In the March 2006 issue of Fast Company Magazine (page 28), John Mackey – Charman, CEO, and cofounder of Whgole Foods Market, Inc says:
“When there are fewer secrets, there is greater motivation to do the right thing. That’s driving busines. There’s greater accountability, and more businesses are getting leadership that recognizes that we can’t hide.
So we better do the right thing.
I think this is part of a larger trend, toward businesses having a greater responsibility in sociiety than just maximizing profits. Customers want that, employees wnat that, and shareholders want that: They want businesses to be good sitizens. Businesses today have a too-narow concept of why they exist. Particularly with the scandals at the beginning of this century, historians will look back and see that business is being called upon to do more. It’s not an either-or situation — it’s not profits versus good citizenship. And right now, a new generation is becoming CEOs.”
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I like this quote because it pushs back at the legal system. I believe the reason short-term profits have been put at the top of the priority list is that short term profits are the only objective way for JUDGES to make business decisions when the leaders of businesses want to do different things. What is in the best interest of the shareholder – TODAY and ONLY TODAY – is relatively easy to adjudicate. What’s in the best interest of the stakeholder (people in the community, our children, ect. who don’t own stock) is a far more speculative experiment to determine. On one side, it makes sense to look at the needs of the community, or maybe even the needs of the shareholder in the mid- to long-term. But this gives a judge – who may be far more interested in keeping criminals off the streat than figuring out a corporate dispute – a lot of power and responsibility that she may not be qualified to handle.
I think the only real answer are:
1. As leaders, define the corporate mission in terms of values – not profits.
2. As investors, only invest in companies that have defined their vision in terms of values and pull your investment when those values are compromized.
Yes, that’s idealistic – but idealism is one of the things I value. 🙂