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Business Roundtable issued an August 2019 Statement on the Purpose of a Corp­oration, which was quite different than those it has issued over the past four decades.

The organization, well known for advocacy and lobbying, has historically emphasized the prime importance of profits for corporate shareholders. Now, however, it has expanded its charge to satisfy a much broader list of stakeholders-employees, customers, suppliers, communities and shareholders.This revised mission statement was signed by 181 CEOs of the largest U.S. corporations.

When I first read it, my reaction was that there was really nothing new; successful businesses have been doing this for a very long time. Later, I began to wonder if its real purpose was simply to burnish the image of its members in todays tough political environment.That may sound cynical, but I suspect that had a lot to do with it.

Anyone who has ever run a small or medium-sized company knows that Business Roundtables statement is not a new concept. Long-term profitability and viability requires critical management attention to all of these areas. Sometimes its not easy to choose between them because a decision to favor one may conflict with the well-being of another, but all of them have to be considered over the long haul if the objective is to stay in business. And company profitability is an absolute necessity if those other stakeholders are to be satisfied; this might be a novel idea for some politicians.

Nearly one hundred years ago, Henry Ford, who had previously doubled hourly wages, instituted a five-day, 40-hour workweek for his factory and office workers.He also built and provided housing (with some strings attached) for immigrants from Europe who had come to work in his factories.

Ford didnt do this because he was a great guy; he did it because it made good business sense. Employee turnover was reduced, and his workers had more time and money to spend on economy-enhancing consumables and, yes, on cars.

After World War II, Phillips Petroleum Co. found that housing for its rapidly expanding number of employees at its Bartlesville, Oklahoma, headquarters was almost non-existent, so it quickly constructed several Phillips Additions of small but well-built houses, which were sold at affordable prices.

To encourage highly educated management and professional employees to come from more urban places to work there, Phillips also built family-oriented recreational facilities, sponsored an amateur basketball team that eventually went to the Olympics, regularly imported cultural events that hitherto had only been available in large coastal cities, and made sure the local education system was topnotch.

Ford Motor and Phillips Petroleum were not the only companies to do this.Other savvy executives figured out what they needed to do to increase employee loyalty and to gain the approval of their customers, suppliers and local communities, and they did it.A formal mission statement was not necessary; the objective was to develop a profitable organization while improving the social and working environment.

Hats off to Business Roundtable for belatedly recognizing reality.

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