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CEOs shift to focus on customers and employees, not shareholders

A Picture of Alex Robbio
August 20, 2019 | Topic: Business  
CEOs shift to focus on customers and employees, not shareholders

The Business Roundtable, consisting of 200 of the US’ top CEOs, yesterday made a major announcement, which grabbed headlines across the media: that creating shareholder value is no longer their only objective. As the text states, “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders”. It goes on to then affirm that they commit to:

  • Delivering value to customers
  • Investing in employees
  • Dealing fairly and ethically with suppliers
  • Supporting local communities
  • Generating long-term value for shareholders

This represents a fundamental shift for major corporations – moving away from their sole motivation being one of generating value for shareholders, and instead focusing on more holistic objectives to help their employees, customers, and wider society.

My perspective

Firstly, in particular, I am excited about the focus on customers and employees over shareholders. I really like the explicit mention of training and development of employees. In today’s emerging, and constantly changing digital world, this is more important than ever. Employees need to be constantly learning to stay ahead of the shifts that technology is bringing. Research shows that 59% of people are concerned they do not have the training and skills to get a good-paying job.

It also means that leaders of organizations can no longer shy away from key societal issues. Employees want to work for organizations that have values and that will make a stand. In the tech sector, where employees can easily find alternative employment, they are choosing where they want to work, and are choosing those organizations that share their values. Social media is amplifying this trend – it’s easy for an organization to almost instantaneously find itself in the midst of a media storm. Having strong values shared by leaders and the broader organization means you’re in a better position to deal with such situations, and avoid them in the first place.

CEOs shift to focus on customers and employees, not shareholders

One aspect however that I did not like in the communiqué was that despite all these companies being very global, they only seem to see Americans as their stakeholders. For example, they state “Americans deserve…” and that the economy needs to “serve all Americans”. I think this is short-sighted and even disrespectful to the rest of the world, especially because many of these companies get most of their revenue outside the US, or have most of their employees (or subcontractors) outside the US. For example, IBM gets just 46% of its revenue from both North and South America, with the rest coming from EMEA and Asia; Johnson & Johnson generates half of its revenues from outside of the US. Real change can only occur if we accept that we are operating in a global world, which means that companies’ operations, and treatment of employees and customers, can no longer be isolated by country.

I’m interested to hear your take on the statement. Do you see this as mere window-dressing? A long-overview recognition of changes that have been underway for several years? As always, I’m looking forward to reading comments.

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