Last week, we posted about the Business Roundtable’s modified purpose of a business. Because this post is too important to miss — refocused purpose of a corporation is presented again. So far, WE ARE DISAPPOINTED THAT THE POST HAS NOT BEEN MORE WIDELY READ. It is a major change in corporate philosophy.
This graphic shows just a few of the companies signing on to this new mission.
[On August 19], Business Roundtable presented a refocused purpose of a corporation. THAT REFOCUS IS A HUGE SHIFT!!! And the revamped purpose is one that this long-time business school professor never expected to see from corporate America. We consider why below.
Before we look at a refocused purpose of a corporation, review these related posts:
- Creating a Business Plan
- Building a Business Plan
- Excellence in Global Marketing Strategies
- How to Use Growth Marketing
About the Business Roundtable
“Business Roundtable exclusively represents chief executive officers (CEOs) of America’s leading companies. These CEOs lead companies with more than 15 million employees and more than $7 trillion in annual revenues. As major employers in every state, Business Roundtable CEOs take seriously the responsibility of creating quality jobs with good wages. These leaders join with communities, workers, and policymakers to build a better future for the nation and its people. For more than 45 years, the membership of Business Roundtable has applied CEO expertise to the major issues facing the nation. Through research and advocacy, we advocate policies to spur job creation. To improve U.S. competitiveness. And to strengthen the economy.”
And click here to see what firms participate.
The Business Roundtable: Its Prior Purpose of a Corporation
For more than 40 years (until this week),
“Business Roundtable has periodically issued Principles of Corporate Governance on the purpose of a corporation. Each version of that document issued since 1997 has stated that corporations exist principally to serve shareholders. It has become clear that this purpose does not accurately describe how we and our fellow CEOs endeavor daily to create value for all stakeholders. Whose long-term interests are inseparable.”
In other words, the main corporate goal involved stockholder returns. Any shift in that purpose presents a significant change in the mindset of CEOs.
Too Important to Miss — Refocused Purpose of a Corporation
On Monday August 19, 2019, the Business Roundtable issued its revised business purpose. The following represent highlights from its press release. Our question: Will CEOs actually follow these principles OR use them for public relations purposes?
“Business Roundtable today announced the release of a new Statement on the Purpose of a Corporation. It was signed by 181 CEOs who commit to lead their firms for the benefit of all stakeholders. They include customers, employees, suppliers, communities, and shareholders. Therefore, the new Statement supersedes previous ones. And it outlines a modern standard for corporate responsibility.”
“While each of our firms serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to these activities:”
- Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
- Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
- Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
- Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
- Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.
“Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”