FIXING what ails American business after the ethereal boom of the '90s and the etherizing bust of 2000-2001 won't be as quick or easy as once thought.
Two years have passed since the stock bubble burst, and equity markets still only percolate along. Big-name corporations such as Enron and Tyco continue to fall from grace. Congress remains deadlocked on reforms that might restore confidence in corporate governance.
While parts of the economy, such as productivity, are strong, it's clear that reform by big business itself will be needed to bring back a crucial, unseen element: trust.
Too many hyped stock sales, too many conflicts of interest, too many examples of executive greed, and too many accounting tricks have left investors, employees, and consumers with a sour mix of caution and fear toward today's business norms.
While the free market carries its own self-cleansing wisdom, company boards and top executives must do more than just hunker down and wait for the good times to roll back in.
To restore trust, corporations need these fundamental changes:
Make company boards truly independent (no consulting fees from the firm) and force directors to spend more time challenging management.
Rid companies of the notion of a heroic CEO who needs supersized compensation. The CEOs of the '90s who let themselves be portrayed as celebrity saviors mostly failed to build teams. They didn't take the long view or connect with workers and consumers.
Restore employee loyalty by swearing off wholesale layoffs in downturns. Many firms that kept workers on over the past two years have gained in worker loyalty and customer service.
Cater to loyal shareholders who are with the company for the long haul, not fly-by-night investors looking for quick returns. Let shareholders pick an accounting firm to audit the company.
Recognize that not every worker, shareholder, or customer operates out of greed. While self-interest is a motivator, too much of it destroys a company or markets. People have core values, such as honesty, that sustain the system and must be nurtured.
A company that puts trust before profits will earn trust in return.