Unfortunately businessmen either feel they're dichotomous or they're actually very shy about saying that they have bigger goals in business than just maximising shareholders' profits, as if it's a dirty word to say that you care about corporate social responsibility,” Ho told INSEAD Knowledge after speaking to INSEAD MBA students at the school’s Asia campus in Singapore, in a dialogue session called ‘Capitalist in his pocket and socialist in his heart’.
“The prevailing ethos, which I think thankfully is changing in the US because of the complete failure of self-absorbed CEOs to do anything that's socially useful and the social recognition that these people absolutely have done nothing for the world, has at least now resulted in a situation where one does not have be embarrassed to say ‘I am a successful CEO and I embrace CSR.’ Before it was like a sign of manhood. The more macho you were, the more you would say ‘I don't give a damn about corporate social responsibility because only the wimps care about that. I only build profits.’ That has been the ruling mentality for a long time and it was that mentality which, in my view, led partly to the near collapse of Wall Street capitalism.”
That said, Ho believes the debate between maximising shareholder value versus stakeholder value is far from over. “If you take the view that in a capitalist structure, maximisation of shareholders' interests, measurement of economic profit, total shareholders' returns and all that sort of thing, that shareholders' returns are the only thing that should concern a CEO, that debate would take you in one clear direction because in that case CSR isn't really necessary. A lot of things are really not necessary. So long as I give the highest returns to shareholders, I should be given the highest possible short-term bonus. And it's totally logical.”
“If you just slightly change that definition of shareholder to stakeholder, the KPI (key performance indicator) and the metric for CEOs completely change. And if you define the welfare of the community and customers, etc., as being as important - or at least having some degree of importance - and you're willing to work towards a model that perhaps you even weight it and have some metrics that can measure it, because measuring shareholders' return is very simple. Measuring stakeholders' return is a vague, airy-fairy, touchy-feely kind of thing.”
Ideally, though, he says there should be a way to quantify all-encompassing stakeholder value. “If economists can actually come out with a method by which you can measure it, like some people are talking about instead of gross domestic product, you should talk about ‘gross national happiness’ and therefore infant mortality should be one of the indicators. If you can actually have some other quantifiable KPIs for what maximising stakeholders' interests are, then I think we would have gone a long way in shifting values within society.”
Ho practices what he preaches. The Banyan Tree, which he founded with the core values of driving sustainable development, rests on a triple bottom line of economy, society, and the environment.
Though he considers himself now to be more an idealist than a ‘socialist’ at heart - the phrase was coined by his wife and Banyan Tree co-founder - his distant past seemed to suggest otherwise. Ho was once detained under Singapore’s Internal Security Act for his political activism in the 1960s/70s and he was also kicked out of Stanford University in the US because of “political activities” at the time of the Vietnam War.
“The responsibility of people who live in a richer world or have come from a richer personal background as I have, is to use the means that we have, not necessarily to be more charity workers or Mother Theresas and be absorbed totally in guilt. I don't think we need to have any of that. We can be very happy, prosperous businesspeople engaged in creating a prosperous company, as I hope that we're doing with Banyan Tree and still at the same time being able to contribute to economic development and the betterment of people's livelihoods in places which need improvement.”
“To me, the proudest thing I’ve done (with) Banyan Tree has nothing to do with hotels; it’s the fact that we’ve been able to build, from a relatively small platform, a globally sustainable brand that would have come from Asia, but be able to compete globally.”
The hotel group Banyan Tree is due to open its first spa in Singapore at the Marina Bay Sands integrated resort in September.
“A brand must emotionally resonate with its consumer, then you build a lasting connection ... For Banyan Tree, what makes the brand resonate is not the fact that we have crystal chandeliers or Christoffel silverware, or our swimming pool was bigger than the other guy’s swimming pool. It was in the little things that we did that we found created the environment for people to have really good memories, whereby, by remembering the Banyan Tree, we are associated with the good times they had.”
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