From at least the 1970s onwards if you asked pretty much any CEO in America what the purpose of their business and their job was, you would have gotten the same three-word answer: increase shareholder value.
Shareholder value is out, stakeholder value is in.
That proposition had the value of simplicity, but over the years it has faced an increasing number of challenges. More consumers and employees began to believe that companies should stand for something besides just making money. Climate change, agitation for social justice, inequality, a constant drumbeat of depressing diversity statistics, and social media driven division all led more people to expect companies to think about more than just making money for their owners.
Skeptics of the old 'shareholder value' dogma included some of the most powerful CEOs in America. In 2019 181 of them, from JPMorgan's Jamie Dimon to Apple's Tim Cook, joined together to declare that it was time for a new paradigm in business, releasing a much chattered about statement via the Business Roundtable.
Shareholder value was out as a single guiding principle, and stakeholder value was in. Some of America's biggest and most successful businesses were vowing to keep the well-being of their employees and communities, as well as their bottom line, in mind when making decisions.
So how is it going?
Which sounds lovely, but words are cheap. How is this new commitment to greater social involvement actually going in practice? The world is still, of course, on fire, and our social divisions so no sign of narrowing any time soon. (Diversity numbers aren't exactly shooting up either). But while progress is slow, at least one new survey of 2,000 Americans from Just Capital and Harris suggests consumers are at least taking notice of companies' efforts, and appreciating them.
"In 2019, 45 percent of respondents said that CEOs were creating an economy that serves all Americans. That number has since jumped to 65 percent in 2021," reports Insider.
Martin Whittaker, CEO of Just Capital, attributes that increase to the turmoil of the last few years, including the protests following the murder of George Floyd and the massive (but unequally felt) disruptions of the pandemic. Companies were forced to respond by the gravity of recent events, and consumers paid attention.
"I think this data is recognition of the positive role many companies have played and the prominence of CEOs during the tumultuous period of 2020," Whittaker told Insider. "This time of crisis in 2020 showed the role of human beings in business. CEOs realized this time wasn't about memos or statements. It was about deeds. We've seen companies do things differently."
You're not just shouting into the void.
The message that consumers really do pay attention to companies' social responsibility initiatives isn't just relevant for leaders of massive corporations. In difficult times, small business owners trying to keep their heads above water may wonder if their efforts to live up to their values are actually making an impact. This is only one survey, but it suggests they are. You are not just shouting into the void -- customers really do care.
Figuring out which causes to support and how for your business is as tricky as ever, but entrepreneurs should be heartened to know that the public seems to both notice and appreciate businesses' recent attempts to be better citizens in a troubled world. Maybe that can help bolster your spirits to keep trying despite the challenges.