Thursday, August 8, 2013

Why Do Businesses Exist?

Had a very good conversation last night with one of my friends. It was especially good because we disagreed on some fundamental principles but yet we were both able to maintain a civil, eloquent, thought-out conversation. So often those conversations devolve into name calling or other slights just out of convenience or exhaustion.

The conversation centered around the idea of the rights of workers versus the ability of employers to intrude into the workers' personal lives outside of the workplace. To frame the argument in as short a space as possible, the question was posed to me, "should an employer be able to fire someone for failing a drug screening?" Then he proceeded with, "should that employer even be able to drug test?" Now before you get up in arms either way, his logic was sound. If the employee chooses to smoke marijuana on his own time, what difference should that make to the employer, as long as the employee comes to work sober. On the surface I see where he is coming from. However, when you look a bit deeper, this presents a fundamental problem and this is where we hit an impasse.

My friend thinks that the employer being allowed to drug test is an invasion of privacy and prevents the employee from living his life. My argument was that the employer tells the employee before employment ever begins that drug tests are a part of employment and that failing one will result in termination. The employee willingly submits to these conditions and thus a contract is made. If that employee is tested and shows positive, he has broken the contract and the prescribed remedy, termination, is enforced. It is all willingly agreed upon up front. That employer is not  preventing  the employee from doing anything. He is just adding a repercussion. Its all still by choice. The concept of "rights" snuck into the conversation. My friend said, "what about the rights of the employee to have privacy?" I said, " what about the rights of the business owner to operate his business however he wants?" The very nature of voluntary employment is really a means for trade. Workers possess hours, which they exchange with employers for money. It is voluntary. If you dislike the terms of the trade, maintain walkaway power and sell your wares (your hours) elsewhere.

This discussion continued for a while and ended up, as these things tend to do, going around in circles. Finally, however, we touched on a fundamental difference in our way of thinking that I think warrants a mention here. The question arose, "why do businesses exist?" His answer was that businesses exist to serve customers/clients. My answer was that businesses exist to please the shareholders. Most of the time that is by maximizing profits but it is not limited to such. A little sole proprietorship exists according to the will of the proprietor. Maybe it is to make the person money. Maybe it is so the proprietor can make others happy. Whatever the case, when the share holders (single owner or millions of stockholders, it doesn't matter) are no longer "happy", the business is dissolved. In the process of pleasing the shareholders, the workers may have as their mission "to serve customers" or whatever but that mission serves the purpose of maximizing the return on investment of the shareholders (investments can be anything, by the way--money, time, love, whatever).

This fundamental difference is what made it so difficult for my friend and me to reach a conclusion on the previous discussion. According to him a business exists to serve customers so what difference does it make what the workers do as long as the customer gets served. From my perspective, the business ultimately serves the owners so the power is held by the owners and thus they can run the business as they see fit. If it ceases to serve them, they will cease to operate it.

It was truly an enlightening conversation for me. It was an exercise in thought about free enterprise, the concept of "rights" and the very core nature of business in general. I feel like I grew from the conversation. I hope he did as well.


Anonymous said...

I would sympathize with his argument of invasion, but I would also state that the employers argument has at least two valid points. 1) you cannot tell if the employee has had enough time since his last hit to the time he comes to work to be truly sober. Secondly, if the person is willing to perform acts that are against the law, then how many other unlawful acts is the person willing to commit? Could that person be so into using their drug of choice that they would be willing to steal- namely from their company? It's partly the "slippery slope" argument, which I dislike, but it also has a basis in fact.

Ryan Byrn said...

From doing books for a lot of sole proprietorships most business owners don't agree overall on the reason they operate as such. Some do it for money, some do it because the company they contract for does not give them the choice, but then a few do it because they honestly want to be responsible for their own time. The later are the people I enjoy working for the most, because they tend to be more generous to their venders and the people like me they hire. As someone who will end up with 15 or 16 1099s this year, I look forward to the repeat business from those types too.

The people who may feel they have no choice in their contractual work are the hardest to explain things to because the whole process is essentially against their will, and I've yet to be able to explain to them that their problems are still based on a choice. The accepted the contract.

While I see your friends point, I agree with you. The business does ultimately serve the people who own the power to it. In a perfect system this would still be the case, but the company would still have to service their customers honestly and with integrity. Companies like Comcast would not exist.

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