I ask questions and I am not alone in this, but I don’t think that enough people ask simple questions. When headline earnings are declared or a company declares that an executive director has received (paid himself?) a bonus I want to understand the pathway that led to that number. Not everything, but it has to make a little bit of sense. I want common sense to be regarded as a high art, more valued than spin or shiny brochures.
If a business sells unnecessary insurance to a customer, is that bad business practise?
On the one hand the customer should check what they are buying and if they don’t need the insurance they should say no. Why does the customer say yes? The salesperson makes a compelling case, or presents the information in such a way that the default settings sound plausible. Is this immoral? The buyer may have real needs that go unfulfilled because they have bought this unnecessary product. Should the seller aspire to a moral code of conduct or is this a case of buyer beware, and that is where the onus remains?
In a way this is the heart of the problem. The seller is only able to do this mis-selling if the seller is a trusted entity. The seller is only able to do this misspelling if the buyer is bamboozled by terminology that sounds complex and clever and by marketing material that holds together.
This would not happen if the trusted entity is in fact trustworthy i.e. acting morally. In a world where some companies act morally and others do not the best defence is an enquiring mind, a confidently enquiring mind. If large numbers of buyers ask simple questions until they understand what the seller is trying to sell, it does not even require training but it does require confidence. Confidence in simple maths will always wash off the befuddlement that is conjured by a confident salesman. And if the confidence is trickery it will break up and be exposed but if there is something sensible under it then that too will come to light.
So I repeat. If a business sells unnecessary insurance to a customer, is that bad business practise?
If the customer remains forever under the illusion that the insurance was necessary, and feels reassured and happy then maybe the insurance was a good thing. This could fall under the category of doing a bad thing for a good reason…. but. But it will only remain good if the customer never finds out that things might have been otherwise, never discovers that he/she has been duped.
When the customer finds out that they have been lied to or cheated, stolen from, made out to be a fool, all happiness is gone. The customer will probably not return any time soon.
Selling someone stuff that they don’t need is short-term-ism. It is usually driven by corporate decree or by the type of measurement applied to the employee doing the selling and the incentives offered to such a person. The employee is acting for short term gain. By extension, the middle managers and the top executives are demanding this type of short term-ism. This is a sort of Ponzi scheme that relies for continued success on a steady supply of fresh punters to be duped.
This is one part of the question. The other follows.
For a company that sells shares on the stock exchange, sales numbers feed into the public numbers, the measures that are used by people who buy shares to gauge the health and profitability of a company. When extreme short-term thinking feeds into the public numbers, the public numbers may look good but there is no easy way to for the share buyer to interrogate those numbers and determine whether the “growth is sustainable”. And that is just the honest share buyers. It is possible that the share buyers are aware of the share price – sales numbers – Ponzi scheme but they want to get in, and out again, and make a profit on the trade.
Very little exists within the scheme to encourage long term thinking or honesty and there is no way for me to change that. But everyone who comes into contact with these numbers can be confident enough in their own native intelligence to ask why and how and for whose benefit.