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Writer's picturePaul Saunders

Which is more important....People, Planet & Profit or Shareholder value?

When we are considering the focus of leadership we can debate the benefits of different leadership styles needed to address climate change, such as sustainable leadership, green transformational leadership, responsible leadership, or we might gravitate towards highlighting the beliefs and values that exist within us as a leader.


There are also leaders  believe their purpose and priority is to create shareholder value and they place the shareholder above all these other priorities. This belief is commonly reinforced by the corporate CEO’s remuneration package which places stock options and shareholder value as a long-term wealth plan for their CEOs.


It is a common practice for Boards to place annual short term KPI’s on executives to deliver the three P’s – i.e. employee engagement survey results, safety results, ESG measures or sustainability reports. And yet, the long-term incentives which drive the wealth of CEO’s, and their executive team are commonly heavily aligned with shareholder value and financial performance.


Can you think of a corporate CEO who left an organisation with a large payout because the shareholder value of that company was strong? Can you recall when a corporate CEO left an organisation and was recognised and rewarded for their achievement of all the three P’s – People, Planet and Profit?


This article is not aiming to solve the governance issues that exist with present CEO compensation models, but such compensation models can often give insight into the leadership thinking within an organisation.

It is harder for a leader to think about driving change towards People, Planet, Profit (3P's) inside their organisation if they are only rewarded in the long term by shareholder value. So how do you know if your leadership thinking is not aligned with the 3P’s?

Here's a short checklist:

1.      Do you always think about short term goals? When leaders only think about short term goals it is hard to think about the 3P’s which often take time to implement and achieve. 

2.      Do you have and prioritise goals for your team on all three P’s: people, planet & profit? Leaders who don’t include business objectives related to non-financial results (ESG or the 3P’s) often don’t have 3P leadership thinking.

3.      Do you struggle getting collaboration across your organisation? A lack of collaboration is a common block to 3P leadership thinking. 3P thinking requires strong collaboration and influencing skill. A lack of collaboration across the organisation, a silo mentality, or a competitive mindset across departments in the business all hinder 3P leadership thinking.     

4.      Do you spend your time solving all the problems, making all the decisions, driving, and directing your people and rarely facilitating or coaching your team? Facilitation and coaching skills are key leadership skills to achieving the 3P’s as leaders know that it is only by facilitating team discussions and coaching their people will they take ownership and be empowered to make a positive impact.

 

So, what can help create 3P leadership thinking?

Education, alignment, recruitment, strategic planning & systems thinking and, coaching your leaders to coach their staff.

·       Educate all staff on the principles of ESG & green innovation. Create think tanks, creative  hubs and green projects that create opportunities for all staff to engage in social and environmental change in your organisation.

·       Recruit or develop your leaders in your organisation to be skilled at systems thinking, capable of long term strategic thinking and with the ability to apply stakeholder management principles in their decision making.

·       Promote and reward leaders and teams for their actions and improvements in workplace culture (i.e. employee engagement, safety, community programs) and green projects (reduce water usage, waste management, energy efficiency, recycling). Such people and planet initiatives all lead to increased profit in the long term.

·       Encourage strategic planning at all levels of your organisation - long term goal discussions across all levels of leadership in your organisation. Quarterly team meetings where progress on long and short-term action plans to achieve the strategic goals is reviewed.   

·       Create a 3P long term incentive model for all the executive team, not only the CEO.

 

·       Coach your leaders to be positive impact thinkers, leaders who understand the social, economic and environmental impact of their decisions. This aligns a leader’s purpose and values to the 3P’s.

 

3P leadership thinking is the future. If you want a sustainable and resilient organisation you need to ensure all your leaders can think and lead the 3P’s.


For further information and a consultation on "Developing coaching skills" "Leader as Coach" and "3P leadership thinking" contact Paul Saunders, Director at LN Consulting Australia Pty Ltd.

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