Do we need to rethink our current models of leadership to participant in changing economic models? Simplistically, yes. The employee experience that is being demanded by millennials will require it. The reigning economic model is shareholder capitalism. By this, we mean that the primary purpose of a corporation is to make as much money as possible for the shareholders. 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.”.
The Wave of the Future
In an article published by Yahoo, author Oscar Williams-Grut, documents Mr. Benioff, an 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 future where shareholders are one among several stakeholders that must be recognized. These additional stakeholders include the employee experience, the community, the environment, and society. It is called “stakeholder capitalism.”
Mr. Benioff was joined in this assessment by leaders of three major firms,
- Chief executive Dan Schulman of PayPal,
- Bank of America chief executive Brian Moynihan, and
- Jim Snabe, chairman of 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.”
Will Current Leadership Models Work?
But the question is, what models of leadership will be required to scale an entirely new corporate value system? Indeed, advocates will speak of courageous, dynamic, forward-thinking leadership. All well and good, but installing a wholly new set of corporate values requires the thoughtful design of a new leadership system 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.
Employee Development Vs. Employee Management
Organizations will have to get serious about employee development. They will have to do more than provide 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.“
Designing the Employee Experience
Mr. Benioff spoke of stakeholder capitalism as a new corporate obligation based on moral values and principles. The truth is that there is a tremendous economic opportunity for adopting this model. My research points out that approaching employees as strategic stakeholders will exponentially increase employee engagement. This additional engagement generates new value that is passed directly onto customers.
I applaud the advocacy of Mr. Benioff. However, the real challenge is how to scale these new values. Scaling values across an organization, let alone an entire economy, will require new leadership systems so that they become embedded in organizational values and cultures. This part is the real challenge.