While this suggests that CEOs may no longer need explicit permission from these stakeholder groups to speak out or take an action, it doesn’t rule out the importance of alignment and collaboration. For example, some point to the importance of a strong CEO and board partnership in promoting enhanced CEO engagement on global issues.
Maggie Wilderotter, former CEO of Frontier Communications, and an independent director at Costco Wholesale Enterprises, Hewlett Packard Enterprises, and Chair at DocuSign, contends that CEOs and boards should work hand in hand: “The board has to work with the CEO so that the CEO knows there is an expectation that he or she will evaluate issues that come up, and decide whether he or she thinks the Board should be involved more actively or make a statement. Then the CEO should discuss these expectations with their board, or at least their nominating and governance committee, and make a call on it. It should be a process, not a knee jerk reaction to a specific issue.”
Others noted the importance of CEO alignment with employee concerns. Ron Mock, CEO of the Ontario Teachers’ Pension Plan, explains: “It’s also critically important that it’s not just the CEO and the executive team that come up with the issues that are important to the company. Employees also have a high level of engagement around global challenges. It is important that we acknowledge that stakeholder group.”
CEOs must resolve disconnections between investors, boards and management
Why aren’t CEOs already more active on global challenges despite the broad agreement that it is a new imperative? In fact, CEOs, boards and investors aren’t always on the same page when it comes to perceptions of the systemic factors that may constrain chief executives:
- CEOs (57%), boards (46%) and investors (46%) identify boards' attitudes, skills, composition and leadership as a top constraint. Given the governance role that boards play, this is not a big surprise.
- Both CEOs (42%) and boards (50%) point to the linkage between executive compensation and short-term performance, which is fundamentally investor-driven. This is underscored by the fact that boards (52%) and investors (44%) alike identify short-term earnings pressure from investors as one of the top constraints.
- CEOs (47%) and investors (54%) also put regulatory requirements high on the list of constraints. For CEOs, this may be closely tied to quarterly financial performance reporting requirements. For investors, this could relate to the importance of client fiduciary responsibility and the need for positive economic performance from the companies in which they invest.
Given the rising importance of global challenges resolution as a corporate growth imperative, it’s up to CEOs to resolve these differences within their own companies. The ability to align a company’s stakeholders around a specific course of action when it comes to global challenges must become part of the CEO’s new DNA.