Employees, Investors Changing Corporate Culture
Many corporations are known for being large, cold institutions focused on production, profits and power. They have been ivory towers standing firmly against the winds of change, but that stance is facing increased pressure as consumers, employees and stockholders are applying more pressure for transparency and accountability.
In the past, disgruntled consumers had few options except for bumper stickers, posters, t-shirts and uncoordinated boycotts. The game has changed in the digital age and consumers with a conscience are responding:
- 87 percent of Americans will purchase a product because a company advocates for an important issue;
- 73 percent of millennials will spend more on a product, if it’s from a sustainable brand; and
- 81 percent of millennials expect their favorite companies to be responsible citizens.
Social media and big data have made information about government and corporations more transparent than ever. Actions and policies once hidden in the shadows of bureaucracy are discovered and publicized by the masses. Such access, for example, enabled Edward Snowden to unveil the mass US government surveillance program on American citizens.
Corporations also are under increased scrutiny. Brand managers must be more transparent, responsive and proactive than ever.
In 2020, employees at Amazon forced the company to take responsibility for its contributions to climate change. In response, the company’s CEO announced the formation of a multi-billion dollar earth fund and additional initiatives are in progress now.
In 2018, Nike took a bold stance for civil rights and injustice when it stood with Colin Kaepernick and the unarmed, innocent victims of deadly police brutality. Even though some burned their Nikes in response to the campaign, online sales for Nike products jumped 31 percent that week.
In 2013, online activists staged a “Starbucks Appreciation Day” to draw attention to the fact that Starbucks welcomed firearms in its stores. When gun-packers showed up for free coffee, customers were outraged. Customers forced the company to reverse its policy on guns.
In 2010, the movie Blackfish shocked the planet and put SeaWorld on life support. It nearly sparked an armed invasion of Taiji, Japan to defend the dolphins. As a result, thousands of people have snubbed SeaWorld and other companies that capitalize on animal captivity and inhumane treatment.
Today employees are among the most vocal stakeholder groups demanding corporate change. Employees at General Motors, Ford, and Chrysler persuaded the companies to adopt domestic partner benefits equivalent to those available to straight employees. Internal activists have pressed companies to reduce their carbon footprints. And Nike cut off ties to suppliers in Bangladesh when they were found to be unsafe.
Company employees have many reasons to become advocates for change. They are vested in the companies that they work for and they are immersed in the culture. Their identity is linked to the company’s reputation. Anyone who has worked at an organization experiencing a scandal (or even a bad football season) knows that where you work can be a potent source of scrutiny. Millennials are more likely to be concerned about the social impact of their employer than older employees. Workers in this age group also are more willing to express those concerns.
In 2025, 75 percent of the global workforce will consist of millennials who really care about social issues. In The United States, 76 percent of millennials consider a company’s social and environmental commitments before deciding where to work.
Corporations can get ahead of potential protests by being open to employee-led movements rather than shutting them down. Employees are likely to be much more in touch with social issues affecting their company than are top executives. Organizations that let their employees’ voices be heard without being stifled by “corporate antibodies” will gain an advantage in responding prospectively and thoughtfully to controversies, rather than in response to a boycott or social media storm.
Corporations can also benefit from internal social movements. The choices a company makes on social issues can have an impact on its ability to recruit new employees. Creating an environment conducive to grassroots social innovation can also unlock new levels of employee engagement, ideation, and impact, outcomes that are especially desirable in this era of flattening hierarchies and social-media-powered brands.
Activist investors are shareholders at publicly traded companies who are attempting to change the organization.
Investors can try to bring about change in a number of different ways. Their primary tactic is to lobby the company’s board of directors through letters and meetings. They typically circumvent the management team, since they are usually subjects of the complaints and calls for reform. Activists often target the management team with high-profile media campaigns that highlight issues of concern. Activists often form a coalition of like-minded investors to strengthen their voice and vote. Despite the conflict, share prices and operating performance at targeted companies often improve after activist involvement.
“If every company were well managed, there would be no reason for activists,” said Warren Buffett. “The truth is, at some companies, the managers forget who they’re working for.”
Companies don’t reflect the social values and priorities of their workforce and their customers will pay the price. In Georgia, for example,
One week after Georgia restricted voting rights, a growing number of corporations are voicing their opposition to this assault on democracy. Critics say the legislation will restrict voter access. They claim that it will disproportionately affect people of color. Coca-Cola, Delta Airlines and Home Depot, for example, are pushing back. Major League Baseball is threatening to move the All-Star game out of the state. The NBA moved its 2017 All-Star Game out of Charlotte after North Carolina enacted a bill limiting anti-discrimination protections.
Delta CEO Ed Bastian called Georgia’s final bill unacceptable. In a memo to employees he said that “the entire rationale for this bill was based on a lie: that there was widespread voter fraud in Georgia in the 2020 elections,” a claim that has been repeatedly debunked.
“After having time to now fully understand all that is in the bill, coupled with discussions with leaders and employees in the Black community, it’s evident that the bill includes provisions that will make it harder for many underrepresented voters, particularly Black voters, to exercise their constitutional right to elect their representatives,” he said. “That is wrong.”
Other Georgia-based businesses, including UPS, Home Depot, Porsche Cars North America and the Atlanta Falcons, have taken stands against the new legislation. JPMorgan Chase CEO Jamie Dimon condemned the legislation. He said the company’s “employees span the United States and as state capitals debate election laws, we believe voting must be accessible and equitable.”
“We believe it’s important for companies and business leaders to continue to study the 98-page law more closely,” said Microsoft President Brad Smith. “We must take a substantive approach, and voice our views collectively.”
And on Wednesday, 72 prominent Black executives did just that, by publishing an open letter titled “The Fierce Urgency IS Now” as a full-page advertisement in The New York Times. The letter denounced the Georgia law and others like it, and urged “corporate leaders everywhere to speak out against efforts intended to make it harder for Americans to vote.”
“As Black business leaders, we cannot sit silently in the face of this gathering threat to our nation’s democratic values and allow the fundamental right of Americans, to cast their vote for whomever they choose, to be trampled upon yet again,” they wrote.
The campaign is led by former American Express CEO Kenneth Chenault and current Merck CEO Ken Frazier. Fortune described the letter’s signatories as representing the “Who’s Who of Black Corporate America.”
The door is open for more corporations to lead the change on civil rights, climate change, food and water security, healthcare reform, gun reform, immigration, minimum wage, inclusion, injustice and more. More than ever, it pays for corporations and governments to do the right thing.