GROWTH. TRANSFER. LEGACY.
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On August 19th the Business Roundtable (BRT), the influential association of CEOs for 200 of America’s leading companies announced a new purpose for the corporation, throwing out the previous statement of corporate purpose put in place in 1997. The new statement is the result of a reexamination of the role of business in serving society. As the chair of the Roundtable, JPMorgan Chase CEO Jamie Dimon, said, “the change is an acknowledgement that business can do more to help the average American.”
BRT’s 1997 statement of corporate purpose was to meet the needs of the stockholder, “The paramount duty of management and of Board of Directors is to the corporation’s stockholders ….The interest of other stakeholders are relevant as a derivative of the duty to stockholders.” Over the past 20 years the climate toward business has been changing. A July survey of 1,026 adults by Fortune magazine found that 72% agree that public companies should be “mission driven” as well as focused on shareholders and customers. In an interview with Fortune magazine, IBM CEO Ginni Rometty, a BRT member stated, “Society gives each of us a license to operate. It’s a question of whether society trusts you or not, we need society to accept what it is we do.”
As result of BRT’s reexamination of what business’s role in society should be going forward, the organization changed its commitment to include all their stakeholders, not just shareholders. Below is a shortened summary, and the full statement of corporate purpose can be found on the BRT website:
….. While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to:
Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, communities, and our country (BRT August,2019).
Should you consider changing your company’s purpose to align with BRT’s new corporate purpose of doing well by doing good. Ken Favaro’s (lead principal at act2) believe you should and said, “If you participate in competitive product and labor markets, customers and employees have real choices; so if you have the opportunity to elevate your strategy or improve your ability to succeed with it, would it not be commercially and socially irresponsible not to?”
Favaro suggests answering these two questions to help determine if you should make the change to doing well by doing good.
“A company’s purpose has to be as relevant to every employee, regardless of their job, and every customer, regardless of what they buy. If it’s only relevant to one or the other, it’s not there yet.”
Simon Sinek - author, motivational speaker
“To be truly successful, companies need to have a corporate mission that is bigger than making a profit.” Marc Benioff, CEO Salesforce
Dick Albu is the founder and president of Albu consulting LLC, a strategy management consulting firm focused on engaging and energizing leadership teams of middle market private and family businesses. With offices in Stamford, CT, the firm is dedicated to helping its clients formulate robust business strategies and follow through on execution of key strategic initiatives. Dick Albu can be reached at 203-321-2147 or RAlbu@albuconsulting.com. Rob Krist, Managing Director can be reached at RKrist@albuconsulting.com. Please visit Albu Consulting’s website for more information at www.albuconsulting.com.
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