The prevalence of large business participating in social activism has increased over recent years. It wasn’t historically the place for business to have an opinion on social issues and be outspoken about them. We’ve seen social media and activist shareholders mobilising large scale walk-outs, protests and boycotts of brands and companies products when companies ran amiss of polarising topics. Successful boycotts in the recent past would be The Dorchester Collection owned by the Sultan of Brunei. Brunei announced it would not impose the death penalty for those convicted of having anal sex, following boycott calls by prominent celebrities and international condemnation of the country’s decision to roll out strict laws making anal sex, adultery and rape punishable by stoning to death.
The choice by big business to fend off potential protests and boycotts that could hurt their bottom line, while also being active participants appeasing current employees, or shift policy, recruit new employees who feel strongly about causes they have been outspoken about in the past is a win-win. Fostering the light-touch internal capability to respond to social controversy within the organisation thoughtfully and proactively rather than retrospectively in the wake of headlines and public relations recovery mode is also a plus.
It’s not inherently a bad decision to get involved, and the financial cost of participation is negligible. Employees passionate about causes offer their time willingly to organise and participate in causes, with the barrier of entry for participation upfront funding being in the thousands. It, however, remains a tongue in cheek fact that the majority of businesses fail dismally in the execution with their participation being handled like a trade show events. Treating social activism like a business event with some lip-service on the day of an event, while the media cycle is focused then disapearing into the night is window dressing and messages the moral and ethical ambiguous business culture. This obviously isn’t a positive messaging exercise.
Involvement in a social cause needs long term planning, objectives, structures and desired outcomes tracked. From the bottom up pressure making Executives, Senior Leadership Teams reluctant leaders, the business messaging needs to align or will come off hollow and artificial. The generational gap between leadership and subordinates is also a challenge. These generational differences make numerous causes very uncomfortable. Leadership that only pay lip service publically because it’s expected of them then subvert the efforts of employees privately ineviatably alienate highly passionate employees.
Hard words, but just showing up doesn’t really cut it anymore. The bar has lifted to the need to Lean-in. If a business isn’t driving outcomes for the stakeholders they are advocating for they should seriously consider not participating. Nobody needs another cheap branded water bottle, pen, or cap.
Leaning-in is crucial because when we scratch the surface of inequality between rank and file and Executives the compensation per employee and the gross operating surplus of private non-financial businesses is by this time a well-known stat. Businesses have managed to keep a lock and key on compensation while increasing shareholder value by 15x the average wage increase per year. This return on shareholder investment is evident in the CEO compensation which increased by nearly 1000% while workers wages increased 12% during the same period.
This stagnation of wages, and massive company profits and Executive remuneration has been talked to death. This issue came about from an academic paper written in 1976 by Michael Jensen and Dean William Meckling of the Simon School of Business at the University of Rochester published in the Journal of Financial Economics entitled “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.” where these gents created a problem that their paper solved where shareholders are the principals of the firm and they argued that Jensen and Meckling argued that the singular goal of a company should be to maximize the return to shareholders. A fictional problem that became famous and made popular by Jack Welsch at GE.
There is a slow change in business philosophies occurring. Obviously, this isn’t in the favour of Executives who have their compensation tied to managing the market and increasing shareholder returns. People act in accordance with how they are compensated. The examples of changes are companies that no longer focus on short term quarterly cash and prizes, but long term value creation.
But coming back to social activism, the outcome that businesses need to drive isn’t shareholder value, but stakeholder value. If businesses continue to actively minimise and marginalise everyone except one party and pay a single class of employee 300x that of ordinary workes to ensure that this special protected shareholder class receives returns at the expense of employees, their families, suppliers, customers, or communities. This doesn’t even begin to touch what it means for social responsibility and social activism where higher involvement, engagement, and accountability is a requirement if participation is desired.
This all sums up to everyone, business entities included, are always welcome to support whatever cause they are passionate about. There is a resetting of expectations that has to happen with numerous offenders. It’s not really on message when a multi-million or billion-dollar business shows up pleading poverty expecting fanfare. Either show up and be prepared to help, or stay at home. It’s not a marketing and advertising photo-op, leave the branded merchandise at the office. Treat equality, human rights and other causes with the gravity they deserve.