Well we all knew we’d get caught. According to Terence Corcoran, who is an Editor over at the Financial Post, us MBA Students at the Richard Ivey School of Business are Up To No Good. According to him I’ve been “indoctrinated:”
The indoctrination of tomorrow’s business leaders takes place at every school, although the Richard Ivey School of Business has set a special standard with its “Ivey Pledge.” To send a “clear message to new graduates,” all MBA grads are required to sign a mealy mash of squishy moralizing. “I will, to the best of my ability, act honourably and ethically in all my dealings… I will endeavour to act with moral clarity, grace and nobility…. I will aspire to make a positive contribution to my society.” Grads who sign the Pledge receive the Ivey Ring at a Ring Ceremony. If I were running a business, I’d only hire grads who refused to sign.
reeks of mushiness, Terence Corcoran is not really in any position to posit hiring any of us Ivey Grads. Terence has never run a company, at this stage in his life he probably never will and not surprisingly he’s never gotten an MBA. Terence and I both went to Carleton (he a long time ago, me much more recently) and while there he received a degree in Journalism (not business). So having never worked outside the Arm Chair Quarterbacking that is Business Journalism, you’d hope he could keep the rhetoric down about Corporate Social Responsibility and come up with some decent points….
Well he can’t. With a bizarre dance blaming CSR for the reason CIBC has lagged its peers over the past decade:
In 2000, we did outperform the other Canadian banks with a total shareholder return of 57.5%. Those were the days — and we may never see them again. The latest CIBC annual report sets out the new unfocused corporate focus. It opens with a commentary from the independent chair, Charles Sirois, whose first statement is that the CIBC board “has been resolute in its commitment to maintaining strong governance principles.” After a brief nod toward the need to protect and enhance shareholder value, Sirois descends into “furthering stakeholder engagement” and managing “increasing stakeholder demands.”
Ah yes. Those nasty stakeholders demanding… engagement. Let’s dissect his statement into English. CIBC did really (really) well in 2000 and since then, not so much. Well thats easy to figure out. In 2000 CIBC profits were based on things like… the tech bubble, and Enron. So 2000 was not really… here’s one of those nasty CSR words… sustainable. Today because of items like Sarbanes/Oxley, shareholder advocacy (on this note see my Ivey colleague Kyle D’Silva’s Post), and ethical standards – the world is a terrible place for CIBC according to CorcoranMilton Friedman once wrote that “the Social Responsibility of Business is to Increase its Profits.” He’s correct of course, but by that measure when you’re increasing profits you should put them on a sustainable footing so next year you will have more Profits. This makes the business, the shareholders, employees and the communities you’re dealing with in life better off. Stakeholders are just what you expect them to be; customers, employees and shareholders. In fact most Canadians in someway or another is a stakeholder in CIBC – I’m pretty sure my mutual funds have some CIBC exposure and I’m a customer. Semantics aside just because I want them to be good corporate citizens is not out of line. And if I were to work for them, acting like a good member of the community is what any society expects of me.On this front CIBC has had a hard a time as late. In the early 2000’s particularly ,what with paying billions for their Enron involvement, the drop off of their Tech business, and more recently being exposed to the losses of the Sub-prime market in the U.S.. Its sad that Corcoran is so against stakeholders and pro Shareholders… Stakeholders – you known Joe Average – are bailing out shareholders in Banks across the U.S. today, and us Canadians did back stop the Canadian Banks though by no means to the degree of our Southern Cousins… Recognizing the importance of Joe Average is probably why CSR is so important – Society wants businesses to run for the long term benefit of all Society. I guess that sounds pretty hippyish, but it makes sense – its the stakeholders profit motive – they want them to do that so they don’t end coming back to the Government and asking for Joe’s Tax dollars – ergo regulation. Along these lines CIBC seems to have stepped in it a lot over the past decade and maybe some activism to keep them grounded is a good thing.I think Terence Corcoran’s argument that we should blame CIBC’s focus on Corporate Social Responsibility for the bank’s dismal performance is junk. And his argument that Ivey Grads pledging to be good Corporate Citizens is a bad thing for the future of Corporate Profit border’s on sophistry. Thats said, our first few crops of Ivey MBA’s who took the pledge are now working for Banks including CIBC.So continuing the Sophistry (I bet the magazine went to press before this was out)CIBC just announced last week that results were up 344% this past quarter – so based on Corcoran‘s logic this was the result of Corporate Social Responsibility, those nasty stakeholders and of course those rotten Ivey Grads.So watch out world! Ivey brainwashed me to give banks quarterly profit growth of 344%!!As usual this blog is my opinion (and a lighthearted one at that) and doesn’t reflect on anyone else but me. My terrible grammar is a result of writing this after a two day long marketing simulator (you know -that brainwashing) and too much caffeine in the roll up the rim Olympics I’m training for.