Corporate Scandal: A Response
Marc Lavine, MBA2
Issue date: 2/3/03 Section: Opinions
The Question of The Week last week-- "how do you feel about the negative view of business, and what would you suggest to improve matters"-- generated a range of responses. Two of the opinion writers faulted the media for creating more of a story than there actually is. Another writer asserted that, "business is not suffering because of its perception." I am compelled to disagree. Placing the blame elsewhere, or downplaying the issue, causes us to avoid the real scope and magnitude of the problems.
Numerous credible sources have reported, with considerable specificity, on very real problems. Consider the following:
Schwab Institutional, a division of Charles Schwab and Co., conducts a survey and determines that "corporate wrongdoing has had a significant impact on both stock market performance and participation in 2002." Among its survey of more than 1,200 financial advisors, 82% of respondents cited corporate scandals as the biggest factor upsetting the markets, followed by disappointing corporate earning and fear of war.
The Wall Street Journal reported last spring that the Gallup organization and Watson Wyatt, had conducted surveys showing a demonstrable drop in employee confidence in senior management. Watson Wyatt's research also shows that returns to shareholders are nearly three times higher at companies where employees report high trust levels, than at companies where employees lack trust in management. The Wall Street Journal also reported that "unethical business practices" were one of the top reasons cited by employees for quitting, in a 2,800-employee random national survey last year by Walker Information of Indianapolis. It was cited by 9% of employees who had resigned from their employer in the preceding 24 months. BusinessWeek asserted that, " faith in Corporate America hasn't been so strained since the early 1900s, when the public's furor over the monopoly powers of big business led to years of trustbusting by Theodore Roosevelt (May 6, 2002)
Numerous credible sources have reported, with considerable specificity, on very real problems. Consider the following:
Schwab Institutional, a division of Charles Schwab and Co., conducts a survey and determines that "corporate wrongdoing has had a significant impact on both stock market performance and participation in 2002." Among its survey of more than 1,200 financial advisors, 82% of respondents cited corporate scandals as the biggest factor upsetting the markets, followed by disappointing corporate earning and fear of war.
The Wall Street Journal reported last spring that the Gallup organization and Watson Wyatt, had conducted surveys showing a demonstrable drop in employee confidence in senior management. Watson Wyatt's research also shows that returns to shareholders are nearly three times higher at companies where employees report high trust levels, than at companies where employees lack trust in management. The Wall Street Journal also reported that "unethical business practices" were one of the top reasons cited by employees for quitting, in a 2,800-employee random national survey last year by Walker Information of Indianapolis. It was cited by 9% of employees who had resigned from their employer in the preceding 24 months. BusinessWeek asserted that, " faith in Corporate America hasn't been so strained since the early 1900s, when the public's furor over the monopoly powers of big business led to years of trustbusting by Theodore Roosevelt (May 6, 2002)
