Tom Gardner: Recap

Tom Gardner, Co-founder and CEO of the Motley Fool, presented to the Business Ethics Society on Wednesday, February 13th.  His presentation entitled, Conscious Capitalism and Foolishness, focused on the discussion of various attributes that make a corporation enjoyable to work at, own, or invest in.  Tom talked at length about the importance of having a high employee retention rate to maintain a successful business over an extended period of time.  He spoke about six specific factors that have significant influence on a company’s ability to retain its employees, and ultimately achieve long-term success.

First, he identified a living wage for all employees as the most important requirement of a conscious company.  In the absence of a living wage, employees will feel undervalued, discouraged, and unhappy, which limits their productivity and detracts value from the company.

 

Tom then spoke about the necessity of providing employees with goal-oriented, purpose driven work.  It is crucial for employees to know that they are working to accomplish a specific goal and that everything they are doing is serving a purpose for the overall success of the company.  Next, the discussion shifted to the importance of creating a work environment that is full of great people.  People are the life-blood of an organization and without great people a company will not be successful.  The fourth factor Tom discussed was employees that were encouraged to grow and develop by taking on challenges.  He proposed that employees are more likely to think creatively, achieve valuable results, and enjoy their job if they feel empowered and challenged by their work.  The fifth characteristic of a successful company is flexibility.  Companies that demonstrate the first four qualities and also provide employees with flexible schedules are those that are most likely to retain employees and succeed over time.  Lastly, he presented the opportunity to experience big financial gains as a factor for employee retention.  However, without the first five factors, a big financial upside is rather ineffective.  Contrarily, Tom identified short-term incentives (large financial gains) as a primary root of unethical behavior.  Ultimately, when deciding what company to work for, own, or invest in, it is important to take all of these factors into consideration.

We would like to thank Mr. Gardner for kindly sacrificing his time to educate, amuse, and enrich the members of the BES.

Tom Donaldson: Recap

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Professor Tom Donaldson of the Wharton School at the University of Pennsylvania spoke to BES on the three ethical roots of the financial crisis. He began by eliminating key misconceptions, namely the role of greed and hedge funds. Greed was apparently present, but not more so than places outside of Wall St. There is no evidence demonstrating that hedge fund behavior had anything to do with the crisis, either. Donaldson suggested multiple other factors that contributed far more heavily. For example, there was a “tech shock” and regulation “lag,” contributing to regulators’ inability to monitor firm activity effectively at that time.

Furthermore, people were absorbed in a phenomenon known as “pay-for-peril,” defined as the idea that it is not your money being invested, so the rational thing to do is take the risk to maximize profit. People understood the unethical nature of such an act, but literally everyone was doing it, so bad behavior became normalized in economic life. Problems extended far beyond single-firm issues, as well; collusion between salespeople and independent auditors from different companies was rampant. In light of all the pessimistic information, though, Donaldson suggested reasonable ways of preventing similar financial crises, which he called “Pelican’s gambit solutions.” They include: coordinated claw-back policies on executive pay; collaborative risk identification; distribution of revocable “membership” benefits; and transparency rules. He left us with a hopeful message: at extreme moments, firms can cooperate to do incredible things.

 

BES thanks Mr. Donaldson for kindly sharing his time to provide such an interesting, practical lecture.