MARRIOTT LAMENTATIONS 249: Part 1 - "The purpose of corporations?and their devious use?of words;?Marriott?'pur(rs)' and 'pose(s)' unashamedly"

Jiddu Krishnamurti repeatedly advised?"the word is?not the thing". As an example, he?suggested that?the word ‘tree’ (and?associated ideas such as tree species)?distracts one from observing a?tree as an object in the?moment. Words and associations drag one to the past;?the moment and the moment’s observation?are thereby missed. Defining?things or giving?an explanation?clutters our 'vision'.?"The word is the description of the thing but the thing is not the description". It's an awesome perspective that?stems?from Krishnamurti's?philosophical and spiritual disposition and his deep understanding of?the process of?thought

But the phrase itself is?useful in a much more fundamental?way. Overall, words can be dangerous things. They are created by mind and based on knowledge and experience of the past and can be employed to condition, manipulate,?mislead or hurt. In business,?words as a means of communication?are either?genuine and sincere (rare!), rhetorical or downright deceitful. A?word that is?frequently misunderstood, discussed and argued over, or used to deceive,?is 'purpose'. What is the purpose of a corporation?

Purpose:?Alexander Pepper surmises that "the issue has become unhelpfully, and over-simplistically, polarised. On one side of the boxing ring?are those who argue that a business must above all act in a way that benefits society. On the other side?are those for whom maximising shareholder value must remain the corporate world’s key concern." To a considerable extent,?it's a tug of war between?short-term or?long-term, moral or?amoral, ethical or shady

Colin Mayer (of the BAFCP) proposed a new definition of corporate purpose: "To profitably solve the problems of people and the planet, and not profit from creating problems." In 2019, as a counter to?their 1997 declaration, the US Business Roundtable?proposed "a fundamental commitment of corporations to deliver value to all stakeholders, each of whom is essential to the corporation’s success."?Another?states that purpose should be "the pursuit of sustainable business strategies that take into account ESG factors in order to drive long-term value creation". On the other hand, as far back as 1970,?Milton Friedman famously advocated that a corporation’s sole responsibility is to make as much money for its stockholders as possible. The Council of Institutional Investors believes that "corporate purpose should be?focused exclusively on maximizing shareholder value."?

Martin Lipton et al offered?a more amplified?perspective?- that "the purpose of a corporation is to conduct a lawful, ethical, profitable and sustainable business in order to create value over the long-term, which requires consideration of the stakeholders that are critical to its success (shareholders, employees, customers, suppliers, creditors and communities), as determined by the corporation and the board of directors using its business judgment and with regular engagement with shareholders, who are essential partners in supporting the corporation’s pursuit of this mission". They?argue that?"the requirement of lawful and ethical conduct ensures minimum standards of corporate social compliance. Going further, the broader mandate to take into account corporate stakeholders—including communities, which is not limited to local communities, but comprises society and the economy at large—directs boards to exercise their business judgment within the scope of this broader responsibility. The requirement of regular shareholder engagement acknowledges accountability to investors, but also shared responsibility with shareholders for responsible long-term corporate stewardship."

Summary:?'Purpose' should be a disclosure?of?why a company exists. Clearly, the argument?centres?around whether or not businessess should have a purpose greater than just making money. Neither employees nor customers would warm to a CEO who publicly announced?'our purpose?as a company is to make shareholders rich, both at your expense and that of our customers.' At the same time, some would argue that what’s good for society isn't?always?good for business

Nonetheless, businesses should surely listen to all?stakeholders: shareholders, employees, consumers, communities, suppliers, investors, and governments. It benefits everyone if, whenever?possible, the interests of all these groups are aligned leading to?a more sincere, more inclusive company?delivering better and more sustainable long-term (as opposed to short-term!)?returns

Surely the purpose of any company is?to perfect its products, motivate its workers, please its customers, stay in business,?and reward its owners. Success then becomes?the fulfilment of its purpose, with profit just one of a number of?outcomes. Or is purpose simply?a smokescreen for boardroom reluctance to modify?the true ethos or strategy of their business (an ethos centering around?greed and a strategy based solely on profit and growth maybe)?in response to societal pressures? In other words, purposeful insincerity and deceit; stakeholder capitalism largely for show; to some, 'purpose-washing'.

Ethics, lawfulness, profitability, and sustainability?are all more important than shareholder wealth maximisation if we are to live in an ethical, lawful, prosperous, fair and sustainable society, as opposed to a shareholder-centred society. But these are mere words and the word is not the thing. Sincerity and authenticity in action?is the key to success and the living out of true purpose

[To be continued -?Next: 'The true purpose of Marriott']

John Shepherd (Marriott victim and hunger striker)