The CEOs of nearly 200 companies just said shareholder value is no longer their main objective
As I read this recent article, I thought of the letter to CEOs written by BlackRock Chairman Larry Fink a year or so ago. It struck me as the canary in the coal mine. His point was that companies must move beyond the P&L as the holy grail of business:
“I believe that profit and purpose are inextricably linked.”
What is our connection to the problems of society; what role does the corporation play?
An emerging business model
This is not a winner take all dynamic, a point made in the BlackRock letter. Fink said organizations “must not only deliver financial performance, but also show how it makes a positive contribution to society.’’ Now the Business Roundtable is echoing that position. Signed by 181 chief executive officers from major U.S. corporations, the statement puts customers, employees, suppliers and community ahead of shareholders in defining the “purpose of an organization.”
What we’re witnessing is a complete rethinking of the business paradigm. While the Business Roundtable restatement of principle is remarkable for being embraced by the leaders of some of the largest companies on the planet, there is also activism from below. Employees are pushing organizations into a different direction. Google employees pushed back on a recent contract with a US department that was against their values. It’s not the first time. This is just the beginning of the journey that has the top of the org chart losing their historic grip on accepted norms.
There have been numerous instances of these issues popping up.
- Challenging old school thinking: The CEO who implements a 4-day workweek to reduce employee stress and improve engagement. Upside: 20% productivity.
- Cisco donates $50 million to help alleviate homelessness in San Francisco.
- Google donates $3 million to Wikipedia, which was chosen by employees.
- More and more companies are donating huge sums to society and are creating a groundswell for corporate giving in the hopes of creating a better world
During my tenure at Martha Stewart Living in NYC we would volunteer to “Operation Backpack” by Volunteers of America. Our employees and our company would donate school supplies to under-privileged kids. It’s an amazing sight seeing our CFO stuffing bags alongside a company van driver; everyone having a great day giving back.
I just returned from a business trip during which my client was telling me how they have had a 6 day work week ever since the company was founded. Yes, in this day and time, employees were working 6 days a week. Leadership decided to give in and now offer two Saturdays off. When I heard this I was in total disbelief that any company could have such an archaic policy and believe it the right thing to do.
On the other hand, to see these 181 large, global companies take a stand and show a connection to society to me is so heartening. Building shareholder value is great, however there should be a purpose to what you, as an organization, are besides simply building a pile of money.
There are myriad problems throughout the world and the activist company that sees its role as a driving force to effect change benefiting the greater community and employees is the new model of corporate responsibility and the Employee Value Proposition
We are entering a new era — an era that shows we all have a responsibility to get off our bottoms and make a difference. If you sit back and pontificate and you are not a part of the solution, just shut up.
Our communities need us. Our challenges need us to face them. So my question is: What are you doing to make a difference?
The psychic value to you of giving back can’t be calculated with $$$$$$$. If you want wealth, give back and the inner wealth just multiplies.