I meet a lot of CEOs as I travel the world for Saatchi & Saatchi. Most of them are just like you and me, except somewhat more stressed. Many of them have worked very hard to get to the top and now find they don’t enjoy life as much as they used to. I believe that much of the reason for this can be put at the door of Sarbanes-Oxley and the total, almost irresponsible, focus on short-term share price. Sarbanes-Oxley has turned out to be the proverbial mega-hammer being used to crack a peanut – it’s cost intensive, non-competitive and major overkill. Couple this with the absolute religion of quarterly reporting and you get a stressful, short-term situation where imagination, innovation, fun and passion are squeezed out. And worse, they are replaced by a functional bureaucracy which focuses more on reporting and messaging than innovating and building. It is a situation that disadvantages U.S. companies internationally and acts as a major start-up deterrent.
This total focus on short-term results and short-term shareholder value has got out of hand. Many CEOs are now actively looking to private equity, though not to make money or enrich themselves. It is simply to take away short-term external pressure so they can actually focus on creating long-term value for stakeholders. I’ve always been suspicious of the exclusive focus on creating shareholder value. My view of the eternal triangle incorporating employees, customers and shareholders, is that it’s employees that matter most. If you can unleash and inspire employees to drive together, you will create loyalty beyond reason from customers. Inspired employees will give customers things they never dreamed possible. If you do this, customers will buy more, revenues will increase, and over time so will shareholder value. Bob Seelert, our Chairman at Saatchi & Saatchi, often talks about starting with the answer and working back. To me the answer is inspiring employees to delight customers. Believe me, increased share value will follow. Or, to paraphrase Bob, start with your employees and work back.
