Business Purpose
The new pecking order for business purposes is Employee, Customer, Vendor, Community, and Shareholder. The Business Roundtable puts customers before employees. I disagree with that. However, it is a step in the right direction.
I believe that employees should be the first priority rather than the customer. I reason that our employees will tend to treat our customers the way we treat the employees.
Priorities Change
I’ve come to believe that this “pecking order” for stakeholders
is not cast in concrete. We may well need to put customers before employees at one time or another or prioritize a vendor’s needs over a customer’s needs. So the priorities are situational. The default, however, should be the order stated above.
Public Company Shareholders
I feel we must change from a short-term perspective to a long-term point of view for our businesses. Wall Street Investors and Shareholders will have to be patient. I hope that companies refrain from giving “guidance” to brokers. Let them do their research and draw their conclusions independently. Once a year, or twice at most, should be all that’s necessary to answer investor questions. Leadership must pay attention to building sustainable growth and invest for the long term, not quarterly results.
If leadership pays attention to employees, customers, vendors, and the community, the shareholders will be well served in the end.
Private Company Shareholders
I rarely run into the issue of paying attention to quarterly results at the expense of the long-term health of the company when it comes to private businesses. However, some leaders tend to focus on a few KPIs to the point where driving the KPI becomes the goal. When that happens, the vision is lost, and employees become less engaged.
Private company shareholders are few and tend to be the founders and key employees. It is much easier to agree about how we deploy resources with a small group of engaged shareholders. Therefore, it is often easier to set the right priorities when it comes to the stakeholders.
Flexibility
This past year has taught us that we adapt or we die. That means we will have to be flexible in how we prioritize the stakeholders. For the long haul, the shareholder should be the last consideration. If we pay attention to all the other stakeholders, the shareholder will be well served.
So, while I’m one-hundred-percent behind the new Round Table declaration of the purpose of a business, I also recognize that we cannot make the prioritization an end unto itself. Still, I hope we will remember, “Employees first, profits and products will follow.”