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Beyond the Bottom Line: Redefining Corporate Social Responsibility

Even people who are hostile to big government in principle actually support and expect the government to regulate the economy to protect interests like environmental quality or retirement security.
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There is little doubt that last November's power shift in Washington was, in part, a referendum on the Iraq War. However, it wasn't just the war that swayed the election. For years, anxiety and frustration with the state of American society have grown, fed by a steady stream of corporate and government scandals.

Meanwhile, Americans spend $3 or more for a gallon of gas, pay more for less healthcare coverage, and, watch pensions diminish -- all while many companies post record profits. Our post-9/11, post-Katrina society is characterized by more anxiety, more insecurity, and more Americans questioning the legitimacy of existing "institutions" -- both public and private.

A few weeks ago, I participated on a panel at Georgetown University with Arianna Huffington. The discussion, "Principles, Profits, and Politics: The Rise of Corporate Social Responsibility," signaled the release of findings from a national survey conducted by Fleishman-Hillard and the National Consumers League.

The survey found that a majority of Americans believe that the most important thing a company can do to be viewed as socially responsible is "treat their employees well." It also found that Americans wear different "hats" when they evaluate a company's social responsibility commitment -- viewing that commitment, by turns, as employees, as investors, as customers, and as voters.

Several compelling themes throughout the survey suggest "red" and "blue" state Americans are united in their view of corporate performance. Specifically, it found that overwhelming majorities of Republicans, Democrats and Independents believe:

  • Corporate priorities are out of alignment with Americans' priorities.

  • U.S. corporations do not act responsibly.
  • Government should intervene.
  • The survey also found that the battle for corporate reputation is increasingly being waged online, particularly on such social networks as MySpace, YouTube, and a growing variety of blogs. A large number of Americans -- Democrats somewhat more than Republicans, but large numbers of both -- get an increasing amount of their information from internet sources.

    These findings suggest several important realities for American business.

    First, there are no large numbers of true "laissez faire" Americans left. We live in a world of big government. Even people who are hostile to that idea in principle -- who consider themselves minimalists when it comes to government regulations -- actually expect the government to regulate the economy and protect such interests as environmental quality or retirement security. That doesn't mean that Americans have huge faith in the government's ability to do this job well, or that they would support any given regulatory initiative. But it does mean that people accept -- as a baseline -- the government's role in realigning corporate behavior with values and priorities, not just the bottom line.

    Second, with vague regulatory statutes and the broad discretion enjoyed by regulators, companies cannot safely rely on purely legal remedies to defend themselves from government action. It is easy, and often politically beneficial, for government officials to target a business for practices that company leaders may have plausibly believed were legal, but which offend -- or appear to offend -- the public's conception of corporate responsibility.

    Neither of these realities is going to change in the near future. But there is no reason for business leaders to panic. Most American businesses are participating in their communities in ways that go beyond simply tending to the bottom line. They need to inculcate that participation into their corporate cultures. Then, they need to aggressively define their public images in ways that are consistent with -- but broader than -- their business brands. In the world of politics, people often have a poor opinion of Congress but a favorable view of their Congressman. It's just as true that if you don't define yourself in a way that highlights your strengths, others will eventually define you in a way that emphasizes your weaknesses. The same basic principles apply to the business world.

    The upshot is that business success is still about making money, but it can't only be about that. It's critical to communicate how success in the marketplace has been good for employees as well as stockholders, and how the company has used its own resources to advance the broader goals people have for their families and communities.

    To be effective, that communication can no longer occur only through media that companies control. It must also take place in the rough and tumble online world, especially on social networking sites.

    The good news for business is that most companies are engaged in their communities. The challenge is to communicate more clearly and compellingly the specific ways they define and create value beyond the bottom line.

    This is my first post, and I plan to be a regular contributor on this compelling issue. I look forward to your comments and feedback.

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