5 Ways Leaders Can Benefit All Stakeholders

By Lyn Turknett

Co-founder and Co-chair, TLG

One of the hallmarks of aging I’ve learned is realizing just how much you don’t know (the internet age has surely exaggerated this phenomenon). I’ve followed the Conscious Capitalism movement since I heard Raj Sisodia at the Academy of Management conference shortly after he and John Mackey, founder of Whole Foods, wrote the seminal book on the movement.

I’m admittedly no expert in sustainability, but I’ve followed Corporate Social Responsibility (CSR) efforts and seen the rise of Environmental, Social, Governance (ESG) reporting. I applauded the Business Roundtable’s new “Statement on the Purpose of the Corporation” moving away from shareholder primacy and embracing all stakeholders – customers, employees, suppliers, communities, and shareholders.

I’ve watched and supported goBeyondProfit, a Georgia-based organization founded by Rick and Shane Jackson, founders of Jackson Healthcare, who believe that business has the obligation to be a force for good.

But I had another “how did I not know that” moment this week when I discovered justcapital.com. This is an organization that has existed for about ten years and was founded to support this mission:

We believe that business can and must be a greater force for good and that markets must be part of the solution. At over $18 trillion, the U.S. private sector is about four and a half times the size of government and 40 times the size of private philanthropy. Building a more just economy that better serves the needs of all stakeholders is an essential step in pursuing true prosperity for all, and addressing our systemic problems at scale.


What Stakeholders are Looking For

I discovered Just Capital when I listened to the newest episode of Gary Hamel’s “New Human Movement” podcast, and Martin Whittaker, CEO of Just Capital, was his guest. Martin explained how his organization ranks companies, has “Just Calls” with CEOs to discuss what they are doing, and does a lot of surveying of the public. They argue that public views are good proxies for what people – including employees – expect from companies, and they say that the data shows a broad agreement across age, gender, race, and political point of view. Some of the things people expect organizations to do are:

  • Pay people fairly
  • Provide good jobs and career progression
  • Hire a diverse workforce
  • Help support strong communities
  • Lead with people who are ethical and trustworthy

That’s not a bad list, and Raj Sisodia goes even further in his recent book, The Healing Organization. Sisodia says that organizations can go beyond profit to alleviate human suffering. In one telling example, he talks about the “two universes” that often exist within businesses. If a senior executive hits a pothole and blows a tire on the way to work, she calls a service like AAA, calls a ride service to take her to work, arrives an hour or two late, and gets a lot of sympathies. On the other hand, if a front-line clerk hits the same pothole, she likely has no service to call, tries to find a friend who might help, struggles to get to work, arrives three hours late, is reprimanded, and is very likely to lose her job.


Longing for Purpose

Another thing that people expect now is a sense of purpose in their work. The Great Rethinking spearheaded by the pandemic has made that front and center. Organizations need to think about their purpose. A great question to ask is, “If our organization did not exist, what would be missing in the world.”

Alex Gorsky, J&J executive chairman, helped drive the effort for the Business Roundtable to develop their new statement about the purpose of capitalism, helping drive the shift to stakeholder capitalism. In a recent event sponsored by Fortune Magazine, he said,

“When companies can create an environment where employees feel like they are part of something bigger than themselves…where 1+1+1 equals five…it is absolutely a secret sauce.”


Leading Through Corporate Social Responsibility

Now that we have an idea of what stakeholders are looking for in organizations today, the question becomes how can leaders within these organizations walk the talk? This is a big question to answer, but here are five areas where any leader can start:

1. Pay attention to purpose and culture. This seems like a no-brainer, but it’s still easy for value statements, purpose statements, and statements of the desired culture to be on the wall and not in behavior, particularly the behavior of leaders. Skip to the fourth point, listening, for tips on holding everyone accountable.

2. Think about your ESG efforts and make them understandable to everyone. This is especially true if you are a large organization, but even if you are small, it is important. Be sure to collect ideas from everyone. Ask yourself questions like; How are you stewarding the environment every day? Does everyone understand what it means to be “carbon neutral”? What might that mean? In terms of social impact, where are you paying attention? Do you know how many employees are on food stamps? How do you assure diversity in hiring? Do you track promotion rates for all hires, and do you know whether people of color are advancing at an acceptable rate? How is your governance? How easy is it to raise an ethical concern?

3. As a leader, hold yourself and other leaders accountable. Organizations know when they have leaders in their midst who are skilled in a domain (technology, sales, etc.) but who are toxic. If the skill is essential, place the person in an individual contributor role, although you still need to be sure that the behavior is contained. Heed the advice in this article – the ripple effect of one toxic leader spreads far and wide. There’s a lot of research demonstrating the negative impact of toxic leaders and team members on performance – institute a “no jerks” rule and enforce it.

4. Distribute power. We still have too many organizations where leaders think they should be making all the decisions, even though we know from decades of data that hiring hands and not brains is a path to high turnover and low company performance. Gary Hamel’s recent book, Humanocracy, is good (although sometimes overly detailed and hyperbolic), but this HBR article on the success of Haier shows so well how organizations can create outsized financial performance while helping individuals use their talents to the fullest.

5. LISTEN. And learn from what you hear. People want to be seen and they want their information heard and their ideas used. At the organization level, regular engagement surveys – and follow-up pulse surveys – are key. Anyone who is involved in such data gathering knows how often pleas come from employees to simply be heard. At the leadership level, 360-degree feedback or other listening tools are essential. And all managers need to be diligent about one-on-ones. Those need to be regular, and most of the meeting needs to be devoted to listening. I read recently that the typical training for new supervisors doesn’t train supervisors well for conducting a one-on-one. Here’s an article that may be useful on how to conduct an effective one-on-one meeting.