Once upon a time, Corporate Leaders maintained an attitude of ‘Integrity First’ believing that honesty, quality products, and good service generated a decent profit.
Then, a major shift occurred.
Shareholders and corporate folks decided that the primary goal of corporations is to generate profits for the shareholders; this was based on the teaching of economist Milton Friedman; and, that being the case, financial engineering took hold. Every game imaginable came forth to pump the price – not the value – of a stock or investment. I’ve seen many of them. The movie, Wall Street (1987), inspired many with the iconic line, “Greed is Good.” Then, the prescient insight of Wall Street: Money Never Sleeps (2010) warned that “Greed has gone world-wide.”
Now comes the time for a possible shift!
The Wall Street Journal reported that The Business Roundtable, an association which includes many of the top CEOs of the world along with the two biggest investors (trillions), endorsed a new ‘Statement of Purpose’ for the Association which was approved by 181 0f the 188 members. Instead of having a statement stating what is best for the shareholders, the new direction says that corporate leaders should take into account ALL STAKEHOLDERS – including EMPLOYEES, CUSTOMERS and SOCIETY WRIT LARGE.
The New Statement of Purpose reads:
Statement on the Purpose of a Corporation
Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all.
Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services. Businesses make and sell consumer products; manufacture equipment and vehicles; support the national defense; grow and produce food; provide health care; generate and deliver energy; and offer financial, communications and other services that underpin economic growth.
While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:
- Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
- Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
- Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
- Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
- Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.
Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country. (Source: Business Round Table)
The Statement is signed by over 100 CEOs and Corporate Leaders including Amazon, Apple, Bayer, Cigna, and Dow.
“Once upon a time never comes again”?
It just might with our Millennials and Generation Z.
Author & Blogger