At the 50th annual World Economic Forum, Chairman and Co-CEO of Salesforce Marc Benioff declared, “Capitalism as we have known it is dead. This obsession that we have with maximizing profits for shareholders alone has led to incredible inequality and a planetary emergency”.
In an article published by Yahoo, author Oscar Williams-Grut, documents Mr. Benioff, outline of how the current obsession with maximizing shareholder value, has not only run its course, and is responsible for income inequality and environmental disaster. He argues that “stakeholder value” will become the wave of the future where shareholders are one among several stakeholders that must be recognized. These additional stakeholders include the employee, the community, the environment, and society. It is called “stakeholder capitalism.”
Mr. Benioff was joined in this assessment by chief executive Dan Schulman of PayPal, Bank of America chief executive Brian Moynihan, and Jim Snabe, chairman of industrial giant Siemens. What is more, both Snabe said Siemens advocated for putting the “remuneration system for the CEO and the executive team on an ESG (environmental, social, and governance) base.”
But the question is, what kind of leadership will be required to scale an entirely new corporate value system? Certainly, advocates will speak of courageous, dynamic, forward-thinking leadership. All well and good, but to install a wholly new set of corporate values, requires the thoughtful design of a new system of leadership to implement them. While talking about advocating for employees is noble, to scale this kind of advocacy across an organization with even a few hundred employees, let alone tens of thousands, will require more than talking about it. It will require a dramatically different kind of relationship between supervisor and staff. New rules, routines, and behaviors will need to be identified and enforced. Organizations will have to get serious about workforce development beyond a simple tuition reimbursement program, which had never proved to be of any value anyway. They will need to recognize that when a person walks in the door, they bring with them that intrinsic capacity every human being carries – creativity and innovation – and find ways to engage them around the entirety of their humanity. Sister Mary Jean Ryan is the retired CEO and Chairwoman of SSM healthcare. At a conference, I heard her say, “We must never forget that when a worker leaves at the end of the day, they go home to become family nutritionist, educational tutors, transportation managers, and behavioral counselors. And when they come back in the morning, they do not magically lose those skills only to regain them once again at the end of the day.“
Though Mr. Benioff spoke of stakeholder capitalism as a corporate obligation, the truth is that there is a tremendous opportunity for adopting this model. My research and the research of many others point out that merely increasing the engagement levels of the workforce creates an exponential benefit to value creation, innovation, and yes, the bottom line. As one simple example, numerous studies documents that the number one variable in hospitality mortality is the levels of nurse engagement.
While Mr. Benioff should be applauded for his advocacy, the real test is how to scale these new values so that they become embedded in how leadership is executed daily by front-line managers, leaders, and directors.