Business seen as a force for good – rediscovering its human purposes
Tomorrow’s Company has redefined the notion of corporate social responsibility since the 1990s. Its work on capital markets stimulated the emergence of the UN principles of Responsible Investment.
The talk, hosted by Initiatives of Change UK’s Trust and Integrity in the Global Economy (TIGE) programme, delved deeper into the idea that people, not profits, should be at the heart of business.
Goyder said: 'The human purpose of business is the idea that we think of business not as a machine but as organic. Every human being associated to that business is, to some extent, part of its nervous system which is very important to its success.'
In Goyder’s recent letter to City AM newspaper, he quoted evidence that proved putting people at the heart of business ensures long-term success: 'One recent study of 50,000 brands across the world found that companies that put people’s lives at the centre of all they did outperformed the stock market average by 400 per cent over 10 years.'
Our assumption about success
Do we believe people are only motivated by money? Do we think markets are a master or a servant? Do we think business is part of society or apart of society? Are we trying to serve the shareholders or employees or customers?
These fundamental questions, which he posed, often underlie how we see business, confirming that we have distorted our view of capitalism. We have made the system dependant on people being motivated by money and the idea that markets must be treated as the master rather than the servant.
Businesses that have long-term objectives, values and vision aimed at benefiting society rather than focusing on profits, are more inclined to have long-term success. Leadership driven by clear values, innovation, putting people first, education for employees, being customer-oriented and trust are just some of the values that ensure businesses thrive for years to come.
Stewardship and Trusteeship
'Yesterday’s societal concern ...becomes today’s customer concern … and that becomes tomorrow’s shareholder return,' he said.
Goyder explained the concept of the stewardship model as a vital part of ensuring businesses are held accountable. The first principle is setting the course – the idea that shareholders and directors have clarity of purpose, roles and relationships. The second principle is about driving performance and continued improvement. Ensuring that everyone involved is contributing to making the business stronger, better, more efficient and more effective, year on year. Principle three is sensing and shaping the landscape – ensuring companies are connected to society. The final principle is planting for the future which is balancing the short and the long term.
Goyder also commented on his vision for future listed companies, which he sees as having hybrid ownership. Tata’s in India is a good example of this, where Tata’s parent company is 60 per cent owned by charitable trusts, while members of the founding Tata family are very small minority shareholders.
Government and Regulation
Goyder argues that the government should focus on entrepreneurship, as well as creating the conditions in which it becomes possible for transitions in ownership to happen in such a way that businesses are not subject to the worst effects of an unregulated market.
Practices like stewardship for listed companies, encouragement of hybrid ownership and support for family and private companies are the future of businesses as a force for good.
Photos by Laura Noble