NEW YORK, December 9, 2021 / PRNewswire / – Almost 90% of senior executives surveyed around the world believe there is an ongoing shift from shareholder capitalism to stakeholder capitalism, and nearly 80% say the change is happening in their business.
But what does this change mean in concrete terms for business leaders? A new Conference Board report reveals the implications for CEOs and senior executives, both in their roles and in the organizations they lead.
The information in the report is based on a series of panel discussions with CEOs and their heads of finance, law, human resources, government relations, technology, marketing and communications. Additional information was gleaned from a global survey of CEOs and senior executives, as well as a series of podcast interviews with CEOs.
Insights from the main report, Towards Stakeholder Capitalism: What the Change Means for CEOs and Executives, include:
The shift to a stakeholder-driven approach is important and sustainable because it is not driven by a single force, but by investors, employees, customers, business partners and decision makers.
- Executives who recognize and embrace change now better position themselves and their companies to succeed in the future.
- Change, although not universal, is happening in all sectors and in all types of businesses: public, mutual and private.
This change affects discussions, decisions and actions at the board and senior management level.
- There is an increasing emphasis on environmental and social issues, diversity, equity, inclusion, employee well-being, workforce management and impact on the community .
- The broader focus on stakeholders forces business leaders to seek a wider range of information about the potential impact of decisions on stakeholders, so that they can make informed decisions about the trade-offs involved. .
- Senior executives say it also significantly affects the way they spend their time, both in the topics they tackle and the internal and external stakeholder groups they engage with.
With a clear strategy, CEOs can drive the growth of their business and create broader opportunities for stakeholders.
- CEOs need to create an environment in which boards and leaders can have frank and open discussions about what the shift to a stakeholder-driven approach means for the business.
- CEOs need to ensure that their company has a strategy for being a stakeholder-centric company, which is tailored to the particular circumstances of the company, and which has clear goals for which the company can be held accountable.
- As different senior executives may each see themselves as ‘first among their peers’ in the transition to a broader stakeholder approach, CEOs should be aware of these potential tensions within the C suite and foster a collaborative environment. and responsibility.
- CEOs are likely to want to seek new sources of information and engage with partners, including non-traditional partners such as NGOs, to broaden their understanding of stakeholder issues and perspectives.
- Along with the focus on stakeholders comes pressure to take a stand on a wider range of social issues, and CEOs will want to ensure their companies take a cohesive approach to those issues, typically focusing on subjects related to the company’s mission, activities, and strategy.
- CEOs who embrace “radical humanity” – that is, who engage in their role as CEOs – are better placed to connect with stakeholders.
The shift to a stakeholder focus requires an increased and sustained level of collaboration among leaders.
- Senior executives may need to take on multiple roles and gain greater proficiency in areas outside of their core expertise. Senior executives should look for opportunities to âput themselves in other people’s shoesâ.
- C-suite members must share challenges, not just successes, with their colleagues.
- Senior managers need to have multiple sources of information to get a holistic and reliable picture of a situation or event, listening to multiple groups for their views.
- C-suite leaders who show greater humility will have greater credibility. Those who genuinely take a broader stakeholder approach can serve as inspiring leaders for the departments they lead, helping to attract, retain and motivate next generations of talent.
“It is important to remember that the evolution of capitalism underway is not a zero-sum game. Shareholder value and stakeholder value are not mutually exclusive,” said Lori Esposito Murray, Chairman of the Economic Development Committee, the public policy center of the Conference Board. âCompanies that focus on the long-term well-being of their employees, customers and communities are better positioned to deliver long-term value to their investors. In addition, it is essential to focus on stakeholders to support capitalism itself. “
âPreviously, social and environmental issues were compartmentalized – someone else’s problem. Now they’re everyone’s problem,â said Chuck mitchell, Executive Director of Content Quality at the Conference Board. In addition, there is a shift from seeing service to all as something ‘extra that was fun to do’ to something that is a business imperative to distinguish companies in the market and attract quality talent to develop their activities. “
âThe shift to stakeholder capitalism has not only amplified the role and voice of employees, but has also dramatically increased the focus on talent at all levels of an organization,â said Rebecca ray, Executive Vice President of Human Capital at the Conference Board. âIn addition to the increased focus on talent, there is an increased need for collaboration within the C suite. Many of the issues that businesses face are new and the solutions require the perspectives brought by all in the C suite. continued C. ”
âToday’s increased focus on serving more voters adds levels of complexity to how businesses allocate capital and other resources,â said Dana peterson, chief economist at the Conference Board. “Leaders need to think about how they reinvest in their operations, in their workforce, and in new products and services that may be more environmentally sustainable or socially responsible.”
âConfidence is the key to success in the transition to stakeholder capitalism,â said Paul Washington, Executive Director of the Conference Board ESG Center. âAs companies balance competing interests among multiple stakeholders, with inevitable compromises and disappointments along the way, it is essential that there is a high level of trust between the C suite and the board,â between the leaders of the C suite and their functions and between the company and its stakeholders. This is all the more true as government and other institutions experience a decline in public trust and the public looks to business for competent and credible leadership. “
In addition to producing the main report for CEOs and the C suite, the Conference Board produced a series of reports for several C suite functions, including:
Listen to the Shareholder vs. Stakeholder Capitalism here.
Experts available for interview
Experts from the Conference Board are available for interviews to discuss the broad implications of the shift to stakeholder capitalism and to offer concrete recommendations on how CEOs and senior executives can make this transition. For interviews, contact the Conference Board.
About the Conference Board
The Conference Board is the member-driven think tank that provides reliable information about the future. Founded in 1916, we are a non-partisan, not-for-profit entity with 501 (c) (3) tax exempt status in the United States. www.conference-board.org
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SOURCE The Conference Board