When financial success is not enough
It was a Thursday morning, a little before 9, when Paul walked into the boardroom for his usual monthly meeting. Accompanying him was his senior staff. Paul, chairman & CEO, was a secondgeneration owner of a medical instrument manufacturing company serving hospitals and outpatient facilities throughout the U. S. His father had founded the company in 1939. Paul took over in 1980. The company was his life and had grown substantially over its 81- year history producing significant revenues and earnings — particularly the last 10 years.
But, the last 18 months had taken its toll on Paul. He had lost his younger brother a year earlier to cancer and his wife to Parkinson’s disease six months later. They had been married for 50 years. The results of these two major events caused Paul to reflect on his life as he contemplated what he would be doing in the future. Paul’s values were changing. What was important to him just a few years earlier didn’t seem important to him anymore.
After completing the meeting agenda, Paul asked the board to go into executive session. The board agreed and Paul’s senior staff was dismissed. Paul opened the executive session stating how much he had enjoyed working with such talented employees, senior staff and board members. He thanked them for their guidance, leadership and focus on policies that produced consistent growth and earnings. He was particularly complimentary about the board’s adherence to the vision, mission and values of the company.
Paul then announced that he would be retiring within the next two years and giving up his CEO position at year- end. He would retain his title as chairman so that he could mentor his successor. He recommended that the board appoint John, his COO, to CEO by the end of the year.
Discussions among board members ensued over the next hour and they finally agreed to appoint John as Paul’s successor.
But there was one more item on Paul’s mind. He wanted to challenge the board to re- examine the values of the company and take a long- term view of what the company could do during this time of uncertainty. He stated that the company, like many others, was facing the perfect storm with the convergence of COVID- 19, a major recession and riots in major cities. He continued, “I do not want to sit here and conduct business as usual in this great time of need.”
Paul continued, “All of us in this room have been extraordinarily successful.” He went on, “We support many charities and other worthwhile causes because it is the right thing to do and it doesn’t hurt our bottom line.
“Now, I am asking the board to do more.
“I am asking you to examine whether or not our values are equal to our societal responsibilities as a corporate citizen.”
He asked the board to focus on supporting first responders in the medical instrument industry — doctors, nurses, hospital workers, ER personnel and paramedics. Paul went on. “In this terrible time of need, we should ‘ give back’ far more than we have in the past.”
He challenged them to consider a long- term social responsibility program, which would embed a legacy for the company. A subcommittee was formed and returned two months later with their findings and recommendations for the entire board. They began their report with a quote from Warren Buffett. “If you’re in the luckiest 1% of humanity, you owe it to the rest of humanity to think about the other 99%.” The committee reported four major findings.
1. The committee determined that most of their business giving was purely corporate, non- targeted and did not include major stakeholders. Therefore, there was no cohesion between what was being “given” and the organization as a whole. For example, employees were not involved in any of the charitable giving; therefore, employees did not identify with the company’s philanthropic values. The board recommended that a strategic philanthropic plan be developed with more targeted gifts aimed at first responders, i. e. employees, managers, clients, suppliers, civic leaders and the communities they served.
2. Frontline employees should be an integral part of all targeted gifts. This would help employees identity with the company’s values and be proactively involved in executing those values. Further, they recommended that every employee be given a day off, once a month, to support any of the programs included in the company’s philanthropic efforts. This would increase employee satisfaction.
3. A strong socially responsible program would help retain and attract top talent, build loyalty among clients and strengthen brand awareness.
4. The report emphasized the need to engage their clients with almost every social responsibility and charitable program. This engagement would strengthen business relationships and provide a competitive advantage from those companies seeking to unseat the company’s business relationships with customers.
Two years later, Paul’s company was recognized as the most socially responsible company in the medical instrument industry. Revenues grew at a more rapid rate than in the past. Earnings growth set new records. A new legacy was born. Paul was filled with a sense of satisfaction as he had begun to fill the emptiness from the family losses he had experienced.
Two years later to the day he called for that executive session with his board, Paul, too, was diagnosed with cancer. At his bedside, he told his immediate family, “when financial success is not enough” you re- examine your priorities to seek joy by giving more than you receive. Paul passed away peacefully that evening.