"It is easy for us to sit here and take potshots at CEOs who put their stock price and their shareholders before their employees.[...] But that's their fiduciary duty. They have a duty to their shareholders, legally, before almost anyone else, and certainly before the employees. The employees are just assets."
Reading David Berman's recent article, "Greed still works", in the Globe and Mail's Report on Business I was struck by how many CEOs still don't see the relationship they have with their employees as sacred. In the article, Berman interviews Bryan Burrough, the author of Barbarians at the Gate: The Fall of RJR Nabisco, a seminal book that explores the backroom deals that featured so prominently (and infamously) in the late 1980s' leveraged buyouts.
It was a good read when first published, and it's still a great book - pick up a copy if you haven't already - but the above quote made me stop and think. Thirty years on the majority of CEOs still don't appreciate the importance of the relationship they have with their employees. CEOs have a duty to provide an environment where employees can do their best work, which, in turn, helps to deliver value for shareholders.
In my recent conversations with CEOs and senior executives of large companies, all of them were crystal clear in stating that businesses exist to make a profit - no-one disputes that. But perhaps the "greed still works" title of the piece is misleading. What shone forth with every word spoken by the executives I interviewed were the strong links everyone had with their employees. These are critical to the success of any organization.
I'd argue that while many see employees as liabilities on the balance sheet, effective CEOs see them as key to the fulfillment of their fiduciary responsibilities to shareholders. Without productive, well-managed employees it is impossible for the core function of a business to operate.
Each and every executive I spoke with recognizes this. Employees bring value to the business, and the person at the top is accountable for providing a work environment that engages every employee.
