Markkula Center for Applied Ethics - Better Choices

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On the Minds of People Minding Corporations

Corporate Governance Themes You Should Know

Center Leadership Ethics Director Ann Skeet has been listening to conversations among corporate directors, and she offers five themes that have been repeated in many of these discussions:

  • Stakeholders matter even as shareholders become more active
  • Different mix of directors and skills sought
  • Effects of the on-demand economy
  • Even investment bankers value right relations
  • Governance as strategy

On the on-demand economy, she comments:

In plenary sessions to panel discussions, the business world's darling of the moment is the "on demand" economy. Even what to call it is up for debate, but the impact of companies bringing together suppliers and buyers of services is on the rise and pushing against regulations that the newly created companies cite as out of date. Executives at some companies make the case that it is ethical to ignore such regulations since legislators and courts are not keeping up with markets, referring to this choice as "selective law adoption."

The "use case" versus "balanced care" crowd would put Uber, for example, on one end of the spectrum, declaring it is a technology company, not a transportation company, and hinting of moving into other realms. The "use case" companies put the needs and the wants of the customer at the top of a list defining the company's values. Other companies fulfilling the matching of supply and demand express more interest in serving both the suppliers and users well through a set of principles applied to both and predicting stronger long-term returns as a result of this approach. These "balanced care" advocates believe this more even approach to both sides of the market is the true innovation offered by this growing type of business.

One point of emerging consensus is that the nature of work itself is changing, providing opportunities to re-evaluate corporate obligations to people traditionally thought of as employees and the relationship between worker and hiring firm. Given the trend of stakeholder care as a means to achieving shareholder return, treating the people doing the work poorly seems less likely to bring high returns over time, but this is a point of much debate in the conversations in the first six months of this year.

Read Skeet's full article on trends in corporate governance

Ethics
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