Wall Street and most corporate CEOs of public companies have embraced this view for at least the past 40 years.
So How Has This Worked For Us?
We think everyone would agree that the foundation of our free enterprise system has taken several jarring hits so far in the 21st century. The quarterly focus on shareholder return at all costs has frayed the fabric that holds the system together. Meeting “guidance” by managing earnings is the standard. “Spin” by a CEO is expected.
Many of the regulations that worked before the mid-1970’s were dismantled and several onerous new regulations have sprung up in reaction to the resulting scandals. Neither of these changes were wise moves. Both the informal and formal rules and regulations have been changed. As a result, the norms for successful commerce have been weakened.
If Milton Friedman were still alive, he would have to admit that it’s not the use of corporate resources for social causes that nearly brought down the world financial system. Quite the contrary – it was social irresponsibility – the pervasive absence of a sense of personal responsibility for the way the capitalistic system works. This is the subversive doctrine!
What Our Research Shows
In our ongoing research on the moral intelligence of CEOs, we’ve discovered that low concern for the common good leads to lower productivity and workforce engagement. Furthermore, business performance suffers. (Figure 2)
CEOs Who Demonstrate a Concern for the Common Good
Demonstrating personal responsibility and a concern for the common good as a leader is one of the major drivers of productivity and workforce engagement. Actual business results can, of course, be impacted by dozens of factors, but a CEO who cares only about pleasing Wall Street and demonstrates little concern for the common good will erode profits and jeopardize the long-term sustainability of the company.
Doug Lennick is the CEO and Co-founder of the Lennick Aberman Group, a performance-enhancement consulting firm that works with executives, leaders and athletes. Fred Kiel, Ph.D., is co-founder of KRW International, Inc. and brings over 30 years of experience to his work with Fortune 500 CEOs and senior executives. Their latest book, Moral Intelligence 2.0, Enhancing Business Performance & Leadership Success, offers insights into the mechanics and benefits of moral leadership and competency.