Any PR professional around long enough has experienced it: the CEO who wants to use PR as a tool to manage the day-to-day stock price. In the mind of these executives, PR stands for “press release” which is what some companies view as the primary function of public relations - to pump out positive news releases that shareholders will care about enough to drive up the price. It’s a myopic, short-term view that doesn’t build brand or market leaders due to the fact that product, customer experience, employee happiness and social responsibility do matter to corporate reputation.
But it’s not just the stock-driven companies that have historically viewed shareholder value as their northstar. The Business Roundtable - a lobbying organization of the world’s largest companies and comprised of close to 200 CEOs of well-known brands - has had shareholder value as the guiding principle of its statement on the “purpose of a corporation” for more than two decades. Its idea has long been that a public corporation exists first and foremost to serve the needs and desires of its shareholders and not the people who work there, the customers who buy its products or services, or the society and world in which it exists.
The “shareholder first” mentality gets really messy when you start to get into markets where a company is delivering a service that is considered to be essential to the basic prosperity or safety of its citizens. Should shareholder value come before public safety if you’re a gas utility? What if fixing leaks in a system would bankrupt the company and cause a shareholder lawsuit - should those leaks not be fixed? Should baseline technology proficiency and access to education and online services be secondary to the shareholder value of an ISP?
What companies are starting to realize is that long-term shareholder value is a byproduct of a view that prioritizes customer experience, employee wellness, ethical business practices and societal good, and not a goal unto itself. It’s taken consumer activism and years of negative press to reach this point, but perhaps times are finally changing? Perhaps.
This Statement of Purpose shift from the Business Roundtable is at its most cynical a shrewd PR move to try and paint a better picture of major corporations and their executives, and the role they play in society. As an eternal optimist, I am hopeful that it is an epiphany that companies realize that all of their employees are ambassadors to customers and the world, and that the happiness of their people is paramount to being viewed in a positive light by society writ large. That happiness is impacted by the public stances companies and their CEOs take on issues related to fairness, the public good and enfranchisement, including wage equality, diversity, environmental stewardship and many other social issues.
It comes down to putting employee wellness first and giving employees the power to change their lives and the world for the better. It’s why after decades of the erosion of employee benefits, companies like InkHouse are increasing paid leave, giving their people more vacation time and things like Election Day off. It’s why businesses are the new battleground states. Their influence can change public policy to the benefit or detriment of all of society. Let’s make it to the betterment.
The final reason I think this might be the start of a new corporate consciousness comes down to generational shifts. As the parent to three Gen Z kids - two of which are now of voting age and about to enter into their adult life of being a consumer with discretionary income (I hope) - there has never been a generation in the history of this country that more equates social good with “worth my money” than the one we’re raising. To many in this next generation, social responsibility is just responsibility.
Did last week's statement by the Business Roundtable mark the start of corporate social responsibility as a common business practice versus a noteworthy approach? It’s up to employees, consumers, partners and the media to hold them accountable to their statement of purpose.
Jason is president of Inkhouse and spearheads agency growth from the San Francisco Bay Area. His singular mission is to debunk the myth that people can't be happy long term on the agency side of PR where he has spent more than 20 years working with companies in venture capital, technology and consumer.