While Wall Street is having the come-aparts and Washington is scrambling to save the economy, we have seen the risks of putting partisan politics ahead of what’s good for business, and main street. Yet amid the turmoil, it seems many are having a hard time staying focused on the most basic objectives–in this case, keeping the nation’s financial system intact and are instead trying to score political points and advance their own side agendas.
Fannie Mae and Freddie Mac got in trouble–partly–because they served a dual-purpose. Not only were they backing most Americans’ mortgages, but they were also there to promote the policy goal of homeownership. That political end undermined the means of their businesses and they ended up requiring a bailout by the Federal Government–but it seems not everyone has learned that lesson
Amid the greatest economic crisis in a century, the best that great institution, the Better Business Bureau, can come up with is a plan to begin penalizing the companies it rates for being in “problematic industries.”
Apparently the Better Business Bureau will soon stop offering objective ratings of individual companies, and start passing wholly subjective “values judgments” on entire industries. Sounds like misplaced-priorities, if you ask me, or should we start calling them the “Better Industry Bureau”?
Some have argued that the Better Business Bureau has outlived its usefulness and that, with the unprecedented level of real time information and statistical data available to consumers, the Bureau no longer carries the weight it once did. Others claim that it is a borderline extortion racket, forcing businesses to pay up and join as members, lest they suffer the crippling sting of a bad BBB rating. As a small business owner, I can tell you: neither observation is completely lacking in credibility but both are–and should be–up for debate.
One thing is for sure though: if the Better Business Bureau is truly about to get out of the objective ratings business, then–as a legitimate consumer resource– it is about to jump the shark.
The Better Business Bureau was created to “promote and foster the highest ethical relationships between business and the public through voluntary self-regulation …” And we all know how well voluntary self-regulation works!
Practically speaking the BBB has long been the go-to source for consumers who want to determine if a business is ethical, responsible, and reliable (or for consumers who want to complain about a business so others might be made aware that said business is not ethical, responsible and reliable).
Now, the Better Business Bureau is poised to morph into a self-appointed cultural and political arbiter, objectivity be damned!
Consider the case of Magic Johnson. Johnson, a former NBA super-star, is now an urban entrepreneur and real estate developer who is nothing short of a business and cultural icon.
His projects have revitalized blighted urban neighborhoods throughout the country, creating jobs and bringing vital commerce to once painfully neglected communities. In addition to real estate, health clubs and movie theaters, Johnson also owns dozens of fast food franchises–and fast food is about to become Better Business Bureau kryptonite.
Like sub-prime lending, used car dealerships, and who-knows-what-else, fast food is not politically correct anymore. Recently in Los Angeles, City Council Member Jan Perry actually sought a moratorium on new fast food restaurants in South Los Angeles.
Never mind that these restaurants, operating multiple shifts every day, create lots of jobs in the community. Never mind that owners like Magic Johnson treat their workers with dignity and respect and provide customers with reliable, quality service, the company that operates the store will soon be at risk of receiving an adverse rating because someone doesn’t like the industry in which it happens to conduct business.
Of course, the Better Business Bureau is free to set its own standards and policies, but the proposed move toward subjective ratings is a radical departure from what consumers have come to know and expect from the agency. With countless sites like Wikipedia and Yelp where consumers can share their experiences–good and bad–and make their own decisions about a company, this procedural sea change being contemplated by the Better Business Bureau is a dangerous and irresponsible gamble that risks undermining consumer trust and organizational integrity.
If the Better Business Bureau wants to maintain its credibility and what is left of its importance in a world where consumers have instant access to the information required to make their own evaluations and judgments, it needs to–at the very least–disclose the reason for this shift. Has the Better Business Bureau undergone some kind of institutional epiphany after nearly 100 years of service, or is it merely acquiescing to agenda-driven consumer activist groups?
We saw this week what happens when bad politics gets in the way of better business–and Americans took more than a trillion dollars in losses in on day. By putting bad politics ahead of good business sense, one important American institution risks losing much more than money–it risks losing its credibility.