Article à lire sur l’Harvard Law School Forum on Corporate Governance : « An Inflection Point for Stakeholder Capitalism » (de Seymour Burchman et Seamus O’Toole).
Extrait :
From the Business Roundtable to BlackRock, there’s growing pressure on companies to respect all major stakeholders—employees, customers, suppliers and local communities, as well as investors. Meanwhile, a variety of innovations are effectively making these stakeholders central to long-term company success. Digital technologies, new ways of organizing work and transactions, and the shift to the service economy have forced businesses to prioritize the interests of all stakeholders—adding significant opportunities and risks.
As a result, unless the company’s survival is in question, stakeholder-centricity is becoming essential to its overall management. Even under short-term pressures such as pandemics, executives and directors will need to view the company as operating within an integrated ecosystem. Only by supporting all major stakeholders, through calibrated and balanced incentives, will companies achieve sustained success.
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Reinforcing stakeholder-centricity through compensation
Through trial and error, Acme has been fine-tuning its approach. In our work with the boards of Acme, and of other companies, we’ve found four principles for making it all work.
Emphasize the long-term. It’s impossible to attend to all stakeholders equally in the short term. Companies are constantly making near-term trade-offs while still optimizing outcomes for all over the long-run. Investments in customer experience today might squeeze suppliers or reduce profitability in the near-term, for example, but boost the value proposition and expand revenues and margins in the future.
Any pay program tied to short-term outcomes will subconsciously influence how leaders balance these trade-offs. Accordingly, Acme has emphasized an ownership culture with greater equity compensation, broad participation, and policies that promote longer employee holding periods. It also steered clear of the usual practice of overlapping three-year performance cycles, as the overlaps effectively create a series of one-year cliffs that emphasize short-term thinking. While Acme has continued to use a short-term, cash-based bonus, it reduced that element’s weight relative to the rest of executive compensation. (Although a clear minority, some companies looking to prioritize long-term, balanced stakeholder outcomes have eliminated bonuses entirely.)
Explicitly tie pay to outcomes for all stakeholders. Acme wanted to keep the cash-based bonus tied to short-term profit and revenue goals, but was concerned that these would keep employees from weighing the stakeholder tradeoffs discussed above. So the company balanced the investor-focused metrics for the bonus with stakeholder-oriented goals such as employee engagement, customer retention, and supplier satisfaction. The simple act of ‘naming’ the priorities and directly tying them to compensation boosted buy-in across the organization.
Balance metrics with discretion. Acme believed that stakeholder dynamics were too fluid to be captured in a typical bonus construct, where ‘hard’ goals were established at the beginning of the year and performance measured formulaically twelve months later. The board set specific priorities and definitions of success, but allowed for discretion in the actual assessments and payouts. They also allowed for the updating of priorities frequently to ensure continued alignment with the strategy.
Stick to your guns. Finally, and perhaps most difficult, boards need to build up the resolve to align compensation outcomes with the stakeholder model. That means letting cash-based incentive awards follow stakeholder outcomes even when short-term financials are weak. And conversely, it means pulling back on pay when stakeholder priorities weren’t achieved, even if financial performance was strong. Note that executives will still be motivated to respect investor interests, as much of their pay will be in stock.
Boards must build the credibility to diverge from the “one-size-fits-all” status quo on pay for today’s U.S. public companies. They have to stand firm in the face of external pressure from impatient investors and shareholder advisory groups to align with their guidelines, most of which are anchored in and promote a shareholder-centric perspective. Some investors won’t agree with this philosophy and decide to select out, but others will take their place if they find the company’s mission, strategy, and execution compelling and in shareholders’ interests long-term. This will require boards to be consistent, symmetrical, proportional, and transparent in their compensation decisions. If the tie always goes to the executive, or if the company applies its philosophy selectively, the board will lose credibility and struggle to operate outside the typical investor-centric norms.
Finally, to sustain and optimize incentives that align with the stakeholder-centric model, boards must be relentless about communication, internal and external. They need to dialogue continually with investors and employees. They can emphasize the mission and strategy, how they’re balancing stakeholder needs over the long-term (even as they make trade-offs in the short term), and how the incentives align.
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Ce contenu a été mis à jour le 30 mars 2022 à 5 h 49 min.
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