Article: Hypocrasy of Corporate America

By Ronald C. Tobin

Before I get into my topic, I want to make a few matters crystal clear: 1) I am an advocate of absolute laissez-faire when it comes to the marketplace. 2) As a result of this, I am opposed to any and all government regulations, no matter what they claim to do. 3) As a capitalist and a libertarian, I find it useful and necessary to point out that the modern market is not free, not capitalistic. We live under a mercantilist system, one that is grinding truly free enterprise into the dust – or is at least attempting to do so. I trust that everyone here is now clear on where I stand on the issue of free markets – I support them without reservation, and will continue to work towards the dismantling of the current mercantilist system.

Modern Corporate America appears to have found a new tool in its struggle to motivate and retain quality employees. This tool was developed by the Harvard Business School, and is commonly referred to as Breakthrough Service. The concept holds that employee satisfaction leads to employee loyalty, which in turn leads to customer satisfaction and customer loyalty. When the first four objectives are achieved, the final result is greater profitability and revenue growth.

Taken at face value, one is hard pressed to disagree with the concepts of Breakthrough Service. Satisfied employees are indeed more loyal to their employer, more productive and more creative. In turn, customers who are satisfied with their experiences in dealing with a company’s employees are more likely to be loyal, continuing to do business with that company, often increasing the dollar value of business done. A company that actually did these things very likely would enjoy greater revenue growth and profitability, benefit from lower employee turnover, and have a loyal customer base. Servicemaster and Taco Bell are prime examples of corporations that actually implemented the principles of Breakthrough Service.

It is apparent, however, that many corporations do not practice what they preach, especially when using truly sound ideas like Breakthrough Service. A classic example comes to mind about an Arizona branch of a now nationwide concern. A couple years ago this branch participated in the initial roll-out of the program, and it was highly successful. Employee satisfaction was up, turnover dropped, and there was an active Employee Committee that was able to get things done. The Branch Manager was a highly motivated fellow, who really believed in Breakthrough Service. Employees respected him because he kept his word. Customer satisfaction was high because the level of service was constantly improving. It looked as if things were on course for continuous improvement.

Such was not to be, however. A year after this company went through a merger, this manager, recognized by many as one of the best in the company, was forced out of his job due to a lingering personality conflict with upper management. The new management team has simply let Breakthrough Service slip away. Of course, they still pay lip service to it, promising its revival at their earliest opportunity. Morale at this company stinks, turnover is way up, and customer satisfaction is declining. One can clearly see the writing on the wall.

Clearly, hypocrisy runs rampant in Corporate America. It is a function of the convoluted, mercantilist marketplace that these companies exist in. As such, the best and the brightest often get cashiered, and good ideas get tossed out with the garbage. Programs that give employees more power, like Breakthrough Service, are often at odds with line management, who want to keep the control for themselves. The mercantilist system is on shaky ground – if the political system it depends on is replaced, then it will surely perish. In the long run, we would all be better off without it.

Capitalism and mercantilism are not the same economic system, contrary to popular belief. The time has come to convince more people of this fact – one that readers here know only too well.

Appeared in THE THOUGHT, September/October 1998 issue.


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