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Marshall Goldsmith
Executive Coach/Author

Marshall Goldsmith

Marshall Goldsmith is an executive educator, speaker, coach and best-selling author. His most recent book is Mojo.

All about the benjamins

Q: Although they now have record amounts of cash on their balance sheets, corporate executives have been reluctant to hire and invest, complaining loudly of a new "anti-business" attitude in Washington. Is this public criticism courageous business leadership or an abdication of personal and corporate responsibility?

The business leaders that I know invest their company's money with the idea of making money for their shareholders and their company. If they believe that an investment will be good for their shareholders and their company, they should make the investment. If they believe that the investment is not in the long-term best interest of their shareholders and their company they should not make the investment.

Shareholders do not invest in companies so that leaders can 'demonstrate courage' or to prove how 'responsible' they are. They invest in companies to make money. Leaders are not investing their own money. They are investing their shareholder's money.

If leaders do not want to invest money, there is a simple reason why. They don't believe that now is the right time for them to maximize the return on their investment.

We are living in a period of great uncertainty. When business leaders feel that there is a good chance of a solid economic recovery, they will invest. We have been in business cycles before. This is not the 'end of the world'. When the economy stabilizes and leaders can see a clear vision for the future, investment will come back.

By Marshall Goldsmith

 |  July 5, 2010; 5:21 PM ET
Category:  Corporate leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Dear Readers - Thank you for all of these thoughtful comments!
1) I completely AGREE that business leaders have been too 'short term'. That is why I mentioned the desirablity of 'long term' investments.
2) Business leaders have been justly criticized for taking TOO MUCH RISK with shareholders money. I find it very puzzling that many of same people who put them down for taking too much risk and upset because they have become more afraid of taking risk.
3) I agree that 'blaming' anyone is generally a useless activity. Why bother? Just get back to work and do what you can.
4) I do not agree with stereotyping all 'business leaders' as 'excessively greedy and self-interested'. A few business leaders got this country into a lot of trouble. Millions of business leaders are doing their best to do the right thing every day. They were hardly responsible for the Wall Street meltdown.

Posted by: MarshallGoldsmith | July 9, 2010 7:55 AM
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All this talk about "uncertainty" does not seem to apply when business takes big risks knowing it has a safety blanket in the form of big bailouts, but when business knows bailouts are unlikely it gets very cautious and turns away from people. The political system is rigged in favor of business. While business CEOs walked away with billions in bailout bonuses, I lost a good chunk of my 401(k).

I do not like the corporatocracy political brand we have unfortunately developed via conservative politics. Business has no conscience. It obviously has no regard for people. Therefore, capitalism needs a regulatory face lift.

The backbone of this country is small business and family merchants who make an honest living and earn a good wage through hard work, dedication and looking out for others. That's American capitalism at work. Wall Street and Big Business shows everything that is wrong with American capitalism by being extremely greedy, heartless and by blaming government for all its failings.

Posted by: citizen4truth1 | July 7, 2010 1:12 AM
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They promised to create jobs in exchange for tax cuts. That was the deal.

If they won't create the jobs and they are just holding on to the cash, then they need to give the tax cuts back.

It's called responsibility. Corporate boards do not solely report to boards; they also report to the American people. We gave them the tax cuts and we can take them back.

If business cannot create the jobs we, the people, were promised then we do not extend the Bush cuts.

Posted by: colonelpanic | July 6, 2010 9:34 PM
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Whatever happened to the Social Contract? Capitalism has seeped into the very innards of our lives, and now the system that teaches us to 'take care of me and you be damned' has taken its meanest step. It wrecked the economy that feeds it and it's blaming us! Anti-business feelings? You betcha.

Posted by: sbuck | July 6, 2010 5:58 PM
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Liberals need to get their act together.

Blame Paul Krugman at the NYTs for corporations holding onto their cash.

Mr. Krugman is constantly shouting that we're in a continuing Depression.

In a Depression, with devaluation, each dollar you hold, becomes more valuable later, because it can buy more goods and services at lower prices.

Why would anyone who believes Paul Krugman spend any money now?

Likewise, in a Depression you have over capacity for production. Why would you invest to build greater production capacity if you think the world already has too much production capacity?

Posted by: jfv123 | July 6, 2010 4:04 PM
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As a former CEO, I understand why there is reluctance to hire. This judgment would not be to just "making the quarter;" it would be aimed at long-term strategic survival.

If I were still in my former role, I would be advising my senior people through meetings and rulings on budgets to be prudent and await events from Washington. I would tell them to "go slow" until we can see where our future governmental required and induced costs will be.

The messages I would cite would be those from Congress and the Administration that the costs of doing business increasing from taxes, regulations, potential inflation, higher employee expenses due to mandated entitlements, etc.

This is what I believe is going on now.

The solution is clarity and a message that the Federal Government is into encouraging growth, growth, growth in the private sector. This is something I haven't seen so far with this Congress or Administration.

Duane Hopper

Posted by: duanehopper | July 6, 2010 2:23 PM
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Whatever happened to the adaptability of the capitalist system spend money to make money? We gave them an unfettered market and they trickled it back to themselves? Pull your money out of the market and start your own small business? Our new market model is not Dell, Goldman Sachs or WalMart it is Aldi's slow and steady will win the game.

Posted by: J1107 | July 6, 2010 12:30 PM
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It's a chicken and egg problem. All the economic news is bad and therefor companies are putting cash in the piggybank waiting fot the news to change. Unfortunatly the only way for the news to change is for them to start spending money. If they're waiting for consumers, they're going to have a long wait. Consumers are tapped out on debt. They can neither borrow nor keep up with Cost of Living. Without any liquidity They're only buying neccessities. If businesses want the economic conditions to improve they only have to do one thing. Give every employee a raise.

Posted by: ArtDodger69 | July 6, 2010 12:19 PM
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If corporate "leaders" were thinking strategically, they would have realized that impoverishing their customer base, chronically understaffing their organizations, and ruining the environment that they depend on for their operating resources (literal and figurative) is a recipe for eventual disaster. What we are going through right now, to put it bluntly. Unfettered greed is not how you build wealth in the long run. It's a poor parasite that kills its host.

Posted by: n_mcguire | July 6, 2010 11:18 AM
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Like Lincoln said to General McClellan during the Civil War, "If you are not using the army, may I borrow it?"

If the businesses are not using the money, maybe it simply needs to be either taxed, or paid out to stockholders.

If a small business generates some money and puts it aside, that is one thing. For multi-national businesses to sock away trillions of dollars is something else.

Most large businesses need to be pared down to smaller and more competitive businesses. These present companies, too large to fail, are an insult to the nation. I think the government needs to dust off the old anti-monopoly laws, and to start shaving these large companies of their multi-million dollar excesses, and monopolistic practices.

Posted by: LeeH1 | July 6, 2010 11:07 AM
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Business "leaders" (and I use that term VERY loosely) are so focused on each quarter's results that they eviscerate the following quarter to "make it". While this might look good to Wall Street, it cuts off long term planning and investments in research and development. And with the terrorized workforce being constantly told "you're lucky to have a job" and then paying for that luck with overtime, understaffing and dealing with increasingly selfish management decisions, these "Masters of the Unverse" are under no pressure to make changes that would benefit the economy as a whole. Corporatism is a sociopatheic phenomenon.

Posted by: Quatermass | July 6, 2010 10:43 AM
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