Business and politics

DOES THE CULTURE of politics with its exercise of power, arm-twisting, use of cash incentives, and behind-the-scenes negotiations also infect corporate governance? How does business cope with nepotism, dynasties, rule-bending, collusion with suppliers, and unauthorized budget insertions?

Companies occasionally employ political tactics to achieve corporate goals. Political games can also be observed in private companies. Behind large conglomerates are individuals who employ the Machiavellian lessons in power and manipulation.

Still, there are differences in how politics operates within the corporation that often makes the transition from the private to the public sector (and vice versa) full of challenges.

Corporate governance sets enforceable rules. There is no need to set up a committee to investigate an anomaly and how this can be prevented in the future. The offending party is given his walking papers and if there is an explanation that accompanies the departure, the public disclosure is short and to the point — Mr. X is no longer with the company. Determining fault and who bears it is swiftly decided.

Media interest is limited. Business executives address a narrower base of interested parties (employees, stockholders, customers, and investors) than politicians (enemies, constituents, and the struggling masses). Thus, media attention on business is narrow since the goings-on in a corporation seldom affects issues that people march in the street for. Seldom do business stories make the front page, even if they should. Scandals involving public-private partnerships that have gone wrong may pop up in online posts and blind items.

It’s all right to buy voting shares. While regular politicians buy votes, they make sanctimonious declarations to the contrary. It’s acceptable however for a block in a listed company to increase its number of shares and buy them in the open market or from other parties wanting to cash out. Shareholders routinely disclose increasing shares in a buyback strategy and state their present share of outstanding stocks. The whole vote-buying operation is transparent.

Evaluation of management performance is routine. For a listed company, the approval (or disapproval) rating is reflected in the price of the stock and the volume of its transactions. A stock that is “not liquid” is one that nobody bothers to buy or sell daily. Its price hardly moves in either direction. For the most part, corporations do not need to wait for a survey company to track how the stakeholders view them.

Constituents can easily move in or out of an investment. If stockholders are unhappy with the way the CEO is running the company, there’s no need for criticism and lobbying. A vote of no-confidence is a simple matter of unloading shares at market price and moving on. They switch funds to another company or hold on to the cash and wait on the sidelines.

Given the political dimension of conglomerates, it is puzzling to note that the top position in government has eluded business moguls crossing into politics. Their names come up in “what-if” speculations. Now and then they jump into the political fray but come up short. Some may win legislative positions. But getting elected to run the country has yet to be achieved by corporate types.

Are the credentials of business success not seen as proof of fitness to govern the country? Given the risk-reward ratio that businessmen are constantly evaluating, it is deemed more appropriate to support (not just with kind words) more politically experienced candidates rather than joining them in an electoral contest.

Corporate politicians do not employ surveys and polls to determine their standing in the organization. It is the earnings per share and dividends declared and marketing strategies that attract support. Corporate leaders rely on verifiable numbers to make their case as being fit to govern, not the numbers that attend their rallies.

Maybe the corporate governance rules of accountability, clear objectives with key result areas, transparency, customer care, and quick correction of wrongdoing can be applied to the political organization.

Corporate governance with its transparent process and enforceable rules of conduct may have already found its way into some local government units. There are sterling examples of certain cities that are being run honestly and efficiently like top corporations.

Business and politics can indeed be mixed into a powerful brew… depending on the proportion of one or the other.

Tony Samson is chairman and CEO of TOUCH xda.

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