The Committee for Economic Development of Australia’s (CEDA’s) Company Pulse 2019 is a compelling read: a clarion call for CEOs, boards and senior business figures to take the mantle of leadership.
CEDA’s Community Pulse 2018 surveyed Australians about their attitudes to economic growth and development. Its findings indicated a decline of trust in business. Believing that “better understanding community expectations of business and responding to them is building greater trust in business and its contribution to our economy and society”, the 2019 survey of Australian businesses provides insight into “community expectations of business; and the “facing business leaders”.
Safety, shareholder returns, value for money, employment opportunity and fair pay. Three key findings, however, stood out as a cause for further reflection:
– 72% of people believe business should be equal to economic, environmental and social performance.
– 78% of the total public support.
– Less than 50% think business leaders are advocating in the national interest when they speak out.
The message is clear: the public wants to be more than making money; they want business leaders to join the national debate; but they believe self-interest is driving current participation. This is good news for business leaders. However, the current business leaders are not civic-minded.
We contend that governance can play a critical role in turning this perception around. Specifically, adopting a modern governance approach.
Modern governance involves giving leaders the tools they need – including data, insights, business processes and communication tools – to understand and respond strategically to current and emerging challenges and opportunities. This includes cultural alignment with stakeholders and the public.
The CEDA survey reveals significant gaps between general public and business leaders when it comes to business expectations. Businesses must address and maintain their reputation and customer bases, ensure their ‘social license’ to continue their profitable operations.
What do people want?
The survey asked respondents “Assuming a company has steady revenue, is operating profitably and is meeting its minimum legal and regulatory requirements, what else do you think should be its highest and lowest priorities for ongoing investment and focus?”. The differences in responses were telling. For the general public, the top three responses were:
– Provide staff with a good work / life balance
– Provide the highest quality product / services
– Ensure ethical supply chains
While for business leaders, the top three were:
– Provide products / services that are better tailored to meet customer needs
– Increase returns to shareholders / investors
– Provide staff with the best training and / or career development
For all six responses, the gap or ‘disconnect’ between the two groups. That is, ranked high by one group were ranked low by the other.
We see some congruence between these positions – improving products / services and paying for the needs of satisfying working conditions – but some divergences – ethical supply chains and increasing returns.
We are encouraged by the fact that all six responses should be a priority for all boards. Effective governance – modern governance.
When they join, they want to make good business decisions. They want to make their business profitable, innovative, ethical, and well-publicized.
Bringing everyone together
The picture that emerges is one of the public and business leaders that are silent on individual issues, but with strong agreement on overall priorities.
Companies that can narrow the gap between public and business expectations faster than their rivals want to be at a significant advantage, as customers want to give their patronage to organizations.
Compliance is an important tool in this regard. Modern governance aids in a company’s legal and regulatory responsibilities and as a business-positive process rather than a burden. In addition to their other benefits, certifications serve as public proof that a company is ‘living’ its values.
Congruence between stated values and observed behavior. This in turn does not justify public debate and contribute to society. That credibility is critical to every organization’s future, as the public demands more of business.
It’s just a business-positive view: the public is hungry to place its trust in credible organizations. Will you answer the call?
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