Business Leadership - US Report
Thursday, 22nd March 2007 at 11:52 am
How CEOs manage short-term business demands while balancing the challenges of societal issues requiring long-term solutions is the focus of a new report from the US Boston College Centre for Corporate Citizenship.
The report offers perspectives from 48 CEOs and senior executives representing 27 major multinational companies from a cross-section of industries who participated in lengthy interviews with Boston College researchers.
The executives provided what the report describes as candid assessments about how expectations of their role are changing and the dilemmas that presents.
The messages that emerged from the research include:
– Public perceptions and expectations of the role of business have changed significantly since the 1970s.
– New roles and responsibilities are being thrust on companies.
– Business is squarely in the middle of a major transition that is reshaping its role in society.
– The current business model is on a collision course unless companies recognize that society’s issues are impacting—positively and negatively—their long-term business success.
Dr. Bradley Googins the executive director of the Boston College Centre for Corporate Citizenship says the research offers the most candid and on-the-record perspectives of CEOs looking at the challenges of the 21st century.
The report found that fewer than 10% of executives interviewed believe the business maxim that their greatest duty is solely to create wealth for investors.
Today’s CEOs offer a more sophisticated approach to blending non-financial activities with the bottom line.
When asked to choose the definition they said best describes how business relates to society, a majority of the executives favoured expansive definitions that recognise today’s businesses must be concerned about issues such as protecting the environment and supporting the needs of employees and that a company can "do well" by choosing to "do good."
CEOs from companies as diverse as GE, IBM, Raytheon, Ernst & Young, Néstle, Apache Oil and Timberland discussed how they manage their companies and respond to the growing number of societal issues and vocal stakeholders.
The report says their perspectives vary greatly.
GE Chairman and CEO Jeffrey Immelt said profits are created by businesses that are doing things that ultimately have real societal benefits. And businesses have not done a good a job of describing that.
While Néstle Chairman and CEO Peter Brabeck-Letmathe warned companies to "be careful what language [they’re] using." Because he said when you say you should give something back, you are intrinsically saying that you have been exploiting society …
Challenging other top executives, KPMG Chairman Mike Rake said, "We need chairmen and chief executives to be courageous and determined to take a longer term view on their business. They need to be leaders of the business in a sense that really engages their people, their stakeholders, their shareholders, their communities, in believing that what they’re doing is good for their business, good for their communities, and that these are inextricably intertwined."
During the in-person interviews most executives conceded they do not spend enough time explicitly examining the role their company plays in society. While they said forums for such debate are limited and the vulnerability of being outspoken can be great, a majority agreed to speak on-the-record for this project.
Click here to view a full report
The Boston College Centre for Corporate Citizenship is a membership-based research organisation associated with the Carroll School of Management.