In his book “Good Value”, HSBC Chairman Stephen Green argues that the values of capitalism need reassessment and suggests that businesses should be focused on the pursuit of two distinctive but complementary goals: profitability and sustainability. Shareholder value maximisation in isolation is no longer an acceptable aim. Adam Smith the father of free markets, recognised early on the threat to the public of un-trammelled capitalism writing “the proposal of any new law or regulation that comes from (businessmen) ought to be listened to with great precaution...it comes from an order men who’s interest is never exactly the same with that of the public.” Smith is arguably suggesting that there should be checks and balances for an orderly functioning capitalist society to flourish.
Image via WikipediaGreen also accepts that regulation is necessary to ensure market driven excesses are avoided. He also argues that there has to be a return to more robust values and a “renewed morality” within the corporate world. Individuals are held accountable to the law, but should also be expected to take responsibility for their actions. Green argues that the same applies in companies: boards should take responsibility to ensure that corporate culture supports the pursuit of profitable and sustainable business.Progressive family firms understand the need to balance their responsibilities to towards their multiple stakeholders, holding to a code of ethical behaviour, while ensuring the prosperity and growth of the enterprise. Responsible ownership of this nature is commonly referred to as “stewardship”.
The IFB has long held that the family business sector recognises the critical importance of stewardship. Looking ahead towards 2011 this issue is high on the association’s agenda and we will be debating during the coming year how family businesses can strengthen their organisations through successful stewardship.
