Putting Profits Last?
By Amanda Eiber
Some TWTW readers and writers alike started off the week with a Monday-at-5-AM Washington Post alert that the Business Roundtable released its “Statement on the Purpose of a Corporation.” In the statement, 181 signatories, all leaders of large corporations, committed to providing value not just to shareholders but to all stakeholders, including their customers, employees, suppliers, and communities. Shareholder value is actually named last, after the statement enumerates the above. This is a major shift in rhetoric from several decades of Business Roundtable statements that have given primacy to fiduciary duty to shareholders over all other constituencies.
Many of the signatories are already living the ethos – activating on a number of social issues. Some examples:
- PepsiCo has long embraced certain sustainability and nutrition goals, like reducing packaging waste and eliminating trans fats.
- Bank of America facilitates the construction of affordable housing via below-cost loans.
- MasterCard has committed to some progressive policies, including issuing cards with true names to transgender and non-binary customers, without requiring a legal name change.
After signing the statement, Best Buy announced that it is adding surrogacy benefits to its roster of employee benefits related to having a child. And, Duke Energy released details about grants it’s making to expand workforce diversity in the communities in which it operates.
What this may mean for healthcare companies
This may represent a way for some healthcare corporations to dip their toes in the water, a move many life sciences companies have previously been reticent to make. If they choose not to, however, they need to be prepared.
- Not all Business Roundtable members signed the statement. Healthcare leaders who abstained may face questions from employees, consumers and media, especially since we’re in a news climate so focused on pricing and value. Companies should be ready to rebut potential accusations they’re not putting people before profits. Even leaders who signed the statement may face questions about concrete actions their companies will take in line with these commitments.
- Companies should continue to prepare for political rhetoric that focuses on the idea of “profits above patients”, especially as presidential candidates look to distinguish themselves and cement their reputations as populists.
- Companies may feel increased pressure to speak up on social issues. Employees increasingly agree it is important for companies to take a meaningful stand on issues. Leaders should prepare a model of corporate activism that aligns with their corporate values and makes sense economically.
Not as much risk as you may think
Importantly, companies may not need to fear that taking a stance on an issue will irreparably damage their bottom line. Jeffrey Sonnenfeld, from the Yale School of Management, writes, “doing good is not antithetical to doing well.” Companies with strong environmental, sustainability, and governance performance find that reflected in their financial results. Research detailed in the Harvard Business Review finds that companies with high levels of purpose – “the aggregate sense of meaning and impact felt by employees” – outperform the market by 5-7% each year, grow faster and have higher profitability.
The Business Roundtable hasn’t yet proposed specific actions, but some leaders shared it will soon release some proposals. We’re eagerly awaiting.
Who wrote this? The managing editor of TWTW is Randi Kahn, who is reminding herself, and you loyal readers, to wear sunblock this weekend. An end-of-summer trip to the beach does not have to end with a sunburn.
Syneos Health Communications' Reputation & Risk Management Practice is a team of healthcare communications consultants, policy-shapers and crisis response specialists. We provide unique solutions to the evolving communications challenges in today’s healthcare industry, using evidence-based approaches to help our clients successfully navigate the most sensitive of situations.
Got thoughts? Contact Randi
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