Menu Close

Who are your stakeholders and what responsibility do you have to each of them?

CEOs are facing a delicate balancing act where it’s increasingly risky to put a disproportionate weighting on shareholder and investor interests to the detriment of customer, community and employee expectations and interests.

Who are you stakeholders?

Our 2018 CEO Survey shows 72% of Australian CEOs believe the world is moving more towards corporate integration where organisations are getting bigger and more influential but with great power comes great responsibility.

Trust is at an all time low

According to Edelman’s Trust Barometer, trust is at an all time low in Australia across institutions, government and business. To address this trust deficit, organisations need to give sufficient consideration to the responsibilities they have to all of their stakeholders and to contribute meaningfully to social progress as well as business results.

There are encouraging signs, our results show 61% of Australia’s CEOs believe the world is moving towards measuring success through a range of metrics, rather than solely on the basis of financial results.

CEOs are also under increasing pressure from customers and employees to take social or political stances, with 57% of Australian CEOs saying they feel this compared with 38% of global CEOs.

Meanwhile 30% of people feel companies are not delivering on the principle of fairness.

First Australian professional services firm to put their pay gap on record

We are seeing increasing investor activism, as well as the movement of regulators demanding more transparency regarding metrics that might give some insight as to whether or not organisations take the principle of fairness seriously. For example, with income disparity causing increasing community concern new disclosure requirements are being introduced in the US and UK where large companies will soon be required to report the ratio of CEO pay to their average (UK) or median (US) worker pay.

Here at PwC we were the first Australian professional services firm to put our partnership pay gap on the record, in a decision based on the belief that with greater transparency comes greater responsibility and enhanced pressure to address important issues.

The principle of fairness, particularly as it relates to pay, must become more of a focus for Australian boards and businesses or they risk further regulation as has happened in other markets.

But more importantly, because restoring trust in pay is a broader societal issue – it will positively impact employees, minorities, the poor, customers, and the public perception of big business. 
The question is how can CEOs and their organisations contribute meaningfully to both social progress and business results?

The answer starts with having and committing to a clear purpose and a shared set of values and behaviours which should help companies take a more deliberate approach to balancing all of their stakeholder interests. In particular, establishing a shared view of fairness and testing business decisions against this definition should lead to more meaningful social and business impacts.

Explore further why trust and purpose is an important conversation for CEOs and Boards via our PwC CEO Survey results.

Leave a Reply