Profit before Prudence

Profit before Prudence

It is now clear, as far as press report and comment allow, that the two Boeing 737 MAX aircraft that crashed did so because of a faulty system that was not duplicated and that was inadequately warned to pilots. The investigation of these tragic crashes will continue, I imagine , for a long time. Comment so far has, of course, elicited much sympathy for those who lost loved ones as well as for the dead themselves. Lost lives are irreplaceable. Lost love is very hard to bear.

Inevitably much of the comment has been about the aircraft themselves, their construction, testing and licensing. With the entire fleet grounded large sums of money are being lost daily. There has been much speculation about the Boeing Company’s loss of credibility. For a great company to find itself in such a disastrous situation is a warning to all manufacturers and suppliers to double-check the safety of their goods and services.

Even more important is the question of Profit before Prudence. All production and services are under a heavy discipline of cost and time. Such disciplines encourage people to cut corners. Risk is calculated, often with unwarranted optimism – because we all know that nobody succeeds without taking risks. You can be lucky or unlucky. In the case of the 737 MAX aircraft luck should never have entered anyone’s consideration. But it did and 346 lives were lost.

Business must take more responsibility for the organisation and running of the world. It has been increasingly doing so for a long time. The pace has quickened. With volatile and often weak politicians business people who are in charge of the world’s wealth must exercise control. But it must be a responsible control, not a greed-based control. Chief Executives of the future will spend at least 50% of their time on matters outside the running of their businesses. This imposes a responsibility beyond value of business and size of dividend.

Chairs of all businesses should now start every Board Meeting with a set of questions. The following is not exhaustive and each industry or service needs to construct its own list. The questions should be subject to approval of the business’s licensing authority. They should be statutory. Minutes should record the answers. Every director should sign the minutes.

[1a] How safe are our products and / or services?

[1b] When did we last establish that for each product or service?

[2a] What is our consumer complaints current record?

[2b] Has it grown or shrunk since the last meeting? Explain why.

[3a] What is our accident record since the last meeting and year to date?

[3b] Has it increased or diminished since the last report / last year? Explain why.

[4a] How do our projected profits compare with the amount spent on safety?

[4b] Who endorses the safety figure? Which supervisor and board director confirm it?

[5a] What is our current staff education (not welfare) budget?

[5b] How does it compare with our anticipated dividend?

[6a] What are our financial and physical contributions to the survival of the planet?

[6b] How does our financial contribution compare with our anticipated dividend?

[7] What social work are we doing beyond the needs of the business?

[8] Are we putting Prudence before Profits in all of the above areas?

Businesses will complain, of course, that this is just another burden on their companies. They will be correct. However, if they are to effectively run the world they must pay attention to survival and all the social issues a population-growing planet requires. We cannot afford to let them become another bunch of politicians unable to discipline themselves enough to run the world properly.

With companies at their present size and of their existing power – and greater – we must recognise that they will effectively be in control of us whether we like it or not.

We had better see they do it decently.