The CEO's Role in Ensuring SOCIAL HARMONY: Plus, Jeffrey Sonnenfeld's take on the pros and cons of capitalism.

• Author: Hayes, Bill

Don't tell Jeffrey Sonnenfeld that a CEO's number one concern should be ensuring a positive financial return to shareholders. Sonnenfeld, a director of Lennar Corporation, senior associate dean for leadership studies and Lester Crown Professor in the Practice of Management at Yale School of Management, and a frequent contributor to Fortune, TIME Magazine and CNBC, among others, isn't buying it.

"I don't think there's a technology CEO alive today who believes that statement. It took 22 years for Amazon to turn a profit," says Sonnenfeld. "There were very few businesses that were instantly highly profitable. So I think that's a very misguided notion."

So if raking in the bucks isn't the entirety of the CEO's job, what else falls onto the chief executive's to-do list? "Building long-term shareholder value is the goal, and doing it responsibly," he says.

To Sonnenfeld, a major part of the mandate should be ensuring harmony between the company and its stakeholders, including customers and the community. I spoke with Sonnenfeld about the CEO's role as well as his thoughts about the current state of our capitalist system.

Bill Hayes: You have said that CEOs "are in the business of social harmony." What does that mean to you in particular, and how can they help maintain that harmony? Jeffrey Sonnenfeld: They're not in the primary business of social harmony, but it is part of their responsibility. There are guidelines and rules and elements of responsible conduct that come along with building shareholder value that are inextricably intertwined. So they're not primarily in the business of social harmony, but it helps to provide for free enterprise to function when there is a reservoir of institutional trust. We need that trust. That's not a new concept. People have been referring to it recently as social capital--which is as valuable as financial capital--not realizing that that term goes back to 1840 when de Tocqueville coined it as he visited this country as a French legislator and political science expert. In his book, Democracy in America, it's a much broader statement, including civic engagement through voluntary associations, but also through civic leaders, especially business leaders taking on citizenship responsibilities. And that fortification of community and public trust is vital. We need to have that social capital for the free-market system to work. That's on a collective basis and an individual basis.

Wherever you look, from financial...