While it is the responsibility of management teams to be good stewards of a company’s capital, that shouldn’t be the only factor driving executives’ decision making. In this interview, Allstate chairman and CEO Tom Wilson speaks with Global Institute chairman and director James Manyika about how companies have a responsibility to make sure economic markets serve the people who live within them, by creating sustainable economic solutions and investing in people’s futures.
Tom Wilson: We have to get focused on innovation, which is, of course, what everybody talks about. But it’s also about the system within which we create. If you’re only driving toward short-term shareholder value, and you’re only driving toward increasing share repurchases, then that does not allow you the freedom as a management team to invest. I think management teams want to invest.
Management teams also have to have greater intestinal fortitude and take more risk. On the other hand, we also need to change the system, so that it’s not just about total shareholder return. Business creates prosperity. You think about what businesses do: We take iron rocks and we make steel skyscrapers. We take molecules and we make lifesaving drugs. That’s what business does, and that’s the purpose of business. The purpose of business, though, in the current system is about total shareholder return. And it’s important. One of the key priorities of businesses is to make sure we’re good stewards of the resources, the capital. We’ve got to make money on the capital. That comes with the territory. But there are other things we need to do.
We need to create dignity through work. We need to make sure our economic markets work well and that they’re fair for people. We need to have sustainable solutions, and we need to be a force for good in our communities. That’s what people expect out of businesses. If we do those, if we work on creating dignity through work, we will get economic growth. There’ll be more things to invest in, and everybody will be better off.
We try to treat our employees as customers. We say, “We’re selling you a job. And with that opportunity, you pay us. You pay us with your hard work, your passion, your commitment.” If you think about it, providing people dignity through work is part of the employee value proposition. Helping them invest in their communities by doing volunteer work is part of the value they get out of being part of Allstate.
We also have to pay them well, and we have to give them interesting work and invest in them. It’s a complete employee value package. That’s what helps create dignity through work—when people feel like they’re respected and they have a chance to achieve their own purpose in life.
But I don’t necessarily think that everything you do that is purpose-driven and for employees and about being a force for good has to translate into higher shareholder value. It’s about balancing. It’s like a portfolio. If you have a portfolio of stocks, you lean a little more on this one at some time—another time, here.
We have to deliver shareholder value. There are minimum amounts we have to do there. But if it’s the last nickel of profit, versus you can do something in the community and make your employees more proud of your company, then I would argue that’s a better use of the company’s resources.
We have a shared purpose, which is to help protect people from life’s uncertainties and to help them realize their hopes and dreams. That’s for our customers, obviously. It’s also for our employees. We believe we can do it for both our customers and our employees together.