In my last blog post I provided my comments on Bower and Paine’s observations in the May-June 2017 issue of HBR regarding two popular perspectives on the purpose of a business: shareholder-centric and company-centric.
In the same issue there is an interview with former Allergan CEO David Pyott.
I like David Pyott’s perspective with regards to the responsibility of executives qua managerial leaders, so I thought I’d share it.
Do you agree with Bower and Paine that boards and CEOs need to focus less on shareholder wealth and more on the well-being of the company?
Look at it from a societal point of view: A lot of the unrest we’ve seen over the past year is rooted in the idea that wealthy, powerful people are disproportionately benefiting from the changes happening in society. A lot of companies think that they need to make themselves more friendly, not just to stockholders but to employees and to society. Having a broader purpose – something beyond simply making money – is how you do that and how you create strong corporate cultures.
I don’t believe that strong performance and purpose are at odds, not at all. My own experience tells me that in order for a company to be a really high performer, it needs to have a purpose. Money matters to employees up to a point, but they want to believe they’re working on something that improves people’s lives. I’ve also found that employees respond really favorably when management commits to responsible social behavior.
Source: “The CEO View: Defending a Good Company from Bad Investors. A conversation with former Allergan CEO David Pyott.” HBR May-June 2017