It is no longer ‘cool’ to say your company’s mission is to make money and maximize shareholder wealth. Although many companies pretend that they have a more noble purpose, their actions, processes, controls, hierarchy, behaviour of management and treatment of their employees reveals that maximizing returns is actually still their number 1 priority.
In his recent article in the Harvard Business Review, Gary Hamel passionately believes that any company, whose primary mission is to make money and enhance the bottom line, is misunderstanding the role and responsibility of business in the 21st century.
Most companies strive to maximize shareholder wealth—a goal that is inadequate in many respects. As an emotional catalyst, wealth maximization lacks the power to fully mobilize human energies. It’s an insufficient defense when people question the legitimacy of corporate power. And it’s not specific or compelling enough to spur renewal. For these reasons, tomorrow’s management practices must focus on the achievement of socially significant and noble goals.
Many companies have jumped on the social responsibility bandwagon and attached green, sustainability statements to their mission. They monitor their carbon footprint and make a fuss of donations and good deeds for charities. That is a good start but it is not enough. Companies need to embed citizenship and community into the fabric of their vision. What is your company’s mission aside from making money? How do you make a difference to the customers you serve? My husband works at a global professional services firm and does not know what their vision is aside from making cash. That is probably one of the main reasons why they struggle to differentiate and manage talent.
Southwest Airlines, Starbucks, Google, Disney and Amazon have a vision beyond making money and their employees can articulate it. These employees feel as if they are making a difference – they know they are more than robotic cogs in a vast money making machine. That is why these companies are often used as case studies for customer and employee engagement. If banks had a socially responsible vision beyond making money, we probably would not be in the pickle we currently find ourselves.
We put so much pressure on politicians to solve community problems but often forget that corporations have an inherent advantage over elected public servants. CEOs and their companies have a capacity to do good that often outweighs that of national politicians.
In their excellent book, The Secrets of CEOs, authors Andrew Cave and Steve Tappin say:
What is less frequently observed is the capacity for good that companies can have. Businesses are in a better position than government ministers to act as they are global, typically have little patriotism, are not prey to election fever, are not mortal and have fewer employees than states have citizens, so each person should be easier to mobilize. Employees are also paid to listen to their CEO’s views – something that can’t be said for the public and politicians.
Sir Bill Castell Chairman of the Wellcome Trust echoes this sentiment when he says ‘companies can be more effective in solving some of the world’s problems than politicians. Politicians are elected by a national vote; corporations have an interest in global success. The best CEO’s have a vision for their company’s impact on the world for 20 or 30 years ahead.’
The current financial crisis has proved that, in a hyperconnected and flat world, companies have a big responsibility to the international, national and local communities.