Engagement in the News: Stock Buyback Bill, Barron's Sustainable Companies List, Amy Klobuchar

When Sen. Elizabeth Warren introduced the Accountable Capitalism Act calling upon CEOs at companies with sales of over $1 billion to “take into account the interests of customers, employees and communities,” ESM predicted this could mark the start of new public discussion about the importance of investing in people and what ESM calls Enterprise Engagement, but we didn’t think it would happen this fast. 

 

In the last two weeks, various issues related to engagement have made national news: 

 

Politician lambasted for management style. Amy Klobuchar, the Minnesota senator who just announced her candidacy for president, is taking a pounding in the media about high staff turnover, her alleged temper and moodiness and the reported unwillingness of several talented people to accept key campaign roles. Is she being singled out for this management style because she’s a woman, as some observers have legitimately asked?  In the past, this issue has not raised much ire about the many men with similar management styles who have run for president. Or did the popular show “Undercover Boss,” the influence of Millennials, and other social forces put a greater public focus on the importance of inspiring leadership that is just starting to show up, much like the MeToo movement last year? 

 

Restrictions on stock buybacks proposed. Senators Bernie Sanders and Chuck Schumer proposed a bill that would put big restrictions on stock buybacks by companies that do not invest sufficiently in their workforce, citing that stock buybacks have soared after the recent tax cut at a pace far greater than investments in people. Their legislation would prohibit companies from buying back stock unless they invest in workers and communities, including paying all workers at least $15 an hour, providing at least seven days of paid sick leaving and offering reasonable and reliable pensions and healthcare benefits. 

 

Barron’s highlights sustainable people management practices. The Feb. 11 edition Barron’s, the highly respected investment weekly, released the results of its 2018 100 Most Sustainable List, whose combined shares lost only 3.2% last year, compared with the S&P 500’s loss of 4.2% and broader Russell 1000’s loss of 4.6%. Barron’s definition of a sustainable company includes the criteria of Enterprise Engagement (i.e., practices related to shareholders, employees, customers and community, as well as the planet). Barron’s quotes Hubert Joly, President of No. 1-ranked Best Buy: ”You need to 1) have a great team, 2) happy customers, and 3) generate returns. But it’s the first priority that generates the second, which generates the third. Making money is the outcome.” This year’s Barron’s report concludes that the success of a sustainable management journey depends “a lot on the personal passions of the CEO.” 

 

Rounding out this year’s top 10 companies after Best Buy are: Cisco Systems, Agilent Technologies, HP Inc., Texas Instruments, Voya Fnancial, Clorox, WW. Grainger, Motorala Solutions and ManpowerGroup. 

Presidential candidate Howard Schultz proposes changes in corporate tax rates. In a recent town hall meeting on the CNN network, Howard Schultz called for a change in the corporate tax cut to include incentives for companies that invest in worker training and other employee benefits.