Stephen Staley: Canada has a corporate culture problem

Canada has fantastically successful companies, staffed by talented and ambitious folks from coast to coast to coast who want to deliver value for both customers and shareholders. They are increasingly prevented from doing so by armies of bureaucrats, activists, and ideologues who have been empowered to seize an ever-bigger share of the large but limited pool of capital to distract these otherwise successful businesses from focusing on what should be their actual priorities. Several weeks ago, Pierre Poilievre wrote a public “memo to corporate Canada” advising that they “fire their lobbyists.” I encourage Hub readers to take note of his points, but also to read within it a broader challenge he encourages corporate Canada to tackle. Corporate Canada has a culture problem, and a focus problem, and shows no sign of recognizing or solving either of them. One demonstrates their priorities by where they point their energy and dollars. On neither front has corporate Canada demonstrated that they take seriously the interests of their shareholders, employees, or customers—let alone the challenges facing Canada and Canadians. Over the past several decades the concept of “stakeholder capitalism” has taken root in corporations well beyond Canada. This idea grew out of an opposition to the Friedman Doctrine, which posits the social responsibility of business is to increase its profits. The straw man version of Friedman’s argument sounds cold and callous. The steelman version acknowledges the reality that the profit-seeking free exchange of goods and services has driven tremendous economic progress and prosperity while eradicating poverty the world over. In spite of this reality, a cadre of management and social thinkers argued that it insufficiently considers the broader needs of an ever-increasing basket of “stakeholders.” In this view, companies should not be so myopic as to merely focus on shareholders by delivering a valuable product or service to customers, or good quality jobs for employees, but to expand their aperture. This focus on thinking bigger has created companies that spend less and less of their limited energy and capital speaking about and advocating for the things that are at the core of what they do. We have enormous telecommunications companies that rarely speak about the positive benefits of connecting Canadians from coast to coast to coast in the second-largest geographic country on earth. We have large grocers who spend an ever smaller amount of their voice and energy promoting the value of buying from farmers and feeding Canadians from coast to coast, while our successful and resilient banking sector seems to view it as an afterthought to talk about the importance of funding the dreams and ambitions of Canadian consumers and business owners as they try to build the economy of the future. To be fair to the corporate leaders who have led their businesses through this transition, the road has been gradual, and the inclusion of shareholders as one of the “stakeholders” has meant modest returns have not been entirely sacrificed. Moreover, as capital flowed into these tertiary areas, an infrastructure of positive reinforcement grew around them. A plethora of dubious “pay to play” awards are given out annually to corporations and their leaders, to affirm the goodness of funnelling shareholder money into social projects. Activist shareholder groups have grown exceptionally skilled at creating space at annual general meetings to amplify the attention paid to their limited holdings and ever more radical proposals. These groups and their well-funded NGO cousins have built strong relationships with ideologically aligned media outlets and writers to ensure the spectre of the sticks of negative PR accompanies the carrots of their affirmative plaudits. A global infrastructure of frameworks and ranking systems has sought to embed the positive and negative reinforcement cycles of at first paying lip service to these political priorities, and then over time ensuring compliance with this increasingly ambitious ideological agenda as it ratchets ever higher. Finally, the current federal government has applied pressure, both through its clear ideological disposition and through their regulatory power, to encourage the pendulum swing ever further on these sociopolitical issues. The risk for corporate Canada is to have swallowed the Kool-Aidso completely that they are unable to be nimble if a future federal government steps back some of the regulatory overreach on these non-core issues. One would think corporate Canada would be clambering for relief from regulators who are constantly expanding their purview, but the extent to which some of these more dogmatic issues have been adopted with near-religious fervour at our biggest companies certainly makes one have doubts. If you think all of this sounds overblown, I challenge Hub readers to speak with friends or family who work at Canada’s largest companies by market cap. Ask them whether their most recent hiring focused on driving revenue, delivering business value, or serving customers has kept pace with hiring focused on DEI, sustainability, or the assortment of other sociopolitical causes corporate Canada has decided to put in the window. Ask them about the volume of internal corporate correspondence they receive focused on those sets of issues and in which direction it has trended over the past decade. Ask whether our technology and networking companies spend more internal and external energy on innovation or social advocacy. Ask whether our financial services companies speak more about funding the ambitious growth of Canadians and Canadian entrepreneurs, or about asserting their strong commitment to curtail the growth of natural resource companies, our economy’s largest sector. What is perhaps most distressing about this shift is that it hints at a lack of confidence in the inherent goodness of what these companies actually do. Providing quality goods and services to Canadians and Canadian businesses is essential to a well-functioning economy. Employing tens of thousands of Canadians, with great benefits, puts food on the table of Canadian families. And delivering solid returns and dividends drives the savings and retirement plans of millions of Canadians. These companies do good and important things. So good and so important that you’d think they would spend more time talking about them, and more time advocating for policies that advance them. Instead, these priorities have seemingly taken a backseat to whatever the ideological “current thing” is, leaving Canadians (including many of their employees) rolling their eyes, and freeing up policymakers from the obligation of sustaining an economy that prioritises their growth and productivity. None of this is to argue that the sizable philanthropic contributions of corporate Canada are a mistake. They are valuable, and frankly essential, to Canada’s not-for-profit sector. But these contributions are enabled by the success you achieve in delivering on your actual mission; they mustn’t be mistaken for the mission itself. Undoubtedly there are leaders at all these organisations who either disagree with these agendas or view them as necessary if minor distractions. But they are neither necessary nor minor, given they are self-reinforcing and have shown themselves to so successfully spread and then take over the mission of these companies. Moreover, the few leaders with the courage and vision to reject them for the sake of their actual core mission (like at Coinbase and Shopify) have demonstrated that the activists who loudly demand their adoption are a much smaller constituency than leaders are led to believe, and once excised the positive culture that grows in their place can multiply rapidly. This is what I read in Poilievre’s memo to corporate Canada: a broad call to use their voice and their influence to drive the economic value they claim to want, rather than exhausting their vocal chords as the backup chorus for the latest trendy ideology. It’s a call to advocate for the good work they actually do, and the inherent value to Canada and to Canadians that flows from the sizable investments they make on an annual basis. The third rail of the culture war tends to produce more heat than light and create justifiable reticence before wading into this sort of argument, but it must be engaged with if these challenges of focus and culture are to be successfully overcome. So what is the prescription for this malady? Corporate Canada needs to shrink its priority list and empower those who serve customers and deliver value, rather than the activist class who have commandeered their corporate podiums and levers of power. Elevate the voices of your hard-working pragmatists who are focused on the core problems facing your business. Challenge public policy that stands in the way of your growth and productivity, and advocate, not just to governments but to all Canadians, for solutions that drive the investment and progress you clamour for behind closed doors. It is on these issues you have true credibility, and unless you direct your energy toward them, you will continue to aggravate your most productive teams with irritating political nonsense and grow your employee base in all the wrong areas. These aren’t easy changes to make, they require focus and courage. Creating a healthy corporate culture is hard work, and changing it takes real effort. Pushing on the open door of the latest trendy culture war issue saves you the headache of facing down the growing ranks of noisy activists you employ. Meanwhile, the ideological bent of our elite media class guarantees some positive finger snaps of affirmation when your trend-following “thought leadership” aligns with their worldview. But the consequences of a metastasizing bureaucracy that averts you from your corporate mission are significant, as demonstrated by low productivity numbers being delivered by our increasingly bureaucratic, bloated, and distracted corporate class today. Know your mission, advocate for it, and build a team that’s united in that goal. In the end, the shareholder value you create will have spillover benefits for your customers, employees, the communities in which you live and work, and indeed all the stakeholders you claim to be fighting for today.