CEOs, with the support and encouragement of their boards, have a new management responsibility in these trying times. I am thinking of a responsibility for public management, not just for internal management of profit and loss responsibilities. When there is a crisis of confidence in capitalism and business, and public anger and fear is all around us, and leadership is hard to find, CEOs are placed in a position where their duties to the company call for them to become public advocates.
Here is a proposition:
The American public is looking for leadership to revive our economy and prevent future collapses. Business leaders need to be more visible in this debate on our country's economic future. CEOs have a duty to their shareholders, customers -- and especially to employees -- to shape the public debate on the future of American capitalism in constructive ways. CEOs also have an obligation to society to contribute to the ideas, culture and structures that will bring long-term prosperity to our country in an era of unprecedented global competition.
One argument for public action is that if CEOs won’t do it, who will?
CEOs are stewards of enterprise; they need to assemble all the necessary capital inputs to make the enterprise profitable and provide value to society. Not all of those inputs are financial. A climate of confidence that allows credit to flow is necessary. A supportive regulatory environment is necessary. Consumer confidence is necessary to sustain markets. Employee confidence is necessary to lower costs and sustain quality, especially in customer service.
If confidence in American capitalism is lost, enterprise will suffer. The first to suffer will be employees. They have already taken the heavy hits from last fall’s meltdown in financial markets. We are told that the recession is over but that employment will take a long time to recover its pre-meltdown levels.
CEOs have a responsibility to the employees to become vocal advocates for the good sides of American capitalism but also to be frank advocates of necessary reforms and changes. American capitalism, in my book, has never been a refuge for shortfalls, shortcomings, and mere status-quo performance.
The American experience has been a call to progress, to leave things better than we found them. This should always be true for American business.
Our resolve should be to do the difficult at once and let the impossible take a little longer to accomplish.
Second, CEOs have a responsibility to customers to keep our capitalism successful and bountiful. In our free society, we rely on private enterprise to meet our needs. Customers depend on business for most everything in life, save some important public goods like safety from crime and public infrastructures. If businesses go into recession, or go out of business, consumer choice suffers and our standard of living falls.
CEOs, therefore, need to speak up and act to keep the system on a proper course. They should fix what needs to be fixed, come up with recommendations for jump-starting growth in recessionary times, and give us grounds to have confidence in the future.
And, rather obviously, if CEOs act wisely to keep American capitalism thriving, those who own our companies will benefit. The stockholders of both private and public companies are the foundational constituency looking to CEOs for long-term results.