In a time when the zeitgeist in America is at an all-time low and most people can’t agree on anything, it seems unusual for a group of nearly 200 top CEOs to gather and come to an understanding. The Business Roundtable, a group of the country’s top CEOs, has gathered regularly since it was founded in 1972. But this year’s meeting seemed to carry more weight as the group redefined the purpose of a corporation and showed the power and importance of business.
- 181 top U.S. CEOs came together to redefine the purpose of a corporation.
- Instead of focusing solely on profits, modern companies should invest in their employees, customers and social issues.
- More Americans depend on businesses to take a stand and make a difference on important issues instead of the government.
- The new purpose could extend to other, smaller companies.
- The Business Roundtable meeting could be the starting point for business groups leading social change.
Companies Focus On More Than Shareholder Value
One of the biggest takeaways from the Business Roundtable gathering was the release of the new purpose of a corporation. In a powerful statement, business leaders cast aside the old idea that corporations exist solely to maximize profits and serve shareholders with the new idea that their main purpose is to invest in employees, provide value to customers and serve their communities and the world. The document was signed by 181 CEOs including the leaders of Apple, Amazon, J.P. Morgan Chase, Bank of America and Boeing.
It’s not the first time the group has defined the purpose of a corporation, but leaders say this is the new go-to definition. The powerful shift goes against decades of profits-focused thinking to show that the responsibility of companies is about more than just money, but instead helping customers, employees and the world.
Why This Meeting Matters
Tensions are heightened in America as we head into the 2020 election year. Business ethics, including fair business practices and equality, have been under the microscope. It seems that every day customers or employees are calling for a boycott of a new company because of unethical practices or questionable political connections.
The Edelman Trust Barometer reveals that trust in government is at an all-time low. Instead of waiting for progress from politicians, a growing number of Americans now expect businesses to make positive changes. The majority of employees say they look to their employers as a trustworthy source of information about social issues. Our modern landscape means that companies don’t just exist within their own office walls anymore — they are connected around the world, and employees and customers expect them to take a stand and make a difference.
In a time of trade wars and tariff issues, the meeting also sends a message to the world that American companies are dedicated to ethical practices and fair trade policies. The government is sending mixed messages to the rest of the world, but a united gathering of business leaders could send a more positive message about globalization.
Impact On The Future
A new purpose doesn’t hold weight if it isn’t backed by actions. The words are powerful, but they aren’t legally binding or connected to any tangible actions. In fact, many people, including a National Review op-ed piece, have argued that the new definition doesn’t really contain anything controversial or earth-shattering. What does the Business Roundtable meeting and new purpose definition mean for the future? To start, it shows customers that companies are aware of them and their values. The members of the Business Roundtable are some of the biggest in the country and set the tone for their industries. If these companies back up their words with actions to bring people together and take a stand for important societal issues, other companies will likely follow suit. However, some people have criticized the Business Roundtable for not doing enough. Changing the purpose of a corporation doesn’t do nearly as much as paying people more and providing more high-value jobs, like Allstate CEO Tom Wilson who — in a recent New York Times opinion piece — argued that better-paid employees will save capitalism more than just changing the role of shareholders. Sustainable change comes when employees are valued and receive fair compensation. Companies that are the most successful are those that invest and care about their employees and customers and follow ethical practices with a sense of social responsibility.
This meeting could instill confidence in American consumers and employees and send a message to the world. It could also be a starting point for more businesses joining forces to take on issues like climate change and economic inequality. Americans are pessimistic about progress made by the government, so business could soon become the channel to see real change in the world.
Blake Morgan is a keynote speaker, customer experience futurist and the author of two books including her new “The Customer Of The Future.” Stay in touch with her weekly on her newsletter.