Last week, the Business Roundtable published an open letter, and it is an interesting one. The Roundtable itself, as well. The Business Roundtable is made up out of almost 200 leaders of large companies. Members include Amazon’s Jeff Bezos, LyondellBasell’s Bob Patel, Gail Boudreaux from Anthem, Apple’s Tim Cook, Larry Fink from BlackRock, and Lisa Davis from Siemens. The business roundtable is chaired by Jamie Dimon, CEO of JP Morgan Chase. I leave out many, many respectable leaders from large global companies, but I invite you to check out the full member list.
Suffice it to say, it is a group of people I would love to be in a room with.
The letter they wrote is interesting, for economists, organizational and marketing strategists. And for HR specialists. In the letter, the group abruptly moves away from a commonly accepted rule that the duty of an organization is to the corporation’s stockholders. Employees are relevant to organizations as means for that duty. I am paraphrasing Milton Friedman.
Now, the Roundtable stated that business plays a vital role in the economy, by adding jobs, fostering innovation, and by providing goods and services. The crux is in the commitment the group makes: companies share a fundamental commitment to all of their stakeholders. All of them. That includes customers, to which they deliver value. To suppliers, by ethical and fair behavior. Supporting the communities, and generating long-term value for the shareholders. The one, though, that made my HR-heart do a little cartwheel, is the commitment on investing in employees.
The commitment on employees includes fair compensation and important benefits, offering training and education, and fostering diversity, inclusion, dignity and respect. Boy, do I like that commitment! It is exactly why I got into my field of profession to begin with.
But, I have to be careful, as well. These are bold statements, and they are not new. A lot of companies, including a lot from the member list, have already included policies supporting this commitment. I see leaders and employees volunteering in their communities, companies with strong policies on selecting and maintaining sustainable relations with suppliers, and companies modernizing their compensation programs, including maternity and paternity policies, to name a few. And large and well-known companies have appointed Chief Diversity and Inclusion officers to focus on the companies’ strategy and inclusion efforts.
And yet, in many companies, cash remains king. Shareholders undoubtedly value these commitments, but in the end, they want their return on their investment. And for a dogma that has been an intrinsic part of many companies’ way of thinking, it is going to take quite some effort, communication and training to change the culture from shareholder to stakeholder. I don’t think there is anything worse than hearing your CEO proclaim these empowering statements, only to find that nothing has changed.
It starts at the top. The members that signed the pledge, need to be serious about these commitments, and they need to implement these in their organization. In addition, with the start at the top, it absolutely needs to trickle down. It cannot stop in higher- or middle management. Managers need to ensure their employees are properly trained, and are engaged and empowered. HR departments need to lead the charge in drafting and implementing modern, inclusive and generation-proof policies and benefits. Words need to be turned into action. This is going to take some time and effort, so employees need to be a little bit patient.
Employees also need to understand that this commitment and all of its effects don’t rule out the importance of revenue, profits and shareholders. The shareholders are still part of the pledge. This commitment does not mean a free-for-all. It will still remain to be important to make a profit. To pay a dividend. To buy and divest companies. Employees must realize that they may see a change, if not already, but they will also have to expect certain things to remain the same. And that is not necessarily a bad thing.
But while that is done, an even greater focus on the people asset will go a long, long way.
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