Many high profile and high performing companies that have stood the test of time use a completely different logic than most to achieve their success. Researchers describe this as ‘social’ or ‘institutional’ logic and at its heart is the belief that the welfare of society and people are core to their purpose, as well as generating returns for shareholders.
These companies are intentional about how they add to social purpose and how they provide meaningful work and income for their people. They don’t just measure profits but also their capacity to sustainably contribute to society and the well being of their people. Recent global research shows companies are increasingly being expected to take a lead in society, rather than just concentrate on financials.
This is backed up by the 2018 Deloitte Global Human Capital Trends survey that confirmed a shift in business focus toward stronger relationships with employees, customers and communities and that 86% of millennials think that business success should be measured in terms of more than just financial performance.
Interesting, only 23% of the companies surveyed in Australia have social responsibility as a priority reflected in their corporate strategy, with 53% indicating it is not a focus for them. David Brown, Deloitte Human Capital Leader stated that:
“This year’s report is a wake-up call for organisations to look beyond their own four walls, cultivate these relationships in a meaningful way and reimagine their approach to their workforce – and their broader role in society — if they want to succeed.”
So, apart from feeling good about themselves, there are some strong benefits to companies taking on social responsibility. For example:
- Organisations that see themselves as social institutions have a strong sense of purpose and values that forges a distinct identity, acting as a buffer against uncertainty and change. A great example of this is IBM who celebrated its 100th anniversary in 2011 by offering service to the world. 2.6 million hours of service was provided by over 300,000 IBM employees on a ‘global service day’. This clear sense of social purpose provides a constant source of meaning for its employees that allows them to navigate other uncertainties more successfully.
- Customers want to deal with companies that have a social conscious and those that don’t have one may experience a decline in their brand popularity leading to a loss in business. Accenture Strategy’s most recent global survey of nearly 30,000 consumers in 35 countries, including more than 2,000 consumers in the United States, found that 62% of customers want companies to take a stand on issues such as sustainability, transparency and fair employment practices. They also found that 48% of US consumers will complain if they don’t like the way a brand is responding to a social issue and that 42% will vote with their feet.
- Employees are more motivated, and experience emotional engagement when they perceive their company as creating social value, according to HBR report, How Great Companies Think Differently. In the current context where attracting and retaining talent is at the top of most company’s priority list, building a reputation as a social contributor is essential.