“Did we hit our numbers?”
These are the five words said by every CEO at the end of every financial quarter. Despite their desire to bring great products to their customers or meaningful work to their employees, this question will dictate what a company does next. No matter their intentions, ethics, morals, or cultural background, leaders are beholden to prioritize shareholder profits; every CEO’s business decision is subservient to this primary directive.
“Making numbers” is squarely focused on exponentially increasing a single-bottom line of profits for shareholders. Growth in and of itself is natural and justifiable in terms of helping a business stay sustainable. But when a corporation feels the pressure to make their fiscal numbers grow exponentially, this is where humans and the planet lose by always being deprioritized.
This isn’t just a problem for companies: Governments struggle with this notion, too. The nature of Gross Domestic Product (GDP) is to focus on exponential growth and productivity. This is why governments and businesses don’t prioritize the environment or social issues. It’s because they don’t need to in order to boost their perceived GDP—whatever isn’t reflected in those numbers-based metrics in essence doesn’t exist for the GDP.
It’s a common business trope to say “what you measure matters.” But when we use those five words as the measuring stick, you get only one answer regarding the world’s primary metric of value: “You don’t matter.”
Where did this anti-human mindset come from? Senator Elizabeth Warren recently introduced a new piece of legislation in August of 2018. It’s called the Accountable Capitalism Act and provides a quick snapshot of how society has gotten to where we are regarding shareholder profits. Here’s an edited excerpt:
For most of our country’s history, American corporations balanced their responsibilities to all of their stakeholders—employees, shareholders, communities—in corporate decisions…But in the 1980s a new idea quickly took hold: American corporations should focus only on maximizing returns to their shareholders…In the early 1980s, America’s biggest companies dedicated less than half of their profits to shareholders and reinvested the rest in the company. But over the last decade, big American companies have dedicated 93% of earnings to shareholders—redirecting trillions of dollars that could have gone to workers or long-term investments.
“Less than half of profits” going to shareholders instead of employees or other stakeholders to “93% of earnings” is a massive increase. Due to this demand over the past decades, of course companies need to make decisions that satisfy this (newish) trend. And as of late, the easiest way to increase margins is via automation, especially when considering that firing a human often means you not only stop paying health and insurance costs, but you can increase productivity and lower error rates as well.
In a recent New York Times article, “The Hidden Automation Agenda of the Davos Elite” author Kevin Roose noted that, “All over the world, executives are spending billions of dollars to transform their businesses into lean, digitized, highly automated operations. They crave the fat profit margins automation can deliver, and they see A.I. as a golden ticket to savings, perhaps by letting them whittle departments with thousands of workers down to just a few dozen.”
But what’s hidden about this agenda? Blame the elites, but when shareholder law and neoliberalist zeitgeist dictate that shareholders now expect 93% of earnings, of course you’re going to automate every job you can.
In a way, it’s comforting to learn about the increase in shareholder expectations over the past few decades. It means we can stop vilifying corporations for making profits when they’re legally bound to do so, and redirect our passions to shifting the underlying economic paradigms destroying humanity from the inside out (or at least the portion of humanity not on the receiving end of the 93%).
This also means we can start listening to people like New Zealand prime minister Jacinda Ardern, whose wellbeing budget and goal of measuring economic progress beyond GDP were a part of Davos conversations this year, in the midst of automation angst. We can also look to the growing numbers of companies looking to gain Benefit Corporation status (also known as B-Corp).
We need to get real about what’s really driving the future of humanity. It’s not AI, globalization, or political chaos: It’s these myopic, privileged, destructive five words. It’s about time we switched their order to tell it like it is:
“Our numbers have hit us.”