Published on: September 2, 2014by Kevin Coupe
One of the most interesting things I watched while I was on vacation last week (in addition to the six movies I saw over eight days, which was a pretty good run, even for me) was a video from the Aspen Ideas Festival that focused on "Values at Work: Linking Purpose, Productivity, and Performance." (You can watch it here.)
The panel - which included Dave Dillon, the chairman of Kroger - begins with a discussion of how companies should define their "purpose." What is interesting about the answers to this question is that none of the panelists talk about "maximizing shareholder value" as being a core business purpose … in fact, there even is the suggestion that companies that make "maximizing shareholder value" a top priority often end up being those that are less successful at doing so.
That's fascinating. Many companies that focus only on making money so they can grow shareholder value end up making short-term decisions that may not be in the best long-term interests of a sustainable business model. The top execs who go down this path, not coincidentally, are being rewarded based on shareholder value … in part because they are shareholders. They make short-term decisions that grow the stock price, they make more money, they get more stock, and so on.
In fact, the best way to serve shareholders is to build a great and sustainable company and business model.
This narrative resonated with me, in part because I think it has been a theme that we've often talked about here on MNB over the past dozen-plus years, and in part because I think we see elements of the narrative playing out in several stories that are playing out across the media.
Not least of these is the Market Basket story, which seems to have to come to some sort of conclusion with the purchase by Arthur T. Demoulas's side of the family of the 50.5 percent of the retailer owned by cousin Arthur S. Demoulas's side of the family. Beyond the family feud aspects of this story - which often was like watching a car wreck - the most intriguing part of this scenario was how employees rose up to oppose what they saw as a management decision to take money out of the company rather than invest in it, to reward shareholders at the expense of the front line employees.
Sure, this was about money. And sure, almost certainly the scenario was more complex and nuanced than it sometimes was being described. But I think it would be a mistake to ignore the fact that at its core, this was a debate about values and priorities. Employees at Market Basket felt that it was their company, and they rejected and fought against a management shift that was at odds with that view.
I think this paragraph from the Boston Globe is instructive:
Corporations exist to make a profit. Stockholders are considered far more important than workers. Corporate leaders have a fiduciary responsibility to maximize profits for shareholders, not maximize the contentment of workers. The Supreme Court famously decided that corporations are people, but judicial ruling can’t give them souls. Corporate leaders are supposed to do that. One legacy of the Market Basket standoff may be to underscore just how vital that executive mandate is.
At the same time, there are stories out there about how labor organizers are calling for expanded displays of civil disobedience to draw attention to the low wages paid to fast food workers around the country.
The New York Times is reporting about a "flood" of recent lawsuits "that accuse employers of violating minimum wage and overtime laws, erasing work hours and wrongfully taking employees' tips. Worker advocates call these practices 'wage theft,' insisting it has become far too prevalent."
Here's a revealing paragraph from the Times story: "David Weil, the director of the federal Labor Department's wage and hour division, says wage theft is surging because of underlying changes in the nation's business structure. The increased use of franchise operators, subcontractors and temp agencies leads to more employers being squeezed on costs and more cutting corners, he said. A result, he added, is that the companies on top can deny any knowledge of wage violations."
Sure, this is all about money. In part, that's because there appears to be a disparity - there have been plenty of stories about how corporate profits are surging, top earners are making more money than ever, and yet these improvements are not being seen throughout organizations. Many employees are still treated as a cost, not an asset …
I've long felt that while much of the discussion focuses on money, there also is something else at play - a desire by employees to be appreciated, to be treated with the same respect as their employers, to be part of a team rather than just disposable cogs in the machine. They want to have purpose, they want to contribute, and they want to be part of companies that have purpose.
And, I believe, this is only going to become more pronounced as young people come into the workforce. They have different expectations, they have different belief systems. Companies that ignore this do so at their own risk.
This is about values, not just value. It is about the soul, not just the bottom line.
Attention must be paid.
It is an Eye-Opener that MNB will return to, again and again.
- KC's View: