A Company's Purpose
When I was in college working on my Public Affairs major, I vividly remember an assignment where I had to read and respond to an essay published in the New York Times in 1970 titled, “The Social Responsibility of Business is to Increase Profits.”
As part of our study of corporate social responsibility, our professor challenged us to respond to the famous Milton Friedman essay, which stated that the sole focus of the corporation is to maximize business profits. For decades, that view of a company’s purpose has prevailed. But this past summer, a group comprised of some of the most powerful and prominent CEOs in America made an important announcement.
The Business Roundtable is a business lobby that includes nearly 200 of the nation’s top CEOs from companies like American Airlines, Walmart and Bank of America, and they periodically weigh in on matters important in the business world. Their latest announcement was a new definition and standard for corporate responsibility, broadening a corporation’s commitment to include five key stakeholders – employees, communities, suppliers and customers, in addition to shareholders.
As someone who has spent my career in employee engagement, of course I was heartened by this news. But I was also a bit disappointed for two key reasons: First, it’s actually quite surprising that it took the Business Roundtable this long to endorse this position. As you read through the statement, it feels like something that could have been published 50 years ago!
Second, it’s not really such a sacrifice – it’s well-documented that companies that pay attention to things like the environment, their local communities and employees out-perform those that do not. So, ultimately, these commitments merely reinforce what we as employee engagement professionals already know: That by treating their employees (and other important stakeholders) responsibly, companies are keeping their commitments to shareholders.
And don’t get me wrong – this shift is a meaningful and positive sign that modern corporations are thinking differently. And in our world, it elevates our role to an even more strategic level. So the next time you’re getting push-back on your request for more budget for employee engagement programs, pass along the Business Roundtable’s perspective. It’s the responsible thing to do!