(This post was first published at www.Forbes.com on August 14, 2019)
The assumption that businesses can prosper long-term in isolation from their local and global communities has become increasingly difficult to maintain—for three primary reasons.
1. Changing public opinion with regard to corporate responsibility, especially among millennials.
Surveys over the years have consistently indicated that American consumers expect companies to not only make a profit but address social and environmental issues.
But a 2017 Cone Communications survey1 found that consumers’ definitions of responsible companies had become more all-encompassing, including:
- Investing in causes in local communities and around the globe
- Standing up for social justice issues including racial equality and women’s rights
A 2019 Porter Novelli/Cone Biometrics study2 found that 79 percent of Americans “believe companies should also support issues that are personally important to them”. And 75 percent believe companies “should take a stand on issues that are widely discussed in the news and in society — like immigration or equal rights”.
And they’re looking for real action. In Edelman’s 2019 Trust Barometer survey3 76 percent said that CEOs should take the lead on change rather than waiting for government to impose it. That percentage is up 11 points from 2018.
Although this growing trend in public opinion can affect consumer loyalty and sales,the greatest bottom-line impactmay lie withthe recruitment of millennials—already a competitive challenge due to the ongoing shortage of skilled workers in every major country except India. Salary is still the primary concern for millennials taking a new job, but many want the companies they’re joining to be doing some good.
- The struggle to retain talented skilled workers
Skilled workers are not only harder to recruit but harder to hold on to. They are frequently contacted by recruiters.
The effort to retain them has become even harder due to a phenomenon I’ve noticed in coaching millennials. It’s not their often-cited sense of entitlement, which I think is open to debate, but more a self-assurance that leads many of them to believe that their companies need them more than they need their companies.This confidence, heightened by the stiff competition for skilled workers,ends up giving them more clout. If they say that they want their company to be involved in positive social and political causes, leaders have to listen.
- The rapid spread of negative stories about businesses through social media
Whether minor or significant, real or imagined,any alleged transgression by a business can be broadcast worldwide in a matter of hours. While mainline media outlets may ignore a nun substantiated story at first, they often end up covering it because the viral spread of the story has itself become newsworthy—especially when high profile figures start commenting. As a safeguard, companies need to build a reservoir of goodwill through positive engagement.
Agendas for action
The 2019 Edelman study indicates that CEOs should work on
- Solving problems in the communities where they operate
- Empowering employees to have a voice regarding issues
- Making philanthropic contributions to issues outside the company such as workplace training
Many companies are already doing this.
Google’s approach has been multi-pronged. In addition to achieving its 100 percent renewable energy target in 2017, the company provides grants to social programs including the Equal Justice Initiative, Pratham Books: Story Weaver platform, and Goodwill Industries International. It also offers employee gift matching and paid time off to volunteer.
IKEA worked with UNICEF’s Save the Children initiative to address the problem of child labor in India. It established a code of conduct along with a monitoring system to insure that all IKEA suppliers adhere to the code.
Business leaders have also been more willing to take political stands.
In 2016 eBay, Cisco, and Apple attempted to block a North Carolina bill seeking to keep transgender individuals from using bathrooms based on their sexual identity. The bill passed, but a year later the state repealed it in the face of political, social, and corporate pressure.
In 2017, many CEOs demonstrated their opposition to the repeal of DACA by resigning from the Strategy and Policy Forum, President’s Trump’s top business advisory panel.
More recently, Nike’s seemingly risky decision to feature Colin Kaepernick in an ad turned out to be a major success. Amidst calls for a boycott of Nike, sales rose substantially, and the company reported a ten percent jump in income for the quarter ending in November 2018.
If businesses want to compete successfully for talent, hold on to the skilled workers they have, and reinforce their brands’ reputations, they’ll need to adapt to a new reality.