Companies like Walmart are realising that consumers and shareholders trust businesses that incorporate good values
Walmart is extremely generous, giving away over $1bn in cash and product annually – but it’s still viewed by the public as one of the least responsible companies on the planet, and is a continual target ofboycotts and protests.
Wells Fargo donated over $315m in 2012, the most cash of any company in the nation, and even did so in a thoughtful manner, focusing on low-income housing and first-time homebuyer support – yet it stillranked as one of the 10 most disliked companies in America in 2013.
Giving away a few dollars, or even a few hundred million, clearly won’t cure what ails a company’s brand. And it’s arguably not the most effective way to drive social change either. That’s one reason why, although net dollar amount is up, corporations are giving a smaller percentage of profits than ever to charity.
The good news is that companies aren’t necessarily giving less, instead they are changing how they think about their charitable efforts – moving from gifts and grants to strategic community investments that they hope will maximize social and business return.
However, there’s an opportunity to go even further. Corporate America still cuts over $18bn worth of checks annually, and in many cases executives still see charitable efforts as something outside of their real business efforts rather than intertwined. If this thinking changes, and these dollars are used differently, it could have a transformative effect for these businesses, and society too.
For instance, let’s think about Walmart’s potential impact. Imagine that it didn’t give away a billion dollars this year – and instead took that money, combined it with a negligible price increase, and paid all of its workers a living wage of $12 per hour. (The idea’s explored here by Berkeley researchers.) The effort would improve the lives of its employees and families, save the economy hundreds of millions of dollars annually, and potentially change the way the public perceives Walmart.
Imagine now if all firms made this type of commitment – focusing their charitable efforts not on cutting checks, but on making every aspect of their business driven by progressive values.
Some companies are beginning to head in this direction, guiding their staff to use their unique skill sets to drive social change. For example, Deloitte pledged $110m of staff time to pro bono work, and hundreds of companies have joined A Billion + Change, pledging to use their skill sets to drive social good.
However, to achieve truly transformative change, companies must integrate this more strategic approach to social impact into every aspect of their business. Take toothpaste company Tom’s of Maine. As Marc Gunther notes in his book Faith and Fortune: How Compassionate Capitalism Is Transforming American Business, years ago, when Tom’s was still a small company, it spent an extra (and unexpected) $300,000 to keep its pledge not to test on animals.
In the short-term, that decision obviously hurt Tom’s bottom line. But because of that commitment, and other efforts to live up to its values, 85% of Tom’s inbound correspondence was positive, an unheard of rate in the industry. Its approach to animal testing was repeatedly noted as a reason for the positive views. This overwhelmingly positive brand view was a large reason Colgate bought them for $100m a few years ago.
Many companies are beginning to follow this path, including Wells Fargo and Walmart, which have both done significant work to develop responsible supply chains, as just one example of their efforts.
Companies are engaging in these efforts because research shows consumers will pay a premium for socially responsible products, but also because consumers will punish leading firms who fake it. Studies also show that employees consider a firm’s values more important than their salary. Clearly, there’s solid business reasoning for integrating a values-driven strategy (and living up to it) at your company. But this reasoning is admittedly not unequivocal, or else everyone would be doing it.
So here’s one way to think about it: would taking the short-term revenue hit needed to ensure that a company lives up to its values, that staff act in an ethical manner in all facets of the business, and that the firm uses its unique skills and market power to make a difference, pay off for the company?
It’s impossible to say for sure, but making this leap is true corporate responsibility. Corporate responsibility isn’t making decisions only when there’s an obvious business yield from doing good. It’s about making a long-term bet that building an ethical company filled with empathetic employees will boost performance and engagement, and will create a company that customers and shareholders trust to stand by its principles and will remain loyal to, even if it costs in the short-term.
Graham McLaughlin leads the CSR program at the Advisory Board Company, chairs the board of DC Alliance Youth Advocates, mentors two boys, and is a faculty member with the Points of Light Corporate Institute
This article was taken from here.