From Facebook rows over data privacy and outrage at the BBC (and elsewhere) over gender pay gaps, to concerns about sugar in our food and plastic packaging, the actions – or inactions – of organizations matter.
Increasingly, organizations need to be seen to be doing the right thing. They are judged on their relationships with their workers, customers, communities and society at large, and not simply on the profit they make.
That’s why The Rise of the Social Enterprise is the title of the 2018 Deloitte Human Capital Trends report – the analyst’s annual rummage through the key HR themes of the year. According to Josh Bersin, principal of Deloitte Consulting LLP:
Now, we have incredibly transparency about anybody who commits bad behavior, violates a regulation or steals data, so we have even more pressure on organizations to not do the wrong thing. It’s all of a sudden become a front-page story and so executives are realizing that, if they aren’t good citizens of companies, they are not only alienating their employees, they are alienating their customers and they are alienating their communities.
A commanding 77% of the 11,000 global business and HR respondents in the report indicate that social responsibility and citizenship are important. But their actions have yet to catch up, as only 18% say their businesses treat citizenship as a strategic priority.
There are mix of social, economic and political reasons why this idea of social conscience and the social enterprise have come to the fore now.
Key is the growing mistrust people have in their political institutions. While the economy and stock markets have risen, a lot of working people are still feeling the pinch rather than pounds or dollars in their pocket.
So, rather than government, people want to put their trust in businesses to improve diversity, healthcare and other critical issues to make the world fairer place and fill the void left by government. The 2018 Edelman Trust Barometer finds that 52% of people worldwide trust business to do what is right, while just 43% feel similarly about government.
The fact that millennials, now in their 30s, recognize that perhaps they are not going to be as well off as their parents is adding to the political pressure. They are questioning the corporate, economic and social issues that have created this situation. Some 86% of millennials – who comprise the majority of the workforce in many countries – believe business success should reflect more than simply financial performance.
While keeping an eye on outside issues is key, this idea of corporate citizenship must also directed internally, says Bersin, to help employees deal with the pressures in the workplace:
People work more hours, stress levels are high, mental health is a problem and physical health is a problem.
Employees can be overwhelmed by the welter of emails or technology that pulls their attention away from getting their work done. Bersin explains:
There’s a big theme in HR of building wellbeing programs and creating a healthy work environment for people, so they can be productive at work and some of that involves curating or managing technology so it doesn’t get out of hand. So part of the story is finding a way to take your social consciousness and apply it inside the company.
Different CEO breed
The social enterprise requires a different type of chief executive – one that thinks about the outside perspective and what is happening in the world. This CEO needs to know when – and whether – to take a stance on political, environmental or other external issues. Bersin says:
The CEO response to all of this is actually kind of hard. Every senior leader who has any kid of external-facing role in the company is going to have to decide what’s their social footprint? What’s their position on different issues? And how do they want to communicate that to their employees? Do they want to take a position on this or not? Every day this will come up. Being responsible and trustworthy is kind of the secret right now.
Taking a stand means risking alienating some people, but Bersin feels that they may have no choice:
What we’ve learned is that taking a position may not be as easy as it seems, but ultimately your stakeholders, your customers and your employees want you to take a position and I think CEOs are being forced to do so. They don’t have to politically active, but they have to be much more clear on what the company stands for and what the company doesn’t stand for and I think that’s different dimension of leadership that I think some leaders are not the best at.
No matter what the business, this is possible. Bersin cites the example of a bank whose stated mission is not to make money for shareholders, but to improve the happiness of our customers by giving them financial wellness.
It’s this kind of attitude to customers that epitomizes this new approach to business, where, says Bersin:
Profit is not the goal; profit is the outcome. The goal has to be something more meaningful and if you have a meaningful goal in the industry you’re in, you will appeal to people in a different way and still make good money and have a good business out of it.
Traditionally, people who are promoted to leadership roles are the ones who drive the numbers, who sell the most or are talented at launching new products. Now, the whole senior leadership team needs to remove the blinkers and look both externally and also think beyond their own function.
A key issue emerging from the report is the urgent need for the C-suite to work as a team not as individual functional leaders. Bersin expands:
Over the last 20 or 30 years, we came up with the Chief Marketing Officer, Chief Legal Officer, Chief Digital Officer, Chief Information Officer…Chief-this, Chief-that, and all of these C-suite executives had very big salaries and functional ownership of areas of the business. When a topic like corporate social diversity, citizenship, diversity and inclusion, careers comes up…these topics cross all boundaries of the company and there’s no one functional area that can do it.
While HR can certainly lead the charge in these areas, nothing will change in the organization without all business areas participating. Yet, the survey found that almost two-thirds of respondents said their C-suite was not working together, but in independent siloes.
Those respondents who said their C-suite regularly collaborated on long-term interdependent work were a third (34%) more likely to experience 10% growth or more in the next year than those taking a more siloed approach.
See part 2 of diginomica’s interview with Josh Bersin tomorrow (1 May) for discussion of the problems of poor productivity, careers planning – including the effect of an ageing workforce – and people data.