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E-MailRichard A. Gephardt is President and CEO of Gephardt Group. Mr. Gephardt served in the United States House of Representatives from 1976 to 2004, representing Missouri’s 3rd Congressional District. He served as House Democratic Leader for more than 14 years, as House Majority Leader from 1989 to 1995 and Minority Leader from 1995 to 2003. Mr. Gephardt ran as a Democratic candidate for U.S. President twice, in 1988 and 2004. Related research from the Program on Corporate Governance includes Lifting Labor’s Voice: A Principled Path Toward Greater Worker Voice And Power Within American Corporate Governance by Leo E. Strine, Jr., Aneil Kovvali, and Oluwatomi Williams; Stakeholder Capitalism in the Time of COVID (discussed on the Forum here) by Lucian A. Bebchuk, Kobi Kastiel, and Roberto Tallarita; and The Illusory Promise of Stakeholder Governance (discussed on the Forum here) by Lucian A. Bebchuk and Roberto Tallarita.
After 28 years in the US House of Representatives, I had the privilege of serving on five different public Boards of Directors, including Ford Motor Corporation, US Steel, Century Link, Centene and Spirit Aerosystems.
In addition, I have had an opportunity to work with numerous other public corporations to help them have a more mutually beneficial relationship with all of their employees.
The main lesson I learned from all of those experiences is that corporate boards and corporate leadership cannot create or sustain a successful corporation if their sole and only focus is on the interests of their investors.
The responsibility of all corporate boards and leadership is to create and sustain the most successful corporation possible and that can only be achieved to there is focus on ALL of the stakeholders of the corporation, including investors, employees, customers and the community, country and world they inhabit.
If the board and leadership engage consistently with ALL of their stakeholders their odds of achieving success for all of their stakeholders will be overwhelmingly good.
Let us look at one of those stakeholders, their employees. Successful engagement with all of their employees is much more than money compensation alone. To be sure, everyone wants more money, but the vast majority of employees work for much more than money alone. They also work for purpose in their lives and are anxious to be an integral part of a winning team. Just like football is a team sport, any corporation is a team activity.
If corporate leadership combines adequate compensation for their employees along with part of employee compensation in equity in the corporation as well as constant information on the metrics of the corporation they will have laid a strong foundation to receive maximum discretionary effort from every employee. If the leadership builds on that foundation constant engagement with the employees to gain their best ideas for business success and expresses gratitude to employees who are performing well – the infrastructure of corporate success will be in place.
The mistake I sense a lot of corporations make is to believe their ONLY responsibility is to their investors. By solely focusing on their investors, they are actually denying their investors the financial rewards and opportunity they deserve.
