Too many leaders today seem more invested in short-term results and personal wealth than in the long-term health of their companies and society at large.
However, at a time when disastrous stories about the actions of Volkswagen, United Airlines, Wells Fargo, AIG and Carnival Cruise Lines dominate the news, I take hope from a few leaders who have been behaved courageously.
Starbucks CEO Kevin Johnson is one of these leaders. When two black men waiting for an associate were arrested at a Starbucks after the manager called the police, Johnson issued a public apology and flew to Philadelphia to meet with the men. When Kevin Johnson appeared on television, we saw a genuine, human response. He was close to tears. He felt badly that the men had been wronged. And he backed up his words by closing more than 8,000 Starbucks stores for an afternoon so employees could receive racial sensitivity training and share reflections. Although he was criticized for closing on a day with historically low sales, I applaud him for doing what was fiscally and ethically right.
Another example comes from Southwest Airlines. When an engine exploded on a Dallas-bound Southwest plane, killing a passenger, CEO Gary Kelly immediately issued a video message expressing his condolences to the family and loved ones of the passenger who died. Kelly does not wear his emotions on sleeve, but he looked and sounded sincere, and he said the right things. He grounded all Southwest planes so every engine could be inspected and pledged his support for the National Transportation Safety Board’s investigation. The company arranged a special flight to Dallas for passengers who had been on the plane and sent a letter of apology with $5,000 compensation checks to each of them.
Finally, there is Larry Fink, the CEO of BlackRock, a multinational investment management company. Fink may be my new hero. His annual letter to chief executives at S&P 500 companies in 2017 called on them to focus on long-term growth and pursue a strategy that is socially and environmentally responsible. Decrying the short-term thinking that is practically ubiquitous, he wrote, “Environmental, social, and governance (ESG) factors relevant to a company’s business can provide essential insights into management effectiveness and thus a company’s long-term prospects.”
In 2018 he was even more explicit:
“Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”
BlackRock is not in the business of losing money. If Larry Fink stays true to his words and holds companies accountable for doing the right thing even when quarterly earnings might suffer, the effect could be profound.
I congratulate these leaders and hope others will follow their example.