Questions about big business and finance world...

[Beorning]

I'm watching The Dropout on Disney+ currently... Also, I'm reading and watching stuff dealing with the FTX collapse. All of this reminded me of all kinds of questions I have about the worlds of big business, finance, corporations etc...

Here are a few random questions and issues to discuss:

1. Can anyone explain to me how this whole power structure of big corporations work: CEOs, Boards of Directors etc.?

2. Is it really possible that you can start a company, build it from the ground up... and then, one day, a board of investors just fires you? And take the whole company away from you?

3. A heavier question: is the world of business and finance really ethical? I noticed that in The Dropout there seem to be these various wealthy businesspeople who are shocked by Elizabeth Holmes' lies, unethical business practices etc. Similarly, in the commentary regarding the FTX scandal, various people shake their head at the unethical behaviour of Sam Bankman-Fried, breaches of normal corporate rules etc. All of this suggests that the "normal" world of big business operates on moral principles. But, on the other hand, there seem to be hundred of cases of corporations and financial institutions behaving unethically, swindling customers etc. I've heard multiple times that big business is motivated solely by greed and the upper management in such companies is infested with sociopaths... So, what is true? Is the business world an okay part of society - or is it something corrupt?

Anyone willing to toss their five cents?

[Oniya]

So, what is true? Is the business world an okay part of society - or is it something corrupt?

Anyone willing to toss their five cents?

First off, you should realize that an either/or, black and white answer is never possible when conscious thought is involved.

I'm passing along an article about sociopathy/psychopathy in business leaders.  It also links to a number of scientific studies about the prevalence of this trait.

As for your question

2. Is it really possible that you can start a company, build it from the ground up... and then, one day, a board of investors just fires you? And take the whole company away from you?

Steve Jobs was literally fired from Apple in 1985.  So yes, you can start a company, build it from the ground up, and still get fired.

[TheGlyphstone]

2. Yes, but its indirectly a consequence of your own actions. When a company needs capital to grow, the most common way to get it is selling stock- fractional ownership in your company. And when people own a portion of the company, they generally want a voice to represent their interests, hence the board of investors. Because you sold them a partial ownership of the company, its not 100% yours anymore, and they can fire you if they own more than you do and judge you a detriment to their interests.

[Thufir Hawat]

More relevant to this board, being fired by the company you created also happened to a certain E.G. Gygax !

[Vekseid]

It can happen when you lose 51% or more of your voting shares.

Some, like Zuckerburg and Murdoch, get around this by keeping tight control of voting shares.

[Oniya]

More relevant to this board, being fired by the company you created also happened to a certain E.G. Gygax !

True - and in a more permanent fashion!  (Jobs was eventually re-hired when Apple acquired NeXT.)

[Beorning]

First off, you should realize that an either/or, black and white answer is never possible when conscious thought is involved.

True. But I wonder what the general tendencies in these matters are...

In a way, it's important for me personally, as I happen to be an employee of a large bank. Now, my particular job doesn't involve selling anything - I actually solve the client's problems. But I keep wondering: am I working for a respectable institution? Or for a ruthless business that cheats and exploits the clients?

I'm passing along an article about sociopathy/psychopathy in business leaders.  It also links to a number of scientific studies about the prevalence of this trait.

So... yeah. About 20% of successful business leaders are at least partial psychopaths. What does it say about the business world in general?

Steve Jobs was literally fired from Apple in 1985.

So yes, you can start a company, build it from the ground up, and still get fired.

2. Yes, but its indirectly a consequence of your own actions. When a company needs capital to grow, the most common way to get it is selling stock- fractional ownership in your company. And when people own a portion of the company, they generally want a voice to represent their interests, hence the board of investors. Because you sold them a partial ownership of the company, its not 100% yours anymore, and they can fire you if they own more than you do and judge you a detriment to their interests.

Is it possible to sell, say, 20% stock to raise some money, but keep the rest for yourself?

Also, help me out with the terms here... CEO is the head of the company, right? Assuming the company doesn't sell stock, is the CEO always the company's owner - or are there owners who hire CEOs to run their companies?

Also, what is the the Board of Directors? Is it the group of people who runs the company (CEO, CFO etc.) - or the owners who oversee the CEO etc.?

[Oniya]

The CEO is not necessarily the owner.  The CEO (Chief Executive Officer) is the person in charge of making The Big Decisions (hiring high-level employees, making partnerships with other companies, looking at market opportunities).  There may also be a CFO (Chief Financial Officer), who is in charge of - well - where the money is allocated.   Depending on the size of the company, there may be a Board of Directors, who are people who are the voice of the share-holders in a publicly-traded company.  If there is a Board of Directors, they often elect the CEO.

The site I have linked to - Investopedia - has a considerable amount of information on business structure and terms.

[Beorning]

Thanks!

All right now, two more things:

1. I know I'm kind of hung up on the whole issue of morality of business... sorry! But do you guys know any specific examples of businesspeople etc. who would be known as genuinely decent individuals?

2. Something I'm wondering about is the modern business dress code... and whether it still exists? I mean, I recently saw some images and scenes from a TV drama The Industry, which is about bank employees. I noticed that the people in this show were all impeccably and elegantly dressed. Meanwhile, as I mentioned - I work in a rather big bank, too. Actually, I work at the corporate HQ. And... I still get away with coming to work in a hoodie. And the overall style of dress in the office is casual or "smart casual" (tops). People in suits? That's a really rare sight here... I wonder if the corporate culture is so different in Poland than in the US or UK?

[Azy]

All I can really add is that my Psychology 101 textbook said in the personality disorder chapter that narcissists tend to do well in the business world because one of the personality traits associated with narcissism is the ability to charm people.  The same goes for politics.  Donald Trump was used as an example.  That made me laugh.   

I did find the physical book I bought when I thought I was going to need it.  It's called 'Psychology; From Inquiry to Understanding'.  Published by Pearson, authors Lilienfeld, Lynn, and Namy. 

I also know that a friend of mine has gone into business with a friend.  Personally I think he's in over his head.  His friend is CEO and owner, the boss man.  He's COO (Chief of Operations), which basically he's in charge of making sure everyone else under him is doing what they need to do.  That's how he described it to me.  He's also involved in major company decisions.  Someone else is CFO.  And then they have department heads.  Most of what they've been doing lately is having meetings with wealthy people to talk them into investing and/or being a future client.   

[Annaamarth]

Thanks!

All right now, two more things:

1. I know I'm kind of hung up on the whole issue of morality of business... sorry! But do you guys know any specific examples of businesspeople etc. who would be known as genuinely decent individuals?

Not that I'm aware of at the moment.  Not impossible though.

2. Something I'm wondering about is the modern business dress code... and whether it still exists? I mean, I recently saw some images and scenes from a TV drama The Industry, which is about bank employees. I noticed that the people in this show were all impeccably and elegantly dressed. Meanwhile, as I mentioned - I work in a rather big bank, too. Actually, I work at the corporate HQ. And... I still get away with coming to work in a hoodie. And the overall style of dress in the office is casual or "smart casual" (tops). People in suits? That's a really rare sight here... I wonder if the corporate culture is so different in Poland than in the US or UK?

Dress codes are much less formal in a lot of places, especially in cubicle farms.  For example, I work in a tech industry at a factory site.  In the factory area, cleanroom clothing is required.  Local site employees can wear ... pretty much whatever they want, and as long as nobody is showing up in a g-string the company doesn't seem to care.

However, the company I work for sells large machines to this factory.  I am not a local employee, I am a guest and a representative of my company.  To that end, I actually have a dress code.

I'm not sure there's anything quite like being the only person in a collared shirt in a room full of sweatpants and leggings.

[CopperLily]

1. I know I'm kind of hung up on the whole issue of morality of business... sorry! But do you guys know any specific examples of businesspeople etc. who would be known as genuinely decent individuals?

Ben and Jerry, the guys who started the ice cream brand.

But generally, I think it's useful not to rely on the ethics of corporations. They are expressly amoral entities, and are designed to be such. Active regulation is what's needed to keep them "in bounds", so-to-speak.

[Oniya]

In at least some aspects, the guy who runs Costco.  They have a good health-care program in place for the employees, on top of a decent wage.  The CEO has even gone up against Lindsey Graham to defend his choice to pay his entry-level employees well:  https://www.huffpost.com/entry/lindsey-graham-costco-ceo-minimum-wage-debate_n_60385208c5b60d98bec8fc9d

[Rinzler]

Ben and Jerry, the guys who started the ice cream brand.

Hmm. Well, they did sell out to Unilever, a company with a history of highly questionable ethics and practices - the most recent being when it hired a private security firm to 'get heavy' with peaceful picketing strikers in South Africa.