Shareholder or Stakeholder?
Excerpt from Robert Reich on Bill Moyers:
“We may be witnessing the beginning of a return to a form of capitalism that was taken for granted in America 60 years ago. Then, most CEOs assumed they were responsible for all their stakeholders. “The job of management,” proclaimed Frank Abrams, chairman of Standard Oil of New Jersey, in 1951, “is to maintain an equitable and working balance among the claims of the various directly interested groups … stockholders, employees, customers and the public at large.” Johnson & Johnson publicly stated that its “first responsibility” was to patients, doctors and nurses, and not to investors.
“[So, w]hat changed? In the 1980s, corporate raiders began mounting unfriendly takeovers of companies that could deliver higher returns to their shareholders – if they abandoned their other stakeholders….
“Are we better off? Some argue shareholder capitalism has proven more efficient. It has moved economic resources to where they’re most productive, and thereby enabled the economy to grow faster.
“By this view, stakeholder capitalism locked up resources in unproductive ways. CEOs were too complacent. Companies were too fat. They employed workers they didn’t need, and paid them too much. They were too tied to their communities.
“But maybe, in retrospect, shareholder capitalism wasn’t all it was cracked up to be. Look at the flat or declining wages of most Americans, their growing economic insecurity and the abandoned communities that litter the nation. Then look at the record corporate profits, CEO pay that’s soared into the stratosphere, and Wall Street’s financial casino (along with its near meltdown in 2008 that imposed collateral damage on most Americans). You might conclude we went a bit overboard with shareholder capitalism….
“[After all, o]nly some of us are corporate shareholders, and shareholders have won big in America over the last three decades.
“But we’re all stakeholders in the American economy, and many stakeholders have done miserably.
“Maybe a bit more stakeholder capitalism is in order.”
How do you listen and respond to your stakeholders? Who are they?