Stakeholderism. Shareholderism. Two words we don’t talk about much in the CX world – at least not in the “-ism” format. I’ll come back to these concepts in a moment, as they are closely linked to what I’m writing about today.
Last week we hit the one-year anniversary of Business Roundtable’s new purpose of a business statement in which they declared that “companies should serve not only their shareholders, but also deliver value to their customers, invest in employees, deal fairly with suppliers, and support the communities in which they operate.”
I was curious to check in to see how these 181 CEOs have fared over the last year. What are these brands doing? Are they living their new purpose?
You can follow Business Roundtable on LinkedIn to catch their one-year updates. I would expect nothing less than a “yup, we’ve been living it” review of the last year.
On Business Roundtable’s site, 14 of the CEOs reflected back on the last year. Many of them cited the pandemic as having underscored this new purpose. They even note on the site: “Through a year of unprecedented crisis, the nation’s companies have held to their commitment and risen to the challenge. Business Roundtable companies have invested in workers, taken a leading role in fighting the pandemic, and supported the communities where they serve.” The author of this article seems to think that the pandemic accelerated the shift. But would things be different if there had been no pandemic? Was this new statement all show and no go?
What do you think? Do you work for any of these companies? Do you buy from these companies? Do you feel a difference in your experience in the last year? I buy from many of them, as well, and I haven’t really noticed a difference. Is that a good thing? Is that because they were already living this purpose and only put an exclamation mark on it by signing the statement? Or is it because they didn’t have board approval to move forward with this statement/change, as is surmised by this Harvard Law School research?
What about other businesses? There are more than 181 companies in the United States. What are they doing? Are they observing and learning from these companies? And why after having made a similar statement in 1981 are there only 181 companies on board? The document I linked to in the previous sentence is an interesting read, and it’s a good reminder that while maximizing shareholder return is an outcome, doing right by all stakeholders is (should be) the means to achieve that outcome.
To answer the question about other businesses, I think that the addition of benefit corporations, a legal structure, and Certified B Corporations, which have a certification that measures their social and environmental performance, in the last ten years or so is a reflection of more businesses thinking differently about people and profit. There are thousands of companies in both of these categories. Stakeholderism over shareholderism. And yet, the two go hand in hand. Again, means and outcomes.
There I go, using those two words again. Let’s move on to what they mean.
Stakeholderism, or stakeholder capitalism, is exactly what you might suspect it is. According to Investopedia, it is defined as: “a system in which corporations are oriented to serve the interests of all their stakeholders. Among the key stakeholders are customers, suppliers, employees, shareholders, and local communities. Under this system, a company’s purpose is to create long-term value and not to maximize profits and enhance shareholder value at the cost of other stakeholder groups.”
Shareholderism, or shareholder primacy, is also exactly what you think it is. According to Wikipedia, it is “a theory in corporate governance holding that shareholder interests should be assigned first priority relative to all other corporate stakeholders.”
Apparently, stakeholderism was a thing even before shareholderism, which makes this whole notion of the new purpose of business really interesting. Why did shareholderism stick? Why did stakeholderism lose its way? And why have business leaders and business philosophers flip flopped on these two over the years? Good question. And there are a lot of articles out there about why one is better than the other. This Fortune article looks at four divergent views on this topic. Financial Times did an interesting overview and came to a similar conclusion that many others have: that businesses cannot serve “two masters.” I think of it differently – again, means to an outcome. People before profits. Take care of the people, and the numbers will come.
The stakeholder approach to business sees integration rather than separation and sees how things fit together. -John Mackey
Annette Franz, CCXP is an internationally recognized customer experience thought leader, coach, speaker, and author. She recently published her first book, Customer Understanding: Three Ways to Put the “Customer” in Customer Experience (and at the Heart of Your Business); it’s available on Amazon in both paperback and Kindle formats. Sign up for our newsletter for updates, insights, and other great content that you can use to up your CX game.
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