"No man can serve two masters," says the gospel of St. Matthew.
A recent Wall Street Journal article by Holman Jenkins uses that wisdom
to argue that the boards at Ford and United Airlines placed unreasonable
demands on their recently departed CEOs, Jac Nasser and Jim Goodwin.
Specifically, Jenkins suggests these boards - as many do - expect CEOs
to serve many masters: not just shareholders, but employees (and perhaps
communities, the press, regulators, etc.).
The biblical reference speaks to the difficulty of serving both God and
mammon. But the quotation is misapplied to the business world. Today's
CEOs not only can serve multiple masters; they must.
The historic wisdom, of course, is that a company must be run
exclusively to benefit its owners, that any attempt to balance the
interest of multiple stakeholders will result in muddled
decision-making. CEOs like Al Dunlap (late of Scott Paper and Sunbeam)
have derided the stakeholder approach, insisting that employees and
other constituents must take a back seat to investors.
Dunlap rejected the idea of the value chain: that companies that take
care of staff will find workers serving customers better, and clients
delivering profits to owners. Dunlap seemed to think the value chain
would work in reverse: that focusing on owners would inspire others. His
exit from Sunbeam was abrupt and ignominious.
Growing evidence shows companies that focus on multiple stakeholder
groups produce better financial returns than those that obsess over
pleasing their shareholders. In their 1992 book Corporate Culture and
Performance, John Kotter and James Haskett demonstrated how companies
that take account of shareholders, customers, and employees outperform
those that focus on just one or two. A few years later, in Built to
Last, James Collins and Jerry Porras explained this phenomenon,
contrasting the "tyranny of the or" (the idea that one has to choose
between competing interests) with the "genius of the and" (the belief
that there are solutions that benefit all).
This may sound counterintuitive, but to PR pros it should be
PR people know better than anyone that any constituency can destroy a
company: If employees won't work for you, you're out of business
(remember Eastern Airlines?); if communities won't let you build new
facilities, you can't expand (see the nuclear industry); and if people
won't buy your products, the results are obvious.
One of PR's most vital tasks is to help CEOs see the competing pressures
from all company stakeholders, balance them, and find win-win
That's why PR must be a C-level function, and not incidentally why in a
sane world, marketing (which manages the organization's relationship
with one stakeholder group) would report to PR, which must manage
- Paul Holmes has spent the past 15 years writing about the PR business
for publications including PRWeek, Inside PR, and Reputation