Response to the Business Roundtable Statement on the Purpose of a Corporation

Earlier this year the members of the Business Roundtable (BRT), 181 U.S. CEOs, released a statement that redefines the purpose of a corporation. 

This renews me with a sense of hope and clear action, as I continue to lead a company that already proves doing and saying the right thing is good business. As I embark on my second year as CEO of Reputation Institute, I applaud the members of the BRT and am moved to share my thoughts on this statement.

At its core, the principle behind the statement to consider all stakeholders is the only rational and competitively advantageous approach to conducting business.

While it would be convenient to think that shareholders have all the answers and can drive accurate prioritization, reality proves otherwise. 

At Reputation Institute, we measure reputation for more than 7000 companies and know that having a clear purpose is critical to an actionable reputation plan. We have empirical data to support the Business Roundtable call and, for over 20 years, we have measured and studied the business impact of a good reputation. We have identified, for example, that 74% of consumers are more likely to strongly recommend a company that has an excellent reputation.

This means that the work that we do cannot be dedicated to profit alone. Our time is too short and too valuable. 

The BRT’s message can be summed as follows: 

• Deliver value to our customers
• Invest in our employees
• Deal fairly and ethically with our suppliers
• Support the communities in which we work
• Generate long-term value for shareholders

Yes. We can do this. And yes, we should do this if we aspire to bring meaning to our work and to perhaps even make the world a little bit better.

How do we act on purpose and ignite it within our organizations? We begin by being fair and ethical leaders, by prioritizing our employees through workplace culture. We do it when we promote and engage in citizenship, innovation, and corporate responsibility.

When these efforts align, we positively impact and earn the support of our customers, employees, and communities. In the end, shareholders are the ultimate beneficiaries. Improving reputations across the board is not a zero-sum game. Everyone wins when companies are more trusted and efficient at the same time. And this will be the outcome of this era if we are true to its pursuit.