CEOs work to generate profits and return value to shareholders, but the best-run companies do more. They put the customer first and invest in their employees and communities.–Tricia Griffith, President and CEO of Progressive Corporation.
It’s a given that part of a company’s purpose includes making money, but it’s no longer only about the shareholder.
Last month (Aug 2019) The Business Roundtable released a new Purpose of a Corporation statement signed by 181 U.S. CEOs saying that: They are committed to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.
Summary of the new stakeholder commitments:
– Delivering value to customers, leading the way in meeting or exceeding customer expectations.
– Investing in employees starting with fair compensation and providing important benefits. It also includes training and education to help develop new skills for the changes being faced, and fostering diversity, inclusion, dignity and respect.
– Dealing fairly and ethically with 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.
Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co. and Chairman of Business Roundtable summarized the change this way: Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term.
This is a radical change from 1978 when the purpose was primarily to serve shareholders. As a leader are you aligned with this new purpose? Is there anything you want (or need) to change?
Clearly the corporate purpose is changing!
By taking a broader, more complete view of corporate purpose, boards can focus on creating long-term value, better serving everyone – investors, employees, communities, suppliers and customers.
–Bill McNabb, former CEO of Vanguard
Building Business Relationships