The Challenge for Business and Society
Stan Litow, the former head of corporate citizenship programs at IBM, has written a new book entitled The Challenge for Business and Society: From Risk to Reward. In it, Litow examines the history of corporate responsibility and argues that companies can succeed by combining a commitment to the bottom line with a dedication to the common good.
While recognizing that the early days of industrialization in the United States were guided by often ruthless business practices, many of these same giants of business used their personal wealth to create foundations and systems that have benefited communities for hundreds of years. For example, Andrew Carnegie began the public library system. John D. Rockefeller championed health care and education. The Ford Foundation has continued to support social justice programs globally long after the family controlled the foundation’s assets.
Likewise, companies that were created in the 1800s often created employee benefits and programs that we take for granted today. The first paid vacation was offered not by government, but by the National Cash Register Company in 1902. Its president, John Patterson, wanted to stimulate “loyalty and good performance” from its employees. American Express created the first private pension plan, half a century before any government in the nation had one. AT&T, General Motors and U.S. Steel all created health benefit programs for their employees long before government agencies did. They did so because their leaders believed that these benefits gave them a competitive advantage and positively affected employees.
More recently, companies like Starbucks have put in place large-scale higher education and re-training programs, including tuition reimbursement, for their employees. IBM created the Corporate Service Corps – often referred to as the private-sector version of the Peace Corps – in an effort to send the company’s best and brightest employees to developing countries in Africa, Latin America, the Middle East and Asia to utilize their business skills for the public good.
But, significant challenges remain. How can business address global climate change or the growth of income inequality? Can business play a consistently positive role in addressing the skills crisis, the lack of high-performing schools, the need for an effective and more economical social safety net, and a broader understanding across culture and across geographies? The remainder of the book attempts to address these issues, and to show how businesses can utilize their unique global positions and resources for the common good.
Litow suggests three ways for companies to go about this work. First, is to recruit and retain top talent. Positive business behavior starts and stops with corporate leaders and employees, and it’s imperative that companies focus on recruiting and retaining the best. Second, good corporate behavior builds support in communities and government, which provides the goodwill assets that companies need to avoid and manage risk. And, third, good corporate behavior builds community support among existing or prospective customers and investors, which helps stimulate business in both established and emerging markets.
Lastly, Litow argues that we as a society need to go from focusing on trying to prevent corporate bad behavior to focusing on how to encourage and reward corporate good behavior. He suggests that if good behavior was prized by government, encouraged and supported by government actions through collaboration and incentives, and highlighted by the media, good corporate practices would go well beyond the best and biggest companies, and that increased attention and incentives would help to address these critical social issues on a massive global scale. Instead of government trying to limit corporate behavior, what if governments partnered with companies to address sound environment practices, a commitment to racial, ethnic and gender diversity and inclusion, and the education gap that exists in many communities?
While the answers are not easy, the approach should move from managing risk to rewarding change. For Litow, that’s the true challenge for business and society, and our shared vision for the future of the globe.
Portions of this blog post first appeared on Forbes.
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CSR Now! Is a weekly blog by Timothy J. McClimon, president of the American Express Foundation, designed to get at what's happening in corporate social responsibility today -- from the point of view of a corporate practitioner.