Serving the interests of all stakeholders—customers, suppliers, workers, vendors, contractors, and communities as well as the environment—is the core concept of stakeholder capitalism.
One other tenet of stakeholder capitalism is the requirement to take a long-term view when it comes to earnings, society and the environment. In fact, the McKinsey Global Institute found that companies who adopt a long-term, stakeholder capitalist view outperform competitors when it comes to revenue, job growth and performance.*
How are companies moving toward stakeholder capitalism? What are some examples of stakeholder capitalism locally in Arizona and throughout the GCU community?
To find these examples, we asked business leaders about the ways they have adopted stakeholder capitalism. And, we asked them for their best tips to help organizations interested in moving toward stakeholder capitalism.
Here are the top 10 tips and examples when it comes to stakeholder capitalism.
- Find sustainable success
- Think in terms of decades
- Every member of the community is a stakeholder
- “How can I be the best partner you've ever worked with?”
- Doing more campaign
- Culture cards
- Invest in employees
- Reputation management
- Take a holistic approach
- Mission-driven strategies
Find Sustainable Success With Stakeholder Capitalism
Typically, CEOs avoid political, environmental and social issues. However, our country needs business more than ever to help address the needs of all its stakeholders in society. Businesses exist to create and capture value by solving problems at scale. The government cannot lead, support and provide for our great nation alone. Given the current social consciousness and global pandemic, society is demanding a broader role for business.
That said, many businesses have already created the appropriate stakeholder orientation in their culture. In the past year a number of companies helped their local community, pivoted as needed with COVID-19, created a more supportive work environment, and/or amended operations regarding environmental impact on our earth.
However, more companies can start on this path. Both consumers and employees want to be associated with businesses that have value-alignment toward stakeholder/conscious capitalism. In the end, CEOs that lead in this manner will in turn find more sustainable success and can continue to also positively contribute to our country’s social and environmental well-being along with their positive economic impact.
- Randy Gibb, Ph.D., Colangelo College of Business, Grand Canyon University
Think in Terms of Decades
As a 66-year-old family business, our time horizon isn’t in terms of months, quarters, or even years; we think in terms of decades. From that perspective, our success is dependent on the health and vibrancy of our communities. The investments we make today in human services, racial equity, arts and culture, and social determinants of a healthy community will benefit us for generations to come.
- Adam Goodman, CEO of Goodmans Interior Structures
Every Member of the Community Is a Stakeholder
We built Cobalt as an inclusive community to connect people with ideas to expert designers, engineers and creatives to bring their ideas to life. In our long-term vision, every member of our community is a stakeholder in the success of the projects they participate in. This inclusive approach allows everyone to consciously take part in working on projects and participate in a marketplace where buyers and sellers are working through a proven business process to build new companies.
- Darren Wilson, Co-Founder and COO, Cobalt
“How can I be the best partner you've ever worked with?”
Focus on what you can do to achieve mutually beneficial outcomes. Here's what I mean. Ask your vendor, "How can I be the best company you have ever worked with?" Ask your boss, "How can I be the best [insert your title] you've ever worked with?" If you want great stakeholder integration in your business, you need to find out from them what their needs are. Conversely, a great relationship also presumes your stakeholder is asking you the same question. Get out of just focusing on your own needs and truly find out what your stakeholders need. With such open communication, you can work on satisfying those needs to the best of your ability, and you'll achieve far better outcomes and more positive, longer-lasting relationships. It sounds simple enough, but too many leaders give this lip service and not focused effort. Your commitment to being a stakeholder's best partner will reap far greater rewards than you can imagine.
- Mallard Owen, Chief Operating Officer of 123JUNK and VP of Programs at Conscious Capitalism Arizona Chapter
Doing More Campaign
In the legal industry, we are conditioned to always look out for our client’s best interests and set them up for long-term success. We do the same for our employees. We invest in them on a regular basis through training and development, team building activities, sharing well-being best practices, virtual yoga Fridays, and encouraging team members to get involved in the communities we live, work and play in. Now more than ever our personal lives are blending with our professional lives and as leaders, we understand the need to equip our team members with the tools and resources they need to be successful. In 2020 we implemented our internal Doing More campaign where we discuss: Diversity & Inclusion; Professional Growth; Health & Wellbeing; Culture & Team Building. We choose to do more because we genuinely care.
- Lindsay Moellenberndt, Chief Business Development & Marketing Officer of Fennemore
Every employee should be empowered to act on ideas that create value for stakeholders. For our company, that means issuing all employees—from executives to interns—a “culture card.” The culture card is a personalized credit card that can be used to make a purchase of anything that improves company culture, our clients, or our employees. We’ve seen these cards be used on everything from solutions to customer issues, educational materials, or even just lunch. By empowering employees to create value, we believe that has a positive impact on all of our stakeholders.
- Brett Farmiloe, Founder & CEO, Markitors
Invest in Employees
Attracting and retaining high-quality employees requires business leaders to provide fair compensation and ongoing training and development opportunities for employees. By offering fair compensation, which is to suggest that the compensation is (at least) 20% above a minimum livable wage, businesses attract higher-quality candidates that contribute more to operational effectiveness and business performance. In doing so, business leaders take the issue of money “off the table,” which gives employees the ability to focus on the work.
Further, it is incumbent upon business leaders to provide on-going training and development opportunities so employees understand that they are valued. Such training and development allow employees to enhance mastery within their current role while preparing them for more responsibility in the future. Thus, business leaders that emphasize substance over procedure increase employee commitment, which directly or indirectly increases employee retention. Investing in this critical stakeholder group by offering fair compensation and growth opportunities, business leaders inspire employees to perform at a higher level today while simultaneously outlining a career path tomorrow.
- Dr. Edward Slover, Assistant Professor of Management & Marketing at Grand Canyon University
Reputation management is simply seeing and controlling how your stakeholders view you. When considering all of the stakeholders businesses are responsible to (employees, customers, investors, community, environment, etc.) it is critical to listen to them, respond to them, and keep them satisfied. The story these stakeholders tell is your introduction to new business opportunities. Remembering the focus of business is not profit (it is a byproduct) but to solve problems for your stakeholders. Ultimately, you control your reputation; treat all of your stakeholders well and your reputation will take care of itself.
- Darrell Kidd, VP of Organizational Innovation, Director of Coaching at Raine Digital
Take a Holistic Approach
Ryan Companies takes a holistic approach to every project, focusing on the “why” behind our stakeholders’ needs so that we can achieve the best possible results for all involved. We also act as stewards in our community in more ways than one; for example, we have completed construction projects at cost for companies such as Make-A-Wish Arizona and St. Vincent de Paul. We know that a commercial real estate project is a long-lasting endeavor, both for our customers and the communities in which they operate. Being a part of this work is not something we take lightly.
- Ashley Black, National Marketing Manager, Senior Living & Multifamily at Ryan Companies US, Inc.
Companies are moving toward mission-driven strategies where the stakeholders, and doing right by them, is at the center of all that you do. It's hard to imagine a more deserving industry to focus on stakeholder capitalism than the food industry in all its forms, and the pet sector, in particular, is a perfect example of the need to focus on its primary stakeholders, our pets. These loving companions are totally dependent on us and for years the industry has provided over-processed food that has had a negative impact on their health and wellbeing. Thankfully, the industry is finally changing, and doing good, doing the right thing by our pets, is the new way of doing well. Focusing the mission and culture on getting back to basics and feeding our pets the way nature intended with whole food ingredients means more days with your pet, and as members of our family, I can't imagine any other way to be.
- Carol Bramson, Side by Side Pet
Those leaders who are set on making a difference in the world should enroll in a Master of Science in Leadership program, MBA or undergraduate business degree at Grand Canyon University. You will learn about how business philosophies, like conscious capitalism, can impact not only your profit, but how you can give back to the world as a business leader.
This guest post is written by Terkel, a knowledge platform that creates community-driven content featuring expert insights.
*Retrieved from McKinsey & Company, Where companies with a long-term view outperform their peers in March 2021
The views and opinions expressed in this article are those of the author’s and do not necessarily reflect the official policy or position of Grand Canyon University.