Last year, the Business Roundtable made waves when — after months of careful deliberation and debate — the organization came forward with a bold declaration recasting the purpose of corporations. This group of leading CEOs collectively ushered in what they called a new era of “stakeholder capitalism,” in which corporations exist to serve the needs of all of their stakeholders equally — customers, communities, employees and stock owners.
This idea of stakeholder capitalism has deservedly received considerable ongoing attention. With time, however, our observation is that in the process of digestion, the conversation around stakeholder capitalism has diminished some of its original power. Primarily, we’re seeing people talk about serving the needs of stakeholders in terms that resemble what for many years we’ve called corporate social responsibility (CSR). CSR initiatives aim to improve business practices and extend community involvement and philanthropy to create stronger relationships and improve reputation. While these initiatives are important, they are different than stakeholder capitalism. Stakeholder capitalism isn’t about reputation; it’s about survival.
The Business Roundtable didn’t plant a flag on the notion of stakeholder capitalism because its companies’ reputations were suffering. If anything, this was an ancillary consideration. The organization made this declaration with the knowledge that in today’s environment, when companies become disconnected from any stakeholder group, their ability to operate long-term becomes imperiled. Dissatisfied customers can issue a viral tweet or Instagram video that severely damages brands. Community advocates can organize boycotts in a matter of hours. Frustrated employees can — and have shown a willingness to — publicly pressure their employers.
Stakeholder capitalism is not an extension or evolution of CSR — it’s a cultural mindset. The companies that thrive over the decades to come will be ones that understand their stakeholders deeply and empathetically, and are relentless, innovative and agile in continuing to serve their needs. In this model, strong reputations are not the goal, but a natural byproduct of a system operating in harmony.
After a year of isolation, exhaustion and widespread personal reflection, retaining top talent is obviously top of mind for many of today’s business leaders. Hardly a day goes by without a company’s new remote work or PTO policy making news. In a Harvard Business Review survey released this month, 98% of business leaders said they have plans to offer or expand at least one employee benefit.
These topics are what retention conversations tend to focus on: more employee benefits, more flexibility, more internal growth opportunities. For these new, talent-winning employee experiences to work, though, they’ll need to be supported by digital systems that are thoroughly, thoughtfully built, and that manage to simultaneously serve the needs of the business and the individual.
Thinking about the purpose different functions serve in a corporation, it’s easy to view things through a “left brain-right brain” lens. In this mode of thinking, HR often “owns” intangible assets such as culture, while IT is seen as “owning” technology. Without physical offices, though, Internet connection and human connection do not so easily untangle. For an employee who is connected to their organization only through screens, the hardware and software they use each day are huge determinants of the culture they experience. For people working remotely, all culture goals rely on technology as a conduit.
The truth is that while we work from home, we are also working on the Internet. The ecosystem of remote work tools and systems cultivated by an organization amounts, ultimately, to something much like a physical setting. To recruit and keep talent, every company will need to create comfortable, intuitive, collaborative and personalized digital workplaces. Achieving this will require a less rigid definition of both HR and IT, and more effective communication between these functions. They need shared goals, mutual understanding and a vision of the workplace of the future that they cultivate and maintain together.
The recent failure of Texas’ power grid due to freezing temperatures was climate change’s latest high profile reckoning. Polls show greater consciousness across generations of climate-related issues and support for interventions. At the same time, in the span of a year, the conditions for action have improved dramatically. The pandemic proved to us that we can reduce our emissions (even if we need to do much more if we’re going to avoid the worst anticipated consequences of global warming). At the same time, a growing number of investors are making climate mitigation plans an imperative for investment dollars. And, of course, the new administration has made climate change a central issue and mobilized an unprecedented number of resources toward it.
Climate change is not a new consideration for leading companies. However, it has been mostly viewed in the realm of Environmental, Social and Corporate Governance (ESG). But an issue this complex and comprehensive, that is so deeply woven into every aspect of work and life, can’t be managed by a standalone ESG team or set of ESG projects. Just like diversity & inclusion are shared responsibilities requiring total organizational buy-in, mitigating climate change is too. Climate change must be integrated broadly into every level of the company’s business planning.
We were fortunate to partner with The Coca-Cola Company as they were breathing life into their Live Positively platform. At the time, they were driving a radical transformation in their operations to reduce their environmental impact. While Live Positively had a clear reputational component, it was far more than an ESG campaign. Rather, the spirit of Live Positively, particularly in areas such as reducing water waste, became business imperatives across the enterprise. Not only was each organization charged to find ways to Live Positively, but through a program we co-developed called “My Drop,” each individual employee was able to envision their personal role in the company’s transformation. Companies that approach climate change in a similarly comprehensive way will have the greatest impact on building a sustainable future, and will reap reputational benefits as a result.