Bridging the divide: disconnects between the priorities of businesses and the public
The days when directors and the chief executives of listed companies had one sole purpose and objective – to make as much money for shareholders as possible – are long gone.
More than ever, companies today need to manage the often competing interests of a string of stakeholders.
The Hayne Banking Royal Commission, public outrage at exorbitant executive pay, shareholder activism, and closer oversight of corporate governance have swung the pendulum away from that old “profit at all costs” mentality.
But with so many competing stakeholders, who is the most important?
This issue came to a head recently at a Business Roundtable in the US when nearly 200 major corporations turned convention on its head and pledged to put workers, customers, suppliers and communities ahead of their shareholders.
Whether this pledge will actually change the way the signatory companies operate remains to be seen but it demonstrates yet again that the very idea of prioritising shareholder returns over other stakeholders is being questioned.
Research just published by the Centre for Economic Development of Australia (CEDA), looks to dig a little deeper on this issue, in a poll aimed at unpacking the attitudes of business leaders and the general public to the role and priorities of Australian businesses.
According to CEDA, the poll of almost 3,000 people, “provides insights to help rebuild mutual trust and understanding between big business and the general public.” To do this, CEDA argues, companies need to understand what Australians value and how they expect large companies to behave.
The results reveal Australians expect a broad contribution from its large businesses. In fact, nearly three quarters of those polled believe businesses should place equal importance on economic, environmental and social performance. No surprises there.
More intriguing is the obvious disconnect between the general public and our business leaders.
For example, the general public believe that work-life balance, quality products and staff wellbeing are the top three most important factors businesses should prioritise out of a list of 30.
Business leaders, on the other hand, prioritised providing products and services to suit customers’ needs, shareholder returns and staff training, according to the survey.
And while business leaders thought businesses should place high priority on research and development, investment in new technology and shareholder returns, all of these were ranked by the general public as being “widely unimportant” of “indifferent”.
In fact, shareholder returns ranked the lowest priority for the public – and the second highest for business leaders.
The public placed a much higher priority on improving staff wages, paying small business suppliers promptly and providing low cost products and services. They also thought businesses fell short when it came to fair and correct tax contributions and managing impacts on the environment.
The poll revealed at least 78 per cent of the general public and 96 per cent of business leaders support corporate leaders speaking out on issues of national importance. However, less than half of the public believe that business leaders are truly or legitimately concerned about the interests of the nation or community when they speak out.
There is clearly an expectation that businesses – and business leaders – should take a greater role in speaking publicly on issues. But how do they know what to say? And how to say it?
At the launch of the CEDA report in Sydney, Natasha Copley, HR Director at DXC Technology, offered a solution: leaders should have a voice on issues that impact them commercially (ie are in the interest of the company), or that are in line with a leader’s character (they have a personal interest). It is only by speaking out issues that tick one or both of these boxes, Copley argues, that leaders can be authentic.
Regardless of what issues are discussed, clear and consistent communication from leaders on the reasons for engaging or advocating on those issues is important.
By understanding the divergence between public and business priorities and by speaking out authentically not only on economic matters but environmental and social issues, businesses are in a better position to bridge the divide between the competing demands of their stakeholders.
It remains a serious gulf but not an insurmountable one.
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