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Wednesday, September 17, 2014

Strategic CSR - Executive oath

The article in the url below extends the debate about whether the manager is a professional (in the true sense of the word profession, with all its accompanying responsibilities). At the MBA level, this argument has been advanced by the MBA Oath (see: Strategic CSR – MBA Oath), but the assumption has always been that meaningful reform will take time and should be driven from the bottom up (i.e., graduating MBAs). The article in the url below, however, is more ambitious in that it targets existing (rather than future) executives. In doing so, it pushes back against the idea that managers and directors have a fiduciary responsibility to operate the firm in the sole interests of its shareholders:
"Lynn Stout, a Cornell Law School professor and author of The Shareholder Value Myth, notes that maximizing shareholder value isn't a legal requirement except in times of business insolvency. It's a managerial choice."
The article also pushes back against a growing public disillusionment with business and capitalism that is perceived to benefit those already in a position of privilege—a position that is not necessarily duly earned:
"CEOs with compensation packages tied to stock price and drawing salaries that are 354 times more than what the average worker earns. … 47% of the 400 chief financial officers surveyed by Ernst & Young feeling that 'they could justify potentially unethical practices to help business survive during an economic downturn.'"
The proposed solution is an oath of office for executives. No word on who would administer the oath and what would make it binding—perhaps that is the job of business schools over the medium- to long-term. The core of the proposed oath would include swearing to:
  • "Protect the interests of all stakeholders of the company: customers, employees, suppliers, regulators, communities and creditors as well as shareholders."
  • "See business in today's rapidly evolving and increasingly diverse environment as both an economic and social institution."
  • "Analyze a wide variety of quantitative and qualitative metrics, and tie executive compensation to both sets of metrics to balance economics and ethics."

The guiding principles that underpin membership of a profession are powerful. The interesting question, therefore, is: Are managers professionals? A first step in establishing them as such would require much greater standardization across business schools in terms of what constitutes the ideal content for a manager certification—i.e., an MBA.
Take care
David Chandler & Bill Werther
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Should executives take an oath of office?
By Jane Perdue
March 20, 2014
SmartBlog on Leadership