In the Nation's Interest
Where Have All The Corporate Statesman Gone?
By Steve Odland
A few years ago, Peter G. Peterson, founder and chairman of the Peter G. Peterson Foundation, cogently asked: “Where have all the corporate statesmen gone?...Why [do] so few in the business community speak out about our soaring budget deficits, our unprecedented trade and current account deficits, our plunging savings rates, and our dysfunctional dependence on foreign capital?” More recently, New York Times columnist David Brooks observed that “business leaders have been inept when writers, intellectuals and politicians attacked capitalism.”
At the Committee for Economic Development (CED) “business statesmanship” describes the kind of thinking and behavior that recognizes that nurturing societal health is part of what it means to be a business leader. A prime goal of business statesmanship should be to strengthen the fabric into which society and business are interwoven. We view that type of societal engagement as a distinct business-leadership trait, though often occurring in combination with other attributes such as showing a long-term commitment to the enterprise, ethical integrity, and other leadership characteristics.
Business leaders have no illusion that their company’s interests are independent of the strength of the surrounding society, or that their business enterprise can stand apart from the system that supports it. They understand that our society and domestic economy need their help for the nation to regain civility in public discourse and develop common ground for sensible policies. They know that CEOs, in particular, can credibly speak to issues that most directly affect the long-term health of their companies, including the nature of the markets they serve, the availability of well-trained workers, and the general economic and social environment.
Today, the work of our corporate leaders is tightly focused on their companies. Oversight by directors, shareholders and government make it difficult for a CEO to step outside the confines of immediate business concerns. It is understandable that business leaders are reluctant to jump into a morass of societal problems, and to be on the receiving end of pointed criticism from shareholders, boards, and the public.
A recent survey of CED’s membership asked: What is the greatest barrier to business leaders taking a more active role in public issues? Three answers garnered 88 percent of responses (split almost evenly): concern about criticism others have experienced; shareholder pressure for short-term results; and belief that a CEO should focus on his/her company.
While the concerns are legitimate, it ought to be an asset rather that a liability to have a leader willing to engage in critical public policy discussions. To enable that to happen, a business leader needs to feel secure in having the backing of his or her board and shareholders. Without strong support from others, the CEO cannot have a forceful voice in the public arena. Board members will have to share the CEO’s vision and fully support the goal of responsible business statesmanship.
Shareholders, too, must realize that their long-term interests are served by responsible, civically engaged corporations (and corporate leaders) that help create societal conditions conducive to economic opportunity. Institutional shareholders with longer-term economic goals hold a key to market acceptance of corporate efforts to emphasize long-term growth based on well-functioning societal conditions. Shareholders should reexamine their strategies from a long-term perspective, especially when their ultimate beneficiaries have goals linked to retirement, education, and other longer-horizon objectives.
True business statesman are a breed above. As such, since 2005, CED has honored such leaders with its Peter G. Peterson Award of Business Statesmanship—executives such as Jeffrey Immelt, A.G. Lafley, Indra Nooyi, David Cote, and Alan Mulally to name a few. The Peterson Award “recognizes corporate executives who champion issues in the interest of the public good, rather than just their company’s or personal interests, and who hold themselves to the highest standards of ethics and integrity.”
In her acceptance speech, Indra Nooyi, Chairman & CEO of PepsiCo Inc said, “Business statesmanship is one of those phrases that says so much in just two words. It captures an invaluable ambition, that business people can and should aspire to something nobler, something greater, than their bottom line.”
Business statesmanship is essential in a dynamic democracy. We need more statesmen. We encourage business leaders to engage.