Defining Our Companies by Our Values
In 1962, Milton Friedman warned, corporations that accept a social responsibility other than to make as much money for their shareholders as possible could undermine a free society. Since then, there have been leaders who have been on a mission to prove otherwise, from CECP co-founder Paul Newman to The B Team leaders, who came together to catalyze a better way of doing business, to Jim Stengel, who left Procter & Gamble to pursue a calling to help businesses find purpose.
And while a recent Forester study showed that 52 percent of customers now evaluate the values of a company as they consider a purchase, the tension between making the next dollar for shareholders and contributing to the public good continues. Companies are starting to recognize that the grind of quarterly earnings, and the behaviors that short-term growth mandates may not enable the decisions that are best for the company, its employers, its customers and the communities where it operates.
More and more, value of a company is derived from how a business conducts itself as corporate citizen: whether it acts with integrity, builds relationships founded on trust, treats its employees and customers with respect, and reflects a positive, humane culture. While those are a lot of constituencies to manage, it is much easier to do with a long-standing set of values to guide you.
In my case, managing a mutual company that has been in business for nearly 160 years, gives me a unique perspective in long-term management. Our policyholders depend on our being around 10, 20, 30 years after they make their initial investment, so everything we do is grounded in being there to meet our long-term obligations. As a result, the values that Guardian was founded upon when 21 German-Americans came together to provide life insurance to immigrants who could not get it otherwise are the same values that guide our work today: People Count, We Do the Right Thing, and We Hold Ourselves to Very High Standards.
While a mutual construct is different, as long as companies continue to face pressure to deliver in the short-term, they risk sacrificing a focus on the values, culture and the strategies that will make them sustainable. Examples include building the next generation of leadership, making more strategic investments, and relying less on leverage.
At Guardian, I have the luxury of making longer-term management decisions as a matter of course. I just reorganized my leadership team to enable succession planning. We’re investing in innovative technologies, from artificial intelligence to block chain, to explore how we can better meet customer needs. And we are currently evaluating our strategic investments for the next five years in order to create steady growth.
The interest of over 200 investors in the first CECP Strategic Investor Initiative late last year showed it’s possible to move from our short-term, shareholder focus to a longer-term, constituency-based focus. Of course, we have a long way to go, as we push against decades of expectations that are only reinforced by current policies, tax incentives and executive compensation that put shareholder objectives first.
As more companies realize growth as they integrate purpose into business practices, we have the power to create a movement toward values-driven leadership. Purpose is a powerful motivator for employees and drives accountability when it’s about doing the right thing every day. The time to effect change is now.