Serge Papin (CEO, Système U): “The director must turn his company into a place of reconciliation for the different stakeholders”

After 14 years at the head of French retail cooperative Système U, which has some 1,600 stores and 70,000 employees, Serge Papin is convinced of one thing: the role of a CEO, far from just being about being maximizing profit, is also about facilitating ‘reconciliation’ between the different stakeholders in such a way as to promote the emergence of shared capitalism. Here are the thoughts of a visionary leader engaged in the development of sustainable capitalism.

After 14 years at the head of French retail cooperative Système U, which has some 1,600 stores and 70,000 employees, Serge Papin is convinced of one thing: the role of a CEO, far from just being about being maximizing profit, is also about facilitating ‘reconciliation’ between the different stakeholders in such a way as to promote the emergence of shared capitalism. Here are the thoughts of a visionary leader engaged in the development of sustainable capitalism.


 

Leaders League: A few weeks ago you launched your ‘dare for tomorrow’ manifesto. Can you tell us a little about it?

 

Serge Papin: A few weeks beforehand, 1,500 scientists launched an environmental protection appeal. With Eric de Carmel, director of Bayard Nature et Territoires and François Lemarchand, president of Nature et Découvertes, we wanted to show our support for them and demonstrate that businesses want to be stakeholders in this campaign in favor of sensible and ethical capitalism. We reached out to members of our network and collected 400 signatures.

 

This means accepting that the role of a company is no longer limited to reaping profit.

 

Exactly, there is a moral imperative for global solidarity from which companies cannot exempt themselves. Hence the need, for them, to no longer focus on the act of selling, but to take a hard look at the nature of their activity and the impact it has on employment, health, the environment, the future… to think of their activity in terms of the greater good, beyond the classic objective of financial results.

 

What concrete form might this new approach to capitalism take?

 

I think that we need to move to a more sharing form of capitalism. My idea is that staff should have systematic access to share ownership and equity of their business. Imagine if a 15-20% stake belonged to the workers. That would automatically lead to a dovetailing of goals and a recalibration of interests. Another avenue to explore would be to avoid the siphoning off of profits by holding companies, which effectively limit the benefits to staff in subsidiaries, which sends them a very negative signal. For me grown-up capitalism calls for sharing.      

 

What do you say to those who believe moral capitalism is a pipe dream?

 

Unlike André Comte-Sponville, I think that morality exists within capitalism and it must find expression in the social responsibility of companies. Don’t forget that today, some companies are as powerful as states. This gives them social responsibilities. Especially when, and this has been the case more and more recently, states fail in their duties in this regard. Exercising your responsibilities is not incompatible with the quest for profit.

 

What role must the director play in the evolving function of companies?

 

A director must be a skilled mediator. Awareness of the changing landscape is more advanced for them than for shareholders, who remain focused on maximizing profit, which fuels resentment among a section of staff and weakens the model. Once again assuring the future means getting away from relationships based on power. This is why directors must make their companies places of reconciliation for the different stakeholders. This is what I endeavored to do, ten years ago, when I took charge of U products in a way that made the products respectful of the environment, good for the consumer and profitable for local economic players. At the time many in the industry viewed this step as a needless hindrance. Today they represent a key element of our corporate culture and all our competitors do the same.

 

What should the role of the state be according to you?

 

The state must be a driver of change. Too much tolerance of certain practices still exists.        

 

Interview by Caroline Castets

(Translation: Simon McGeady)

Read the full Special Report: Conscious Capitalism

What is the role of a company? Two schools of thought, two rival philosophies, have vied for supremacy for over twenty years now. Is it to put the interests of shareholders above all else, as Nobel prize-winning economist Milton Freedman declared? Or is it, in addition to the shareholders, to serve other stakeholders such as staff, clients, suppliers and beyond?
Summary Nicolas Notat (President of Vigeo-Riris): “Staff and shareholders are two constituent parts of value creation” Jean-Luc Petithuguenin (Founder, Paprec): “Profit is the oxygen of a company, but it's only a means and not an end” “Nurturing well-being in the workplace and provoking the curiosity of the individual is vital to economic performance” Philippe Joannis (Founder, 5fois5): “Purpose before profit: this inversion of priorities is the key to conscious capitalism” “A reasonable level of profit is important to guarantee the continuous distribution of capital” “If a company is driven by short term profit, it’s doomed” “It’s impossible to be profitable in the long-term while ‘massacring’ stakeholders” Stanislas Guerini (French parliamentarian): “Reimagine businesses by removing the twin barriers which oppose capital and work” Making Capitalism More Moral

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