What happens when stakeholders have control of businesses
- Network Leaders
This is part three of a five-part series on what can be done to create a better economy amongst loss and beyond it, at the 6 month mark of COVID-19. Read part one and part two.
have a resilient economy, we need to acknowledge that business has a bigger purpose in society than just generating profit for business owners. Businesses supply people with their livelihood through employment, anchor communities, and affect the environment — businesses shouldn’t automatically prioritize profit over these functions. By and large, though, that’s not how things work now: we’ve become accustomed to business owners basing their decisions on profit alone that it’s no longer surprising to see big profitable companies refusing to give their employees paid sick leave in a pandemic, or immediately engaging in mass layoffs during a national crisis with no thought of the consequences for the workers.
But, how do we ensure that businesses do take these broader considerations into account? One good way is to give people who have a stake in whether businesses fulfill that bigger purpose is a voice in the decisions that businesses make. Right now, almost all for-profit businesses are controlled by an individual owner or by a board of directors appointed by shareholders, so it’s not surprising that they put profits for owners above everything else.
If other stakeholders (such as workers or community members) had some control over the decisions that businesses make — through worker ownership, community board representation, or other structures — they’d be able to effectively pressure those businesses to look beyond pure profit and grow in healthy shared ways that ultimately build economic resilience.
Bringing a broader set of stakeholders into business governance is not easy. To be effective, multi-stakeholder business decision-making needs to be efficient and not get in the way of entrepreneurship and innovation. However, the good news is that there are countless creative, smart, and committed people experimenting with different models for democratizing business, and Common Future network leaders are at the forefront of this experimentation.
Tomás Durán of Concerned Capital is working to convert businesses in Southern California to employee ownership, providing capital solutions to owners to facilitate these conversions and to train and support workers who want to buy into the business they work in. Hillary Abell of Project Equity is helping businesses nationally convert to cooperative ownership and providing dedicated financing tailored to those conversions. Countless other network leaders are putting a multi-stakeholder vision of business at the heart of their entrepreneurship and economic development work. Their efforts are building new models that show great promise in leading us toward a more representative, and ultimately more resilient, economy.
This is the third entry to a five-part weekly series where I’ll break down some of the changes that we need to create a more resilient economy and share who the visionaries are working to bring them into the world. Read part one and part two. Follow the series here.
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Sean Campbell is a New York City-based Common Future Social Entrepreneur in Residence. Learn more about him here.