Capitalism - The Right Way

Capitalism is getting a bad rap these days. The likes of Bernie Madoff, Tom Petters and many others have given it a bad name. People have legitimate gripes about it. Many have been taken advantage of — abused of their home values, stock portfolios and salaries. There's the real sense that only a few people at the top are getting rich and that 99 percent of the rest are really struggling; capitalism is not helping, in the eyes of many.

Yet in helping companies restore, enhance and realize value, I see a positive side to capitalism happening in many of today’s small businesses: many business owners sell their business and write checks to their employees as a way of saying "thank you" for their contributions; some owners create a profit-sharing plan to share the positive results with their team; private equity firms invest in young entrepreneurs who have a better idea.

Granted, these examples are too few and far between. The premise is that when companies do well, the owners should share it with all of the stakeholders — not just keep it for themselves.

How could capitalism work better and be seen as a desirable economic system, not a system of "greed"? I believe it takes a different perspective on the part of owners in three ways:

  1. Being open with the financial results of business, treating employees as shareholders, fully informed and concerned about the financial results. This happens when owners share the state of affairs, including employees in understanding and solving problems — then sharing financial profits on the upside. When owners "keep employees in the dark", the rumor mill takes over and the work environment becomes distrustful.
  2. Treating employees as trusted partners, empowered to make decisions, not as workers who need to be closely watched lest they steal from you. Smash the time clock into pieces and replace it with a culture of shared community and team building. Owners can do this by communicating measurements of success so that employees gain the satisfaction for reaching goals together, whether it’s shipping $500,000 per week or 100 on-time deliveries each day. They can go home and say, "We had a good week."
  3. Considering all of the company’s stakeholders: vendors, customers, employees and the community. All of them have an interest in the success of the business; treat them as such and create "win-win" situations for them. Examples include faster vendor payments in exchange for discounts and better customer prices with the promise of increased business.

My colleagues and I have coined the term "Meaningful Capitalism." Capitalism can be meaningful if owners care more about all of their stakeholders and follow the examples outlined above. Owners need to consider what is best for the health of the organization first, not only what is best for their personal benefit. They should strive to have a successful transition of their leadership to another leader, for the good of the organization — not set up for failure to "prove" how important they were to the success of the organization.

If business owners can focus on more meaningful stakeholder relationships and building a successful organization of committed team members, then capitalism has a chance to do what it was intended to do. It can be the engine that provides economic freedom in the United States, the greatest country on earth, a country based on "freedom and liberty for all" through the development and preserving of the free enterprise system.

Although imperfect, capitalism still provides the best way for people to hold their heads high with pride in the fruits of their labor, earning a fair wage.

Announcements

Subscribe to newsletters, announcements and updates from the Platinum Group.