVA, like other electric generating companies is at the mercy of the world for fossil fuel prices and they are limited to what they can generate based on their resources. When you have a supply and demand situation and China is getting a lot of the coal, the supply here dwindles and the demand is still there. Thus, the price increases. When TVA raises the price the utility pays for electricity due to increased fossil fuels costs, then the utilities must do so also. Although gas prices have dropped, coal has not and therefore there has not been a decrease in electricity costs. The bad part is the utilities, that supply the power to the consumers, get the bad publicity for the increases when it is just a pass through cost. I know because I work for one and we have to be mindful of every penny we spend. Where I work, we are a not-for-profit organization so when TVA increases what we pay them, then we have to pass it through to our customers. We operate on the bare essentials. Unlike the gas companies who are constantly manipulating the situation to keep the prices per gallon high. With electricity, TVA is not limiting their supply to keep prices high. They generate what they can but the reality is that there are times when they don’t have the resources to generate what is needed to meet demands and must buy off the market which is costly.
The US government is trying to mandate that 25% of electricity generation come from renewable energy sources in order to reduce electricity costs. Most discussions exclude hydro form the list of what qualifies as renewable energy. The issue with this is that in Tennessee, solar and wind generation is not really an option and this requirement puts an unfair burden on those that can’t generate with the renewable energy sources.
http://www.tva.gov/fca_faq_0209.pdf
http://www.eia.doe.gov/neic/infosheets/coalprice.html
http://www.worldwatch.org/node/6026
This post is in response to Scott’s post about energy companies.
With the current economics that are taking place, we constantly seam to hear more and more about CEO bonuses and pay. Do we pay these people too much or is it unreasonable now that main stream America needs to watch every penny to get by? Wealth, power and respect: I would dare say that the majority of CEO types are after the first two and if respect follows then great. It seams ludicrous though that these positions are being compensated for well as compared to the people that actually do the work. I do, however, believe they do deserve a sizable salary but not to the extremes we are seeing today.
As we have stated, the companies will eventually act in a manner representative of the leadership character. If the wrong desires drive the action, then the corporation will become a taker environment.
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
See the bottom of this link for more detail on CEO compensation as compared to the masses.
If companies wish to survive for the long haul, I can’t help but feel managing the desires to be a giver will always prevail. Righteous desires will lead to true purposeful action and aid all others that are in this brook with us.
I do agree on this. Few managers and CEO’s earn mor than they deserve to.
Chris
While I do not have a problem with CEO pay and bonus’, these are usually in the contract the CEO and company signed.
But, I dont know how “bonus’” can be paid when the company is losing money.
Roy,
Oh I understand how the system works. I just question the reasonability of some of the numbers.
I agree Chris. I was disturbed to see how much money some of those CEOs make in the current economic situation. Am I jealous and want them to make less? Not at all! If we were in a profitable business and were making money, I can care less what their paychecks are, because if they are profitable they deserve it. But if you receive federal bailout money and then sign some insane bonuses to CEOs and executives, then there is a problem.
For example -“Merrill Lynch, the loss-making Wall Street bank, paid its staff billions of dollars in bonuses even as it prepared to be taken over by the US government-backed Bank of America.”
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4316475/Merrill-Lynch-paid-billions-in-bonuses-before-bailout.html
Great point. The CEO of Chrysler only agreed accept a salary of $1 as part of federal bailout to save his company.
http://blogs.wsj.com/autoshow/2008/11/18/chrysler-ceo-would-accept-salary-of-1/
I think the few cases we’ve seen of CEO’s accepting a $1 salary is even more insulting. It’s not genuine. They’re only hoping to avoid being demonized by the public. All of these guys had to have been aware of their respective companies pending financial woes. Perhaps not to the extent that we’re seeing now, but all of them knew they were in bad shape. We’re seeing very little accountability. These guys are no better than Madoff. They’re only sorry because they were caught.
I have no problem with CEO’s having high salaries if they’re doing their jobs.
That is an interesting article Chris. It is crazy to me to see that the CEO’s pay is basically double what the corporate profit is (Figure 7). It makes you wonder how the board of trustees and the stock holders allow this to take place. Either the board is just as unethical or they aren’t paying attention to what is going on. Also, it is interesting to see how this seperation in CEO pay and the profits and workers pay has increased over the years. In the early years on this figure, the lines were realitively close together.
The ratio in Japan is 10 to 1. American corporation leaders are greedy.
http://filsalustri.blogspot.com/2008/11/salary-pyramid.html
This is true with most corporations, however there are exceptions. The CEO’s or leaders of these corporations are always going to be taking more from the company than the others that are really doing the work. This is all okay until these corporations cross ethical boundaries and start operating toward their own specific interests and not others. After this has occurred these corporations are brought under scrutiny, which normally they would have never been in.
Corporations have to make money to survive. As they get more wealth, they get more power and respect from individuals and other corporations. In today’s economic conditions corporations that can not stay at the second level of desire should move down to the first level. This level will allow them to survive, using positive ethical values, until the situation passes. At this time they need to go and listen to the customers’ wants and needs. This input will give them a vision to create a new mission for future wealth.
http://www.businessweek.com/print/magazine/content/06_23/b3987083.htm?chan=mz
I agree about using positive ethical values!
“It seems reasonable to consider that an ethics code coupled with the attitudes and behavior it influences make a significant contribution to the organization’s ethical climate” [ http://www.accessmylibrary.com/coms2/summary_0286-20630458_ITM ]
In order for corporations to be successful in any market, specifically under the current economic situation they must maintain a market presence or power within the market. Additionally they must also maintain a level of respect by other corporations and consumers if applicable. Lack of respect will damage a reputation, therefore leading to the loss of power. If both the levels of desire, power and respect are maintained, wealth will come to these organizations easily once these levels are maintained. Imbalance within these levels of desires can lead to the destruction of a corporation.
The following article discusses when corporations become too powerful in a market and how they can lose respect from other corporations and consumers.
http://www.businessweek.com/2000/00_37/b3698001.htm
That’s an interesting article, Brad. There’s a discussion of how corporations have become detached from the American public and have, in a sense, lost the ability to relate to their customer base, at least in any financial sense. One could argue that failure to successfully relate to others, the fourth principle of purposeful action, has played a role in the current economic crisis. Just as individuals can become lost or steer down the wrong path so too can corporations.
Jimy you have good quote in regard to desires.
“We are living in a world governed by desire. This is part of being human. As we seek to fulfill our desires we often do not consider whether or not we are harming others, being truthful, ethical, moral, etc. ….”
The world is running on fuel called desire. Human is desiring for things till he dies one way or another. Some are desiring to be free from the desires and all life long in search of it. From the quote above shows that not all the desires cannot be bad? But free from desires give freedom for mind.