Egon Zehnder
Search
Select region
Close filter

CEOs and Stakeholder Capitalism: An Expanding Leadership Role

It is January 2020, and as we leap into a New Year and new decade, we are witnessing a dynamic leadership conversation globally. Many of the world’s most notable leaders have just convened at Davos for the 50th anniversary of the World Economic Forum (WEF); this year’s theme was “Stakeholders for a Cohesive and Sustainable World.” Calls for clarity and commitment to stakeholder capitalism, profit motive and social responsibility were supported with purposeful statements from institutions like the US Business Roundtable and the UK’s Institute of Directors. What does this mean for Chief Executives around the world?

CEOs are finding themselves in new and highly challenged leadership positions. They are being asked to respond equitably to an ecosystem of stakeholders which includes their customers, employees, suppliers, communities, the environment and shareholders, many of which can represent differing interests. Moreover, a heightened focus on the expansion of corporate purpose is taking place at a time when more than half the world’s CEOs are worried about the economy. According to PwC’s 23rd annual global CEO survey, released at the start of the WEF, this more “pessimistic” economic outlook has surfaced due to the immense levels of uncertainty CEOs are currently facing. Over-regulation is rated the top threat globally, but there is also rising concern over economic growth, as well as trade conflicts, climate change, cyber threats, and geopolitical tension.

Confronting so much uncertainty while weighing the demands and expectations of a broader stakeholder group, puts CEOs in a very challenging position, a position that calls for greater resilience and purposeful leadership. “I believe with all of my heart that leadership requires true purpose to be successful,” Jill Ader, the Chairwoman of Egon Zehnder, stated in an article she wrote for the WEF. “When under pressure to perform, people with a sense of purpose have a compass.”

We spoke recently with a group of US CEOs at an annual dinner about how their roles are evolving and expanding in the face of stakeholder capitalism. They agreed that the call for stakeholder capitalism is neither simple nor binary; that this is not a zero sum game between profit and company purpose; shareholders versus other stakeholders; social good versus capital gain. What is often posed as dualistic is instead multifaceted. It involves difficult, interdependent leadership decisions, unique to each situation and business model. “The question is becoming less about if we should adapt to a stakeholder model and more about when. It’s about sequence and priorities,” Said one attendee. Another added, “We may need a new approach to decision making altogether--a whole new way to assess risk and reward.”
 

"Leadership requires true purpose to be successful."

Jill Ader, Egon Zehnder Chairwoman


Despite real distinctions among CEOs over approach and timing, they acknowledge that those really driving the expansion into stakeholder capitalism are their employees. Millennials and younger groups, in particular, believe fervently in “Mission First” companies. According to the newly released 2020 Edelman Trust Report, 73% of the employees surveyed expect their CEOs to offer the opportunity to shape the future of society in a positive way. As one CEO at our recent dinner explained, “It would be my failure if I can’t convince the investors that not putting mission first would hurt our competitive advantage.”

Employees are asking for more “access and presence” from their CEOs; they want to feel part of a shared vision. One CEO noted that she now spends as much time convening Town Halls as she once did delivering strategy presentations. The Edelman report finds that a “stunning” 92% of those surveyed want their CEOs to speak up on the issues they care about. This is the generation of “I,” of identity first; the workplace is no longer peripheral to employees‘ lives, but instead incorporates their most essential beliefs and convictions. Meeting this balance between individuality, inclusion and belonging has become increasingly important for the organization.

So what does this all mean for CEOs? Certainly a more thoughtful, collaborative and open style of leadership is required. Active leadership of broader and more inclusive stakeholder groups will call for abundant empathy-- “the foundation skill for all social competencies,” according to leadership expert Daniel Goleman—to really understand and include such a broadened followership base.

It’s a loaded charge. Leaders today are learning to lean boldly into the uncertainty, however uncomfortable it may be. They are seeking new ways to evenly engage a more diverse set of stakeholders in order to drive profit and purpose. But this course is neither linear nor formulaic. It is a work in progress. However, one thing is certain. As our own chair, Jill Ader, wrote for the WEF: “A great leader atop an organization has a watershed effect—not only benefiting the executives who report to them but their teams, customers, shareholders and other stakeholders.”
 


 

< Volume 6
The Call for Curiosity

Volume 8 >
Demystifying Courageous Leadership

 

Browse the Volumes

Volume 1: New Captains of Consciousness

Volume 1: New Captains of Consciousness

Infusing CEO leadership with social responsibility and accountability: Edelman reports that people are shifting their trust to relationships they feel they can influence, above… Read more

Volume 2: Supporting CEO Leadership

Volume 2: Supporting CEO Leadership

“We simply can’t learn to be more vulnerable and courageous on our own. Sometimes our first and greatest dare is asking for support.” Read more

Volume 3: Leading a Collaborative Enterprise

Volume 3: Leading a Collaborative Enterprise

CEO leadership is, by its very nature, a collective and relational endeavor. Still, we often speak of CEOs as if they are forces unto… Read more

Volume 4: The Uncharted Leadership Voyage

Volume 4: The Uncharted Leadership Voyage

The CEO turnover rate is at a record high and appears to be accelerating. How can we better prepare CEOs for today’s reality, where… Read more

Volume 5: The Boardroom as Leadership Laboratory

Volume 5: The Boardroom as Leadership Laboratory

CEOs struggle with developing their leadership teams; boardrooms are living labs for leadership experimentation. Why CEOs should expose their senior executives to board work… Read more

Volume 6: Cultivating Inquisitive Leadership

Volume 6: Cultivating Inquisitive Leadership

Curious, bold leadership is not something you simply have or don’t have; you build upon what is there, you learn it and continue to… Read more

Volume 7: CEOs and Stakeholder Capitalism

Volume 7: CEOs and Stakeholder Capitalism

CEOs face new requirements from stakeholders that calls for greater resilience and purposeful leadership. Read more

Volume 8: Demystifying Courageous Leadership

Volume 8: Demystifying Courageous Leadership

Coming to courageous leadership depends upon practice—it is the building up of small moments of courage, toning the cognitive and emotional muscles of boldness… Read more

Volume 9: In the Eye of the Storm

Volume 9: In the Eye of the Storm

Five tips for CEOs while they work to manage the business and create psychological and emotional safety for their employees during the COVID-19 crisis. Read more

Volume 10: Towards Scenario Planning in the Uncertainty of a Global Crisis

Volume 10: Towards Scenario Planning in the Uncertainty of a Global Crisis

After weeks of being immersed in immediate questions from COVID-19, CEOs are starting to tackle the challenge of preparing for what is next. Read more

Volume 11: Embracing Uncertainty to Accelerate to a Brighter Future

Volume 11: Embracing Uncertainty to Accelerate to a Brighter Future

All over the world, we are hearing CEOs ask the same question: What is the best way to lead and move forward when we… Read more

Volume 12: The Road Ahead for CEOs: Shifting Identity to Enable Change

Volume 12: The Road Ahead for CEOs: Shifting Identity to Enable Change

CEOs have stepped up like never before to do their part in accelerating the movement for justice and reconciliation forward. Read more

Back to CEO Insights

Back to top