One of the painful results of boards embracing the goal to “maximize shareholder value” is shown in the Edelman Trust Barometer:
- Only 53% of respondents trust business
- Only 18% of the general population trust business leaders to tell the truth
The overarching goal for corporate boards should not be to maximize shareholder value. Instead, boards should set as their primary objective to:
Build an excellent, ethical, and enduring organization.
Excellent means achieving extraordinary results for customers, employees, and shareholders.
Ethical means achieving those results the right way, with integrity, not cutting ethical corners.
Enduring means achieving those results sustainably, being conscious of the firm’s impact on the planet, and acting responsibly to ensure precious resources are not wasted. Enduring also means acting sustainably inside the firm, not burning people out, nor engaging in unsustainable financial practices.
Such an overarching goal will not appeal to the short-term day traders. But the overarching goal to build an excellent, ethical, and enduring company, oft repeated and pursued by company leadership, will have great appeal to a large and growing base of customers, employees, and shareholders. Why? Because trust will be built.
Many customers will reward the firm with their loyalty. Many talented employees will make a deeper commitment and unleash their creativity. Many long-term oriented institutional investors will have confidence the firm is creating extraordinary value over time.
Boards should set as their primary objective to build an excellent, ethical, and enduring organization.
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This article is one of several Bob Vanourek wrote for Trust Inc., A Guide for Boards and C-Suites, published by Next Decade, Inc. 2014 and edited by Barbara Brooks Kimmel, Executive Director, Trust Across America – Trust Around the World.
Bob Vanourek and Gregg Vanourek are leadership practitioners, teachers, trainers, and award-winning authors. They are co-authors of Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations, a winner of the International Book Awards, and called “the best book on leadership since Good to Great.” Take their Leadership Derailers Assessment or sign up for their newsletter. If you found value in this, please forward it to a friend. Every little bit helps!