Key Lesson:  In order to build shareholder — and all stakeholder — value over the long-term, we need to recognize and reward managers who take the long view.

When Dominic Barton became global managing director of McKinsey, he had some urgent problems to deal with. The firm’s trust-based culture had led to damaging charges of insider trading and the violation of other securities laws. In order to reestablish trust in the marketplace, Barton instituted a series of rules and reforms that some inside the consulting giant resisted. Ultimately, Barton prevailed and the company is now on much firmer ground.

Barton has subsequently turned his attention and leadership to what he calls “short-termism” or the focus on results that go no further than the next few quarters. In a recent opinion piece in the Financial Times, he says that “Capitalism may be the greatest engine of prosperity ever devised. But it requires taking the long view to really deliver.” Barton suggests that companies look beyond quarterly earnings per share, and consider metrics such as “manufacturing quality, employee recruitment, development and retention, safety and affordable pricing.” In the end, he reminds us that “creating value for shareholders is not the same as maximising short-term profits.” He further argues that the “biggest financial rewards should be reserved for managers who deliver long-term value, not just a quick pop in the stock.”

Dominic Barton is our Grounded Leader of Week for his focus and leadership on building lasting and meaningful value for all stakeholders.