Restoring Trust in Corporations - The role of the board of directors
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Summary

Corporations are essentially people in law.   So why do they behave so differently?   Our laws give corporations the same legal status as any person, with some exceptions; namely the right to vote in Canadian political elections and hold public office.   Otherwise, corporations are considered to be people - only immortal.

 

People are taught how to behave harmoniously by their families, communities, and cultural and religious institutions.   Schools teach them how to be productive.   They get married and have children to nurture and guide, so they too can become productive members of society.   When they die they leave a legacy that is passed on to their children.

 

Similarly, corporations are also born to entrepreneurs who nurture them, not entirely unlike they way they were brought up themselves.  They live and grow in communities where they behave in ways that help them get the support they need to succeed, the way any natural person does.   In fact, in many ways, young corporations develop in the image of their entrepreneurial fathers and mothers.

 

So what happens to corporations, when they grow up that causes them to stop behaving like valued members of their founding societies?   What causes our corporate “citizens” to become aliens in their native communities and thereby breed mistrust?

 

The answer is independence.   Not unlike temerous teenagers, feeling omnipotent, corporations quickly find resources and opportunities outside their native communities and  abandon both their paternal entrepreneurs and the communities that helped them succeed.

 

The surrogates are investors, boards of directors and professional managers who thrive in entirely different and disconnected ecosystems of mutual interdependencies that cause them to abandon their founding roots as a corporate “person”.   They become immortal, independently wealthy, powerful and influential.   The transformed, soulless corporation's primary purpose is self-preservation.  It is consumed by fortifying its independence, analogous to a growing volcanic island on a fast-moving tactonic plate drifting farther from its continental origins.

 

There is only one solution to this incongruence between the “natural” and “unnatural” citizens of any nation; reestablish and cultivate the communal interdependencies of their origins.   The first step is to recognize that corporate boards are the surrogates of the paternal entrepreneurs who founded their corporations.   Like any father figure, boards must take a long-term view of their corporation’s well-being.   Boards must adopt a strategic imperative to cultivate interdependent relationships between corporations and their communities (however defined,physical and logical) to satisfy the long-term, sustainability interests of the corporation.   Greater interdependence would alter corporate motivations and stimulate behaviour that is more consistent with the expectation of all the “natural” citizens of their communities.