The Great DEI Rebrand?

What We're Really Seeing Is the Last Gasp of Shareholder Capitalism

It’s been an alarming, confusing, daunting, and, arguably, galvanizing time for the United States. How we run our country including the investments we make to enable our citizens - and aspiring citizens - to thrive have, with the stroke of our president’s pen, been abolished.?

As the daughter of an immigrant, the wife of a first-generation college student, the mother of children who fall into numerous “diversity” categories (LGTBQ+, disability, historically underrepresented), and as the friend and colleague of tens, hundreds, thousands who want to bring their many talents to the workplace and the world, what is happening right now terrifies me.

There is a fundamental disconnect between the American values that have helped this country succeed and what we have seen in the past five weeks. This rise of Autocracy, Inc. will harm, is harming, millions.?

As the interconnectedness between democracy and capitalism plays itself out, leaders have been caught in the crosshairs. What do we do when, with the stroke of that same pen, the way we run our businesses, including the tools we have employed to create high performing cultures of excellence are demolished?!

Many leaders are stumped. They know what is right for their businesses, but they are also concerned about the aggressive tactics that could put them at legal risk. They need help. They need context and they need solutions.

Let’s start with context: As I explain to my consulting clients, the numerous executives I coach, and my mid-career executive education students at Stanford, while our democracy is certainly under siege, so is capitalism. In fact, what we are really seeing is a fight for the heart of the corporation; a war between profits at all costs (shareholder, aka “me-first” capitalism) vs people, planet and profits (stakeholder, aka “we-first” capitalism).

Since 2008, we have seen a growing demand from a myriad of stakeholders pushing companies to be more than bottom-line driven. In our best-selling book, Intentional Power: The Six Essential Leadership Skills for Triple Bottom Line Impact, my co-authors, JeanAnn Nichols, Corey Jones, and I write,

“As the rich have gotten richer and the rest have struggled to make do while the looming climate crises went from a theoretical debate to a daily reality, attitudes regarding the role of the corporation have changed. Employees, customers, consumers, and even investors have been asking themselves, “Given all of its power, shouldn’t a company do more than make the 1% richer?”

In 2019 the Business Roundtable, an association of 181 CEOs who run the largest US-based corporations, announced the purpose of a corporation should no longer be exclusively about “shareholder value”—now it would be about “stakeholder value.” In their announcement, they said:

“Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”

This bold move by the Business Roundtable was a validation of how best-in-class companies were, and are, run. It announced a new world of work where bosses and employees collaborated to drive results for the benefit of people, the planet, while also ensuring profits.

Knowing that employees are their biggest asset, many employers across the country followed the Business Roundtable’s lead and launched numerous initiatives to ensure they had the programs, policies, and practices to attract the widest array of talent. They understood that in the new world of work, hiring, promoting, and retaining employees who bring a multitude of skills, experiences, and abilities are foundational to ensuring companies can meet the expectations of their vast array of stakeholders.

The result??Push-me/pull-you tension between traditional and modern leadership.

As remote and hybrid work took hold, as the hiring and promoting of historically underrepresented talent became the norm, as pay transparency and pay equity became essential, and as the expansion of employee benefits actually began to support American families (yay - meaningful parental leave!), we have heard the ongoing complaints by more traditional leaders that Millennials and Gen Zs - a full 54% of the workforce! - ”just don’t want to do the work.”

Big picture: The current moves away from supporting employees, and all stakeholders, towards a centralization of hierarchy and authority, is a desperate power play by a narrowing majority to “return to business as usual.” It is a direct response to the shifting power dynamics brought on by stakeholder capitalism.

Traditional leaders are uncomfortable with a working environment where hierarchy is replaced by distributed decision-making, where collaboration trumps “my way or the highway,” and “where get it done fast” has been replaced by “get it done right.” In this new world of work, traditional leaders worry that productivity will be impacted and that companies won’t meet investor expectations; it’s one of the foundational beliefs of shareholder capitalism.

But guess what? Since 2019, corporate profits have reached an all time high and investors have experienced stunning returns.

According to ChatGTP, if you were lucky enough to have been able to invest $1,000 in the S&P 500 at the beginning of 2019, you would have about $2,540.42 at the end of 2024, assuming you reinvested all dividends. This is a return on investment of 154.42%, or 17.36% per year!?

As Larry Fink, CEO of Blackrock, shared in his 2022 letter to CEOs:

“Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not “woke.” It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.”

Not a bad endorsement of stakeholder capitalism, if you ask me. ?

The roadmap has changed and many in the majority have not been taught how to operate and thrive in this new world of work. They need tools, training, insight, and support - support they don’t feel they’ve received. I only really understood the depths of the anger, resentment, and confusion when I participated in the RESET: Modern Leadership for Men research study in 2022. As we learned, those men who feared diversity and inclusion were much more likely to be dissatisfied with their jobs and their careers. Conversely, those men who embraced inclusive leadership were the most successful, most confident, and most likely to be in senior roles.?

What we are seeing now in Corporate America is a failure of management, which means it is a failure of leadership.?

So, how does a modern leader navigate today’s very complex times? As I share in my classes and coaching:

1) Modern Leaders must recognize that the old way of working no longer works and adapt accordingly.

2) Modern Leaders must understand that, despite the current zeitgeist, traditional power dynamics have shifted and that the best leaders move from authority to influence. It’s about “Leader’s Intent” not “Leader’s Command.”

3) Modern Leaders must recognize and learn how to use their power to drive meaningful impact for themselves, their teams, and the world at large.

So, go ahead, rebrand your DEI, ESG, and other stakeholder commitments if you must, but don’t stop doing the work.

As my colleague, Dr. Angela Jackson recently shared at a launch event for her new, must-read book, The Win-Win Workplace: How Thriving Employees Drive Bottom Line Success, “There is no need to die on the sword of an acronym. But not continuing to listen and support your employees, and other stakeholders, is a recipe for failure.”?

I’ll leave you with a final thought…Recently I was in New York and I had some unexpected free time and so I decided to show up at the box office for a Sunday matinee of Redwood, the new musical with Idina Menzel. First, it was sold out - totally packed. My friend and I got the last two seats - paid an arm & leg for orchestra, but I am so glad we did.

Frankly, I was surprised it was sold out because the reviews have been so-so. I can understand why - Redwood is not like most Broadway musicals. It isn't a romp with great sing-along songs. It deals with some very heavy current topics: death, grief, marital discord, climate change, and...fire.

As a woman who grew up in Northern California under the canopy of towering redwoods and the ever-present threat of forest fire, this musical was primed to speak to me. But, it didn't speak only to me. The audience LOVED it. There wasn't a dry eye in the crowd; the standing ovation was earnest and heart-felt.?

As you probably know, redwoods grow because of fire -? they are THE metaphor of resilience and growth as a result of chaos. The musical explains that redwoods grow hundreds of feet high, but have very shallow root structures. They survive and stand tall because their roots grow and intertwine with other redwoods. In other words, they are strong and sturdy because they are interconnected. Even in the wake of fires and the devastation that comes with them, they literally hold each other up.? Yep - a metaphor for our times.?

Lead On!

Lisen