Broader stakeholder interests triumphed in 2014
Like most of us at this time of year, I’m inclined to take stock and review the highs and lows, the shining triumphs as well as the bitter disappointments. A running theme in Corporate Secretary in 2014 has been the need to pay attention to a broader range of stakeholders beyond investors.
Our Summer issue’s cover story discussed the value of investing in employees’ development – including helping them map out career paths – from a governance perspective. In it, I cited an 80-year tradition at McCormick of assigning employees at various levels to active learning projects that the food manufacturer believes translate employee engagement into the greater good. ‘The two-for-one spirit is something we talk about in the firm, meaning that if you think twice for the company, the company will think twice for you,’ said Eric Barger, vice president of global talent management. Imagine how such an ownership mentality could strengthen compliance at most companies.
An article I wrote about creating civil workplace cultures that appeared in our September special report on ethics and compliance reported higher employee engagement at companies that invest in creating a culture that clarifies the kind of behavior that gets rewarded or punished, and the kind that won’t be tolerated. As Sharon Parella, a partner at Thompson Hine and champion of anti-bullying programs, explained, an ethical culture inspires among employees ‘greater trust that their company is a place they may want to spend more of their careers.’ Brown-Forman’s chief diversity officer, Ralph de Chabert, said he sees civility training as part of a workplace culture that supports his work by helping to ‘create an environment where everyone can bring his or her best self to the workplace and maximize his/her contribution.’
Mars, Southwest Air Lines and a growing list of other companies have embraced the idea that making employees their top priority affects how engaged employees are in their work, how well they take care of customers and, ultimately, how strong the company’s business results are.
In Boston earlier this week, friends told me that one of the high points noted by local media in their annual look-back was the victory by employees and customers of Market Basket, whose 10-week walkout and boycott convinced the family-run board to sell their majority share of the private company to their cousin, former CEO Arthur T Demoulas. As I said in an August newsletter, it was Arthur T’s ouster as CEO in June by the board, led by his cousin Arthur S Demoulas – in part for opposing a special dividend that would have drained the company’s cash surplus – that sparked the walkout/boycott.
Market Basket’s prices are lower than Walmart’s and the starting wage it pays workers is notably higher than the state’s minimum. Nor did it take a union to compel the New England grocery chain to provide profit-sharing, bonuses and a 401(k) plan to employees. These factors are largely responsible for the loyalty shown by Market Basket’s employees at all levels and by customers in opposing the board’s removal of Arthur T. That’s an impressive force and one most CEOs could only dream of inspiring.
We’ll expand on this theme of looking beyond shareholder interests for best practices in governance in 2015. Our February special report on shareholder engagement will feature a story on how companies are increasingly engaging with a broader range of stakeholders, including local communities, to address sustainability concerns.
Thanks for your interest and support this year and best wishes for improved governance policies and practices in the new year!