Roger Martin, Dean of the Rotman School of Management at the U of T, wrote about the growing malaise about big business in a blog at Harvard Business Review.
His message is that the modern corporate environment, in which shareholders who have no real ties to the companies they own but do control all the actions of those companies, exerts a negative influence on the companies, their employees and their communities. It creates an environment that forces managers within those companies to lead inauthentic lives, which causes them to lose their moral compass, which leads them in turn to behave ever more inauthentically.
It’s a complex argument, but Martin lays it out well. And his message is that this situation is totally unsustainable because it ultimately leads to decreases in shareholder value.
What’s missing from the article, though, is the solution. How do large organizations remedy this problem? How can large, public businesses serve their communities and their employees as well as their shareholders?
I think one solution lies in the business model of employees as shareholders – like WestJet. This ensures alignment between the corporation’s financial returns and those who generate them. It reduces one of the complexities of a model in which there are 3 primary stakeholders – customers, employees and shareholders. Ie, it reduces the model to customers / company.
There are other ways – what have you seen that’s working?