Who Do Corporations Fight for?
The private sector is coming under increased pressure to play a greater role in strengthening society and helping raise up the weakest elements. In Taiwan, TSMC CEO Morris Chang is leading by example and helping build a brighter future for all.
Who Do Corporations Fight for?By Jimmy Hsiung, Kaiyuan Teng
From CommonWealth Magazine (vol. 559 )
Against the backdrop of ongoing food safety scandals, Taiwan Semiconductor Manufacturing Co. Ltd. CEO Morris Chang spoke Oct. 22 at the CommonWealth Most Admired Companies awards ceremony. Presenting his remarks as part of the address "Who Do Companies Fight For?" Chang challenged the private sector to consider the social responsibility it must shoulder.
As CEO of a marquee company with 20 years' market leadership, Chang said "do no evil" is the golden rule of business, and he would rather have clients let him down than disappoint them first. Following are excerpts of his speech, edited for brevity:
In light of the recent spate ofissues occurring throughout society, people are justified in wondering "Who do companies fight for?" Today, I would like to address this topic and share TSMC's position on this question.
If one were to approach a number of management academics and raise the issue of corporate responsibility, one would likely be given a laundry list of stakeholders. This would include the board, customers, employees, management, shareholders, society and suppliers.
But my take is there are only three independent variables. The boss and the big shareholders? No, they are not the ones we fight for, nor are the management. So then who do we fight for? I've narrowed it down to three: employees, shareholders and society.
Employees are the most important stakeholders among the three I have specified. We make a commitment to a quid pro quo arrangement with our staff. In return for a meaningful job with good pay, they offer loyalty and hard work.
Our commitment also extends to promoting balanced living for employees. TSMC has always held that from the most junior worker up, none should spend more than 50 hours at the office, including me.
Time outside one's place of employment is for exercise, education, family, relaxing, socializing and sleeping in an orderly, planned fashion. That is what is meant by balanced living.
Corporate interests built on good customer relations
Achieving balanced living is much easier if an employee has meaningful work. When we were preparing this presentation my secretary asked if this meant providing employees with challenging work. I told her I used the term meaningful for a reason. High-level employees need challenging work, but focusing solely on this issue will only upset colleagues in the lower echelons of the organizational structure.
I deliberately excluded customers from my list. The reason is I believe that to give shareholders excellent returns and employees good pay, good customer relations are mandatory. In other words, the interests of shareholders and employees are derived from good relations with customers.
Shareholders are also key
In regards to fighting for shareholders, this group includes anyone with company shares. An individual's interest is directly proportionate to the number of shares they hold, and all shareholders should receive good, quality returns.
For their part, shareholders are looking for long-term, quality returns. We hope to seek out long-term shareholders, or long-term investors, but shareholders have the right to pull out at any time. By good returns we mean the share price and cash dividends.
Society no longer talks about morality
Corporations exist to help make society better. For TSMC, a few markers on its vertical axis, indicating what TSMC is doing, include abiding by the law, boosting awareness of climate change, building a world-class working environment, creating trust, encouraging innovation, delivering excellent shareholder returns, fostering balanced living for employees, not manipulating political ties, not offering bribes, opposing corruption, prioritizing good corporate governance, promoting energy conservation, providing excellent jobs, strengthening the commitment to corporate philanthropy and taking a stake in environmental protection.
Once the above-mentioned has been achieved, on the horizontal axis, TSMC can elevate positive social aspects such as caring for the earth, economic development, engaging in charity, morality, seeing that people live comfortably and work happily, and rule of law.
I have found that people talk very little about morality these days, but I personally find it very important.
Whether in terms of education at home, in the family or at school, I think the biggest difference between around 60 or 70 years ago and today is that morality was very important, but nowadays it is rarely mentioned. And outside the school environment, it is not talked about at all.
As part of society, corporations rise and fall with society. I quote Google's motto, "do no evil," in the pursuit of winning situations for companies, customers and society, and to caution against getting involved in zero-sum games.
Not getting into zero-sum games with customers is something I am most pleased about as head of TSMC.
There have been two stages in my professional life, the first half being 25 years at Texas Instruments Inc., and the second half at TSMC. Although I was in charge of worldwide semiconductors for TI, there were few chances to pursue win-win situations with customers, and most of the time we ended up in a zero-sum game, where if you make a little bit less I make a bit more, and when I profit a bit more you profit a little bit less.
Over more than 20 years at TSMC, while sometimes zero-sum games have occurred, most of the time we have the chance to pursue win-win situations with clients.
This is why our philosophy is to treat customers as partners. Our attitude is that, we would rather have the customer do us wrong than let the customer down ourselves. This is precisely the opposite of Chinese warlord Cao Cao's quote, where he said, "I would rather disappoint everyone in the entire world than be wronged by a single person."
It is true clients have let me down, yet we cannot keep score. Rather, when it comes to customers, intellectual property rights holders, suppliers, tool designers and society, we must be supportive. Because for TSMC, our attitude has always been that we need each link in the entire supply chain.
Translated from the Chinese by David Toman