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, Step Up: A Call for Business Leadership in Society, from the Boston College Center for Corporate Citizenship.
The report provides the perspectives of 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 provide candid assessments about how expectations of their role are changing and the dilemmas that presents.
Four strong messages emerged from the research:
“Our research offers the most candid and on-the-record perspectives of CEOs looking at the challenges of the 21st century,” said Bradley K. Googins, Ph.D., executive director of the Boston College Center for Corporate Citizenship and associate professor at the Carroll School of Management.
Fewer than 10 percent 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 favored expansive definitions that recognize 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 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 you’re using. Because when you say you should give something back, you are intrinsically saying that you have been exploiting society. I have nothing to give back to society; I have given to society before.”
The in-depth interviews provide another dimension to the emerging body of research on how corporate leaders perceive the role of the corporation in the 21st century. This qualitative analysis provides texture to surveys conducted by the World Economic Forum and McKinsey & Company. A 2006 McKinsey survey revealed that 84 percent of executives surveyed thought their companies should make contributions to the good of society that went beyond pursuing shareholder value.
In the Boston College survey, Chuck Prince, CEO and Chairman of Citigroup said, “One of the main things I think is different today and will be different tomorrow … is to make [corporate responsibility] far more integral to what you’re doing.”
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.
“These comments are certainly instructive for other business leaders and provide a glimpse of what goes into managing in today’s turbulent environment and the impact of more businesses stepping up to the challenges of the 21st century,” said Boston College’s Googins.
To view full report go here