Stakeholder CapitalismContinuing my periodic citation of work by Jeffrey Pfeffer (most recently here), one of my favorite business academics, let me recommend reading the two-page piece he has in the July-August issue of the Harvard Business Review.
"Shareholders First? Not So Fast ..." deals with today's renewed appreciation of the value of considering all stakeholders in business planning and decision-making. Pfeffer argues:
In the 1950s and 1960s, the stakeholder was king. CEOs saw their role as one of balancing the interests of the various groups that touched their companies customers, employees, suppliers, shareholders, and the community at large. This reflected the executives' sophisticated understanding not only of their role as stewards of the valuable resources entrusted to them but also of their own enlightened self-interest: Each of these groups was essential for organizational success. What was true then is even more so today, in an age of knowledge work, outsourcing, global supply chains, and activist interest groups.Pfeffer goes on to say that
opinions on deregulation, finance, time horizons, and the wisdom of corporate leaders are all shifting, and the logic for putting the creation of shareholder wealth ahead of the creation of stakeholder-value is rightfully under fire.To build profitability and productivity, enlightened managers are
implementing high-commitment work practices. These include investing in training, decentralizing decision making, and having pay be contingent on organizational, not just individual, performance. Other sources [of research] show the benefits companies reap from customer loyalty and high levels of customer satisfaction.Pfeffer points to the increased prominence of balanced scorecards and other assessment tools as evidence that companies using such tools recognize the suboptimality of focusing exclusively on financial metrics.
Of particular interest to people in the training field, are Pfeffer's repeated references the the importance of employee training in implementing strategies that embody a balancing of stakeholders' interests.