Psychopathy is a personality disorder characterized by an abnormal lack of empathy combined with strongly amoral conduct, masked by an ability to appear outwardly normal.
In the US, corporations, limited liability corporations, and other types of a business have a clear common goal, to make a profit. That is their primary, and in many cases their sole purpose. While corporations have been assigned many of the rights given to US citizens, such as first and fourteenth amendment rights, they are certainly lacking in empathy and I think it’s fair to say that many corporations act amorally. That is to say that they operate without morals, good or bad. Corporations have been around since the mid 14th Century and up until the 18th century they were mainly chartered companies that governments used to do their bidding like the British East India Company or educational institutions.
Prior to the industrial revolution, most businesses were sole proprietorships or partnerships. In both cases the owners were liable for the debts and the actions of their businesses, business owners paid the price for their failures and reaped the benefits of their success. Starting in the 19th century, with the advent of the industrial revolution, corporations started becoming more popular, their main feature is that the owners were not liable for its debts and its investors could only be held responsible to the level of their investments.
So let’s say you have $10,000 in your personal bank account and you own ABZ Corporation and it has $1000 in its bank account. You order 5000 widgets a month on credit, every month for a year. Widgets cost you $1 each and you sell them for $3 each. On the 13th month your widget order gets eaten by your pit bull. Widgets-Are-Us wants’ their money. You tell them that the company only has $1000; they can take it or take you to court. Even if they took you to court, they’d not get more than the $1000(I’m not a lawyer and don’t pretend to know the law, don’t let your dog eat your widgets). You as the business owner are not liable the corporation is liable. If you had a partnership, you and your partners would be liable.
Which one of these business models sounds like it would promote empathy and morality? The one that makes people responsible for their actions or the one that isolates them from their actions?
Corporations have enabled moral ambiguity that has contributed to many of the problems the world is experiencing. From the global financial crisis to BP’s oil rig disaster in the gulf; focusing on short term profits at the cost of long term goals sounds like something you’d expect from a toddler, not from educated adults. What can we do?
As employee’s we can influence our corporate cultures and move towards creating transparency at our workplaces. It’s hard to make back room deals and perpetuate shady practices when most people in the company know what’s going on and you have a corporate culture that’s moral and empathetic. As a people we can embrace motivation 3.0. Self directed employees who are allowed to develop mastery/optimum performance and be a part of something bigger than themselves are thoroughly engaged and unbelievably dedicated to their work, they stop being cogs and become innovators and collaborators. They also increase profits and productivity.
As business owners we can look at new corporate structures like L3C, or B Corps. An L3C is a low profit limited liability company. It’s a cross between an LLC and a nonprofit. A B Corp or Beneficial Corporation has to go through a certification process to ensure that the work they are doing or products they are selling are beneficial to society, it also covers environmental practices, employment practices and purchasing policies. Currently there are over 300 B Corp’s in the US including: Seventh Generation household products and King Arthur Flour.
It’s time we embraced the changes that are needed to make our companies more sustainable and responsible and our citizens happier and more productive.