Post by account_disabled on Mar 5, 2024 5:05:43 GMT 1
The purpose of a company had to be more than just making a profit for its investors. According to Fast Company , this powerful group argued that there are other stakeholders in the equation that companies must respond to, including customers, employees, suppliers, and the communities these companies serve. This statement went against the long-standing capitalist mantra of maximizing shareholder value, and many experts argued that it was about time. Being CEO of a publicly traded company today is a totally different game than it was two decades ago. Consumer activism is much more prevalent today thanks to access to social media. One study estimates that about 38% of Americans boycott at least one company at any given time, and the number of boycotters increases by double digits each year. purposeless companies The Fairtrade movement, which ensures that suppliers such as farmers are paid fairly, has been growing in popularity over recent decades.
The striking impact of the Black Lives Matter movement, as well as Donald Trump's divisive presidential term, highlighted that companies can no longer be indifferent to the political opinions of the Ecuador Mobile Number List communities they serve. All of these macro trends, coupled with greater urgency around climate change, caused the general public to enthusiastically welcome the new declaration of intent from American companies. For the optimists among us, it seemed that American companies had finally taken the first step in discovering their purpose. However, almost two years later, we don't have much to show for it. In fact, just a few months ago, one of the purpose-driven business movement's most prominent advocates, Danone CEO Emmanuel Faber, was unceremoniously ousted. Shareholders ousted Faber because he failed to generate profits for them during his tenure as CEO. Ironically, his public dismissal did not generate any uproar from the other stakeholders he had focused on serving. A sobering reality: companies without purpose Corporate responsibility can be a difficult thing to achieve.
Despite their elite status and high compensation, most CEOs and C-suite executives operate in the same framework as regular employees. They are hired for top positions based on their skills, networks, and experience, incentivized to perform well, and can be fired if they don't. All three steps are executed by the equivalent of a hiring manager for a CEO, which is usually the board of directors. The board represents the interests of investors in a company. So, in effect, the CEO's boss is the investor. purposeless companies The question then is: Why are only investors represented on a board of directors and not all stakeholders ? Surely Faber could have saved his job if he had all the stakeholders evaluating his performance. The answer lies in the order in which different parties are paid when a company generates value. For any value to be distributed, an investor must first pay to set up a company, hire and pay employees, pay for supplies and technology, and pay debtors, including the government in the form of taxes, before for any benefit to come to you. Additionally, there is always an element of risk in the event that a company fails or underperforms, causing one investor to lose all or part of their investment while everyone else continues to get paid.