It strikes me that within corporate governance there's a way of thinking that mirrors one of the things I like least about journalism - default cynicism. I dislike it for two main reasons. First because I find it hard work and demotivating to deal with, since you're constantly told that low motives lie behind whatever activity you're considering. Second because I find it a very unenlightening way of looking at the world. If everything, no matter how principled, brave, whatever, can be collapsed back into the advancement of self-interest, then we can't really distinguish between anything, can we?
Where it comes from I don't know, but it seems to be tied up with a desire to see, or perhaps be seen to see, things are they 'really are'. To cut through through the guff, and get down to what people are really doing, and why they are really doing it. Don't fall for all that naive, hopey changey stuff, that's not what these bastards are really like, they are all pursuing their own agendas.
In the governance world, this style of thinking sees low behaviour everywhere. When directors are not shirking, they are fiddling the numbers to ensure their incentive schemes pay out. Well, call me not cynical enough, but I don't buy it. I'm in no way misty-eyed about the executive class, and I'm sure that there is a fair chunk of it that is concerned with material rewards, and that this is a big bit of why they do what they do. But a) it's not all of them, perhaps not even most of them and b) that doesn't mean that they are corrupt and therefore likely to engage in the kind of behaviour ascribed to them.
In fact, in both the political and corporate world I would describe such a default cynical mindset as naive. It will get you through, because you can always come up with a reason why an apparently well-meaning/altruistic/brave action is actually self-interested. And actually looking at game theory and research into cognitive biases (see right at the end of this old post) you can see why such a mindset, once in place, might never get shaken off again. But, as I said at the start, because this view explains everything it explains nothing. In other words its not really affected/informed by experience.
My concrete example of this is executive pay. The cynical view of this says that executive rewards have gone up because directors line their own pockets and, with the connivance of rem consultants, spend their time designing and implementing targets that they know will be easy to hit and thus schemes will pay out. Yet companies were encouraged to make the performance-related bit of reward large - so that they didn't make a lot of money if the company underperforms. And most big shareholders say that they accept that companies need to pay top whack to get the best people. So what's the big shock about what we see? It doesn't really require self-serving executives to emerge. Personally, as is obvious, I think the focus on performance-related rewards is an enormous waste of time, but I don't think it's a 'con' or a 'rip-off'. I think it's fundamentally flawed, not that it's a basically sound model undermined by greedy execs.
And ultimately I think that a cynical view gets it wrong because it put way too much emphasis on the individual and their standards of behaviour (or lack of them) rather than the context. It might be quite an enjoyable worldview to adopt, since it lets us see lots of 'villains' that we can enjoy loathing, but I'm not sure it helps us make sense of what we see in the corporate world. We may not think much of the executive class but, to paraphrase Sam Spade in The Maltese Falcon, don't be too sure there as crooked as they're supposed to be.
3 comments:
It's a kind of vulgar economic determinism, as practised by Private Eye.
I blush to mention the obvious but a rather more sophisticated view was once summarised as 'social being determines social consciousness'.
One doesn't have to believe Executives are always cynical, greedy and crooked. One just has to believe they exist in a social and working environment where the unacknowledged, default assumptions about motivation - and indeed, success - are based on accumulation and a theoretical model of self interest.
exactly. it's particularly odd to see folks on the Left falling into this way of thinking (though I understand the attraction).
Really good post, and thanks for bringing to my attention that Thomas Gilovich book, I’ll be sure to add it to my list!
As part of my job I often get to see the level of pay that directors award themselves, and what annoys me is that they seem to be rewarding themselves for the good performance of the company, irrespective of whether it was brought about by external factors out of their control or by the hard work of people beneath them (although I’m not disputing that they too have worked hard themselves). Just seems to be a case of reward themselves for the good times, blame other factors during the bad, as most people seem to do.
However, I too realise that I may have this attitude in order to try and justify my centre-left political beliefs, telling myself that if I were in their position, I would give myself less pay and increase that of those lower down in the corporate ladder in order to set a moral example.
Could go on about this for ages, but thought provoking nonetheless!
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