Surveying the wreckage of decades of corporate greed, the CEOs of nearly 200 major U.S. corporations decided they have a different idea: capitalism with a conscience.
These business titans all belong to the The Business Roundtable, a group of prominent CEOs who occasionally convene to chat about the corporate State of Affairs. They’ve released a number of manifestoes on corporate governance since the 1970s, when the group was founded,1 but the latest seems to turn everything we accept about a corporation on its head. Positively, I might add.
According to the Roundtable, businesses no longer exist solely to maximize profits and deliver value to shareholders. The Mr. Potters antagonizing the George Baileys of the world now find themselves the dinosaurs. What should the goal of business be now? Investing in employees, providing value to customers, dealing ethically with suppliers, and supporting local communities2… all formerly nice to have, but a long second, and third, and fourth, etc. to the bottom line.
The rationale behind the Roundtable statement is simple – large corporations pursuing profit at the expense of all else literally create a society (and business climate) that’s unsustainable. “The American Dream is alive, but fraying,” said J.P. Morgan Chase CEO Jamie Dimon, in a press release.3
Others who signed The Business Roundtable’s redefinition of business include Amazon’s Jeff Bezos, American Airlines’ Doug Parker, Bank of America’s Brian Moynihan, Coca-Cola’s James Quincey, Morgan Stanley’s James Gorman, and Walmart’s Doug McMillon. The statement appeared on a splash-making two-page spread in the August 19th edition of the Wall Street Journal.4
You’ve got the facts, now let’s talk PR.
First of all, WOW – happy to see big business finally dragging its feet into the 21st century! Anyone who runs a business has caught on to this trend – Corporate Social Responsibility is no longer walled off in its own silo. For-profit companies are beginning to be run more like non-profit companies – not in the sense that they don’t turn a profit, but that they adhere to a MISSION that’s about more than making a profit, that’s about POSITIVE IMPACT. Social consciousness is baked into what many businesses now DO.
There’s the #PRWIN, hooray!
But the #PRFAIL here – and it’s a big one – is the crazy and nonsensical separation between doing all those good things (like investing in employees and cultivating happy customers) and delivering shareholder value.
NEWSFLASH: 20% (that’s 1/5th) of the entire S&P500 market cap value is BASED ON REPUTATION!5
YOUR VALUE TO SHAREHOLDERS IS DIRECTLY RELATED TO THE STRENGTH OF YOUR PR! This means that all of the great, positive, healthy ways your company functions, for your employees, customers, and community, 100% deliver value to shareholders.
Being a good corporate citizen – adhering to a greater sense of purpose and mission – builds tons of value for the people who choose to invest in your company.
We’ve seen MANY TIMES what happens when companies forget (or completely ignore!!) their greater purpose:
- Google employees abused the company’s freewheeling, informal culture to start nasty online forum debates that gobbled up work hours6
- Toys R Us won approval in the midst of Chapter 11 bankruptcy to award its executives $16 million in bonuses7
- Drug maker Indivior falsely advertised its more expensive opioid product Suboxone as “safer” than others of its kind, bilking insurance companies out of billions – plus developed a program that allowed high doses to be prescribed to addicts8
- The Fyre Festival. Oh, the Fyre Festival. Where to begin.
- United Airlines barfed out the lamest response after a passenger’s dog died when a flight attendant shut its carrier in the overhead bin9
- Volkswagen concocted an elaborate, company-wide scheme to falsify its unfavorable emissions findings (while its CEO took home $70 million in bonuses)10
- Drug maker Mylan increased the price of the critical EpiPen by 400%, at the drop of a hat – all while increasing its CEO’s salary by 600%11
Unfortunately, the examples are everywhere.
But it’s becoming more and more clear that the public won’t stand for it, and you can bet your bottom dollar that headlines like this have an effect on stock prices and shareholder value.
Moral of the story: If your company doesn’t have a greater purpose, find one. Stick to it at all costs. And for goodness sake, HIRE A PR FIRM to remind you of your purpose, and help get your good works out into the world. We’re talking about 1/5th of your market value – with additional power to make or break. Time to bring in the professionals.