There is growing recognition that without social purpose a company can’t achieve its true potential. For genuine impact, social purpose must be grounded in reality and be apparent throughout the business. Companies often pay lip service to contributing to society but don’t do enough to ensure Corporate Social Responsibility (CSR) initiatives are embraced and acted on. But today’s shareholders aren’t just financially motivated. A strong social purpose is attractive to investors because they know how important it is for retaining talent and inspiring employees and customers.
BlackRock’s CEO, Larry Fink, has been reflecting on social purpose. In his annual letter to CEOs of large public companies, he indicated that the firm is going to be more actively involved in their long-term strategies. He said: “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”
In a recent announcement Facebook founder, Mark Zuckerberg, claimed that the company felt a responsibility to make sure its services are good for people’s well-being. Facebook is going to reduce public content from businesses and news organisations in favour of personal content from friends and family. Facebook wants to encourage more worthwhile interactions even though it expects people will spend less time on the network. Why? Because it will be “good for the community and business over the long-term.”
Be transparent
Whether or not social platforms affect people’s wellbeing, it is clear that the ease at which information is shared on social media is putting companies under the spotlight. With the widespread use of social media, unethical behaviour and wrong-doing is more likely to be exposed. In addition, customers can rapidly lose confidence in a business and rally around causes.
Just look at how the #MeToo campaign spread virally on social media, following allegations of sexual misconduct by Harvey Weinstein. This has shown how widespread sexual harassment in the workplace is.
It’s not just the entertainment industry that has come under fire – a number of well-known tech executives have been forced out by allegations of misconduct.
Uber’s CEO, Travis Kalanick, was pressured to resign following revelations about numerous scandals at the company. A blog by former Uber engineer, Susan Fowler, exposed a company rife with sexual harassment and discrimination. While a controversial lawsuit against Kalanick by its early investors, Benchmark, has apparently been dropped, it is clear there is lot of work to do. Following interviews with hundreds of Uber employees, law firm Covington & Burling has provided a long list of recommendations, approved by Uber’s Board, to address discrimination and ensure a diverse and inclusive workplace.
Avoid bro culture and play by the rules
Binary Capital cofounder Justin Caldbeck’s inappropriate behaviour forced him to step-down from the venture capital fund last year. Caldbeck has since spoken to students at his former university about the dangers of ‘bro culture’. He is taking time out to reflect on his mistakes.
The National Venture Capital Association has been working with law firms to create HR policies and best practices to help VC firms and start-ups get their houses in order. Not surprisingly these include sections on harassment and discrimination.
Social purpose should start with company culture. It is no good creating a better world if your employees are treated unfairly. It takes guts to start a business – entrepreneurs have big personalities – they need thick skin and an unwavering belief in their business. Start-ups need to grow fast, but with rapid growth there is always the danger of creating ‘toxic’ cultures where people don’t play by the rules. You can help avoid this with a diverse team – a mix of different talent, genders and ethnicities.
Flexible long-term strategy
CSR goes beyond what is required in employment law. It is about making sure your team is valued and respected. For example, firms that provide flexible working arrangements, time for employees to master their roles and to get involved in charitable work can help improve job satisfaction and performance. A good work/life balance is good for families and communities. But social purpose goes even further than this. There needs to be a re-orientation of long-term strategy as companies tend to focus too much on short-term profits.
At Vie Carratt, we help companies research and analyse future trends that could affect their business and devise flexible strategies for long-term, sustainable growth. A major part of this is crafting purpose-led visions which explain what the business stands for and how it contributes to society.
We aim to bring social purpose to life for all stakeholders – to inspire employees, customers, shareholders and investors. We are seeing an evolution, as companies appreciate that if you put purpose before profit you can be more profitable long-term.