Looking Beyond Win-Lose - Value In A Stakeholder World

Deciding on stakeholder focus and measuring tradeoffs between the various groups are among the most challenging tasks in the value creation journey.

- Greg Milano And Michael Chew

For decades, much of the corporate world has focused on maximizing value for a relatively small group of shareholders. Increasingly, this focus has expanded to the welfare of a broader group of stakeholders, including employees, customers, suppliers, and society at large.

In response, managers must consider how to go beyond merely maximizing share prices. They must increasingly concern themselves with employment levels, wages, customer satisfaction, and broad societal benefits like environmental protection and a sense of social purpose.

Although all companies can improve on these types of goals, many successful management teams have already realized that companies that take care of their employees and consumers tend to deliver better results for shareholders too. We demonstrated this in research published earlier this year, in an article titled ‘Companies that Do Well Also Do Good’1, on CFO.com.

We studied the total shareholder return (TSR), including stock appreciation and dividends, of companies in Fortune’s Most Admired Company ranking, which includes 50 global ‘all-stars’ determined by a survey of executives, directors, and securities analysts. The criteria used were social responsibility, quality of products and management, investment value, and the ability to attract talent. We similarly studied Forbes’ Just 100, which recognizes companies that pay workers fairly; treat customers well and protect their privacy; produce quality products; minimize their environmental impact; give back to the community; commit to ethical and diverse leadership, and create abundant jobs opportunities.