In an increasingly fraught and politically charged business environment, how can organizations be successful and be responsible leaders in society? Susan Sobbott, Darden board member and business strategist, and Darden Professor Jared Harris, faculty lead for Responsible Business for Corporate Boards, addressed this question and more in their online discussion for executives around “Navigating the Complex & Politicized Domain of Corporate Governance.” Here are the top seven takeaways from the conversation to navigate the complex decisions and challenges that executives and corporate boards face today.
Takeaway #1: Start with Defining Values
Business leaders are increasingly faced with complex situations and the business environment is becoming more politicized. We’ve seen how controversial decisions, like the prominent transgender bathing suit display at Target, can land companies at the center of a heated debate and impact financial returns.
Start by defining your values to serve as a guide and make a conscientious effort to connect with diverse audiences. This will allow you to make nuanced decisions based on various perspectives. While your decisions may not always please everyone, it’s important to stand by your values and purpose.
Takeaway #2: Align Decision-Making with Company Values
A Gallup poll1 indicated that 26% of employees strongly agree that their company delivers on its promises, leaving 74% skeptical, showcasing a misalignment with the decisions being made and the values being communicated. When faced with decisions, revisit your company’s values and ask yourself if the decision you’re making is aligned with those values.
For example, when pharmaceutical giant, Merck, was not meeting its financial guidance, Ken Frazier, former CEO of Merck, made the decision to reduce the R&D budget. It was a risky decision, but one made in line with Merck’s commitment to patient care and innovation. It was accepted by the company’s stakeholders due to its alignment with the company’s values and purpose.
Takeaway #3: Have a Clear Understanding of a Company’s Purpose and Values
Having a clear understanding of your company’s purpose and values may not guarantee smooth decision-making, but it can provide a useful filter and help anticipate controversies that may arise. Responsible businesses are run and governed well. Have conversations that consider the potential scenarios and tactical outcomes in advance of announcing a decision. It’s impossible to avoid all stakeholder frictions, but taking time to anticipate outcomes forces a wide range of inputs to be considered and leads to more well-informed decisions.
Takeaway #4: Balance Stakeholder Needs with Authenticity
Companies face the challenge of balancing the needs and demands of various stakeholders, such as employees, customers, suppliers and shareholders. It’s difficult to satisfy all of these groups simultaneously and find initiatives that meet everyone’s needs. Leaders have to find a few initiatives that can productively solve for shareholders and employees and suppliers. It’s these factors that are contributing to the changing nature of C-suite and board members’ jobs. Authenticity is key when making decisions and stakeholders can sense authenticity. A code of ethics or statement of values is great, but you must live out those ethics and values in your decisions to come across as authentic.
Takeaway #5: Stay Current Technologically and Culturally
The pace of change is accelerating, both in technology and cultural. Leaders have to work harder to be smarter. In the boardroom and as an executive, the job requires you to stay current on the issues/trends that impact not only the particular vertical being addressed, but also what’s happening culturally as well. A commitment to self-education and lifelong learning is critical.
Takeaway #6: Pay Attention to What’s Happening in Adjacent Industries
Leaders today must stay abreast of what is happening in adjacent industries. For example, with the ongoing safety concerns at Boeing, they created a Safety Committee. Even if you are not in the aerospace industry, it’s a signal as a board member to evaluate your organization and identify potential shortcomings in your process. For example, if you’re an online payments company, Boeing’s actions may signal to you to look at cybersecurity threats and evaluate if you’re doing enough.
Takeaway #7: Seek Out Different Stakeholder Perspectives
Today, there is an interconnectedness of stakeholders, one stakeholder’s actions can impact others, and it’s necessary to understand multiple stakeholders’ perspectives that are outside of your area of the business. Every stakeholder has influence over the success of a company and with tools like social media, it’s becoming easier to influence others. Board members must come together to discuss what different stakeholders have in common and think about risk management and brand activism.
Access the on-demand webinar for the full conversation.
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Responsible Business for Corporate Boards is an 8-week live virtual, online program designed for busy senior executives and board members who need to navigate increasingly complex corporate activity. This weekly, live virtual program, featuring Darden’s world-renowned thought leaders in stakeholder management, strategy, ethics and finance – including Ed Freeman, Jared Harris, Yo-Jud Cheng, Scott Snell and Rich Evans, will change the way you think about serving on and interacting with boards.
1 Efron, Louis (2022). Are Your Company Values More Than Just Words? Gallup. https://www.gallup.com/workplace/406418/company-values-words.aspx
