When I graduated, and started my first job in a Fortune 500 oil & gas company (yup, that one lah, mana lagi?) the idea of shareholder value was all the rage. My company had even hired the folks at Stern Stewart & Co to teach our managers the concepts behind Economic Value Added. GE’s Jack Welch was the hotshot corporate hero of the late 1990s / early 2000s, and his book taught us the value of being No. 1 or No. 2, stack-ranking your folks as A, B or C players, and the virtues of being a larger-than-life CEO.
Fast forward 20 years later, and the landscape of corporate thinking has certainly turned a tide. The Global Financial Crisis in 2008 has forced a radical rethinking of business ethics. Milton Friedman’s mantra of shareholder value has given way to a more comprehensive idea of corporate responsibility. We are now told that a balanced approach to business – honoring not only shareholders but others who also lay claim to the corporation – can actually generate value. The Covid-19 pandemic has forced another radical shift, this time amongst workers who begin to question the meaning of work (although it has been pointed out that this is something every generation needs to negotiate in its own time.)
Of course, a signal example of how thinking around corporate values has shifted is the reputation of Jack Welch, that lion of Corporate America. When he retired, the succession of Jeff Immelt was seen as the culmination of a rigorous, almost scientific approach to succession planning. Can the Next Guy emulate the great Jack Welch? It turns out, as William Cohan writes in his latest book, that Jeff Immelt’s career as CEO of GE ended being a long and costly exercise in unwinding the mess that Neutron Jack had left him. Costly, especially because Jeff Immelt ultimately lost the confidence of his shareholders, and lost his job as CEO.
Today, GE is on its way to being split into three entities (much like how our own Sime Darby has been split into plantations, property and motor businesses).
I would not be surprised if, decades from now, the wheels of corporate fads turn yet again, and another generation re-discovers the urgency of putting shareholders first (or solely) in the eyes of the corporation.
(I would also not be surprised if, decades from now, some enterprising investment bank decides that it would be a neat idea to merge the Baby GEs and the Baby Simes back together again. Show me the money!!!)
For now (and personally I hope for some time to come) we can and ought to insist that our corporations remain tethered to the human values that make up the community of people who work for and derive value from our corporations – values of decency, respect, and shared prosperity.