Employee since 2007

The next time you’re in CostCo, check out the employees’ badges.  Right under the employee’s name, the badge say “Employee since _______”.  Subtle, but powerful.

From what I know about CostCo, this is the real deal – they care about employee longevity, about treating people right, and about setting themselves apart from their peers.  Barron’s called them the “anti Wal-Mart”, and with average 2007 pay of $17/hour – 42% higher than Sam’s club – there seems to be real truth to the story.

And then in the perfect twist, analysts like Emme Kozloff of Sanford Bernstein calls CostCo’s CEO Jim Senegal “too benevolent” and analysts at Deutche Bank complain that “it’s better to be an employee than a customer or a shareholder.”

(Now  I’m supposed to drop in the chart of CostCo’s 10-year stock performance and show how it’s drastically outperformed the Dow and Walmart – each of which have offered a 0% 10-year return versus 80% for CostCo.  So here’s the chart if you’re curious.  But that’s not what’s on my mind.)

Costco v. Wal-Mart v. Dow Jones Inex
Costco v. Wal-Mart v. Dow Jones Inex

What’s on my mind is that, while I recognize that Jim Senegal has to do the dance of saying he pays employees well and treats them right because it’s good for the bottom line – because employee retention is higher, “shrinkage” (aka theft) is lower, and CostCo’s more affluent customers value interacting with happy employees – at some point we have to get to the heart of the matter.

When did it become accepted that actions that are right and moral – like paying employees a decent wage – have to be explained away and justified?  When did we accept the notion that people should be moral in their lives but that the moment they show up for work their morality is subsumed by their obligation to maximize profits (whatever that means)?

All great companies exist to change their industries, to change the world, so the starting point is a sense of purpose and a willingness to play by a different set of rules.  The question is: how far are we willing to go?  Of course great companies should do great things for their shareholders and make lots of money for (all!) their employees, but the notion that it is better for management to be amoral rather than moral undercuts the foundation of our society, our values, what makes us human being.

It may sound naïve, but I find it ironic that in a country (the U.S.) where values, morality, and religiosity have such a central place in our culture, in the corporate mainstream – which is itself populated mostly by values-driven, moral, religious people – it is verboten to talk in any serious way about acting in a moral way because it is the right thing to do.  Instead there’s this Texas Two Step, nudge-nudge wink-wink from CEOs to Wall Street to say “honest, guys, I’m just doing it to make more money!”

And then all of a sudden, a company that wins the Global Renewable Energy Award and that plasters magazines and billboards and tradeshows telling the world that “BP” stands for “Beyond Petroleum” is responsible for a 60-mile oil spill that will wreak unknown and unmitigated havoc on the environment, on wetlands, on marine life, and on us.

When will we as a society get to the point where we see that this is all connected?

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CSR 2×2 Redux Part II – What are we really learning?

(Part 2 of 2 on “Should foundation program officers be more like venture capitalists?” is coming soon)

A press release on CSR just came over the transom today, and I read it as validation of the Corporate Responsibility 2×2 post I wrote last week.  Better yet, the release is from the Center for Corporate Citizenship at Boston College, run by Brad Googins (whose blog post was the inspiration for my original post).

The headline of the press release is “New Report Examines How Corporate Citizenship is Organized Inside Global Companies,” and it announces the findings of a survey of 330 global corporations on their corporate citizenship practices.

The release begins, “A new report released by the Boston College Center for Corporate Citizenship confirms that managing a company’s role in society is becoming a formal part of corporate structure and management practice, with many companies internalizing the function into corporate departments and cross functional teams.”

Wow, OK, that sounds impressive.  Keep reading….

In examining the management systems associated with corporate citizenship, the Boston College researchers contend the field is in an early stage…:

  • Corporate citizenship is not strongly linked to strategy or business plans in most companies
  • Top management identifies corporate citizenship as important but in most companies does not exercise significant leadership on the issue
  • Employees are seen as the most influential stakeholders for citizenship but inside the company are seen as the least informed
  • Boards of directors are just beginning to focus on corporate citizenship issues
  • Measurement and use of measures of corporate citizenship are weak
  • Minimal training is being done at every level on the relevance of citizenship to the success of the business

I don’t get it.

How can the headline be that “managing a company’s role in society is becoming a formal part of corporate structure and management practice” if a main finding of the report is that “corporate citizenship is not strongly linked to strategy or business plans in most companies” and that “top management…does not exercise significant leadership on the issue”??

While I recognize that in every evolving field rhetoric and messaging often run a few steps ahead of practice (hence the term “vaporware” in the technology space).  But the CSR space too often feels mired in wishful thinking about practice.   This runs the risk either of letting companies off too easily or, worse, having the CSR expert community play a supporting role communicating that CSR is front and center on the agenda when in most cases its at the bottom of a “nice to have” list.

Brad Googins’ comment on my blog was that he prefers to “see the glass half full,” and I absolutely agree that companies have made lots of progress in the last 15 years; that making progress is very, very hard; and that continuing on the current trajectory would be a very good thing.  But if we don’t do a better job distinguishing aspiration from reality, the field as a whole will lose credibility and will miss the opportunity to be taken seriously as a management approach for long-term corporate sustainability.

The Corporate Social Responsibility 2-by-2

Nathanial Whittmore, who writes a great blog at Change.org, posted yesterday about Brad Googins’ response to Barack Obama’s inauguration speech (Brad runs the Center for Corporate Citizenship at Boston College).  Nathanial was very enthusiastic about Brad’s call for corporations to step up to their citizenship responsibilities in the midst of the current crisis.

Brad’s post makes some sweeping claims, including, “Indeed, a great deal of rethinking and recalibrating corporate responsibility has been taking place, positioning citizenship at the heart of the enterprise.”

Reflecting on the years I worked in CSR (some of them collaborating closely with Brad and his colleagues at the BCCC), I have to disagree.  Outside of a very few organizations that were founded around a mission (like the Body Shop before it was bought by L’Oreal), I do not agree that citizenship is at the heart of the enterprise for 99.9% of enterprises.

So while I applaud Brad’s exhortation, I worry that now is the time when we’ll see less, not more, progress by corporations in CSR.

Looking at the evolution in corporate behavior and expectations around that behavior over the last two decades, my hope is that there’s a slow but inexorable pull of rising expectations – reflected especially in the progress in diversity initiatives, environmental responsibility, more strategic philanthropy and volunteerism, etc.

But my fear is that the vast majority of corporations are not ready or willing to make real tradeoffs in order to “do good” for the world, and that, in times of economic hardship, CSR becomes a “nice to have” that drops off the list.

I wrote about Nike a little while back, just one example of why I’m skeptical about many CSR efforts.   My fear is that very little progress has been made in areas that are hard to tackle and which involve real tradeoffs.  In fact, with all of the CSR standards out there (ISO 26000, the Global Reporting  Initiative, the UN Global Compact), it strikes me that there’s not a lot of straight talk about where the dial has and has not been moved in CSR.

This got me thinking about a 2 by 2 matrix of CSR – with impact on the world on one axis and level of tradeoffs on the other.  I took a stab at sketching this out:


There’s nothing definitive about this picture, and it’s only meant to be illustrative.  But one has to acknowledge that, thanks to changes in attitudes and expectations, we’ve made some good progress on the left-hand side of the graph (where the tradeoffs are low, and the impact ranges from low to high): the recognition that, for example, reducing energy consumption will be good business and good for the world; or that a more diverse workforce – and programs that support it – is the right thing to do and a great way to attract and keep more talented employees.

But if CSR is “at the heart of the enterprise,” and if, as Brad Googins quotes, Lee Scott, the Chief of WalMart, told the Retail Federation, “There is no conflict between delivering value to shareholders and helping solve bigger societal problems,” then we’d see a lot of movement on the right-hand side of the graph.

And, in most cases, I’m seeing no movement at all.

Do you just do “more than nothing”?

I recently had the chance to look at the corporate responsibility / poverty alleviation project of a major multinational corporation, and it looked very familiar.  As far as I could tell, they took a set of things they already did, named it, studied it, collected a few metrics on it, and claimed thousands of jobs created, millions into the local economy, etc.

These days, it seems that every company has to do something “nice” for the world.  The problem is that, in most companies, a small group with not a lot of power, budget or influence is in charge of the “nice” projects.  Hence the result: going from doing nothing to doing a little bit “more than nothing.”  This might be good enough when your stakeholders aren’t going to dig any deeper – when all you really want is a theme for a section of your annual report, to write a press release, to get a few photo ops, etc.

I guess “more than nothing” is, well, better than nothing.  But it’s also pretty disappointing, and we shouldn’t pat ourselves on the back yet if this is the best we can do.