I attended a speech in Boston a few weeks ago by Daniel Diermeier, a Professor of Managerial Economics and Decision Sciences at Northwestern University’s Kellogg School of Management and co-creator of the CEO Perspectives executive education program.
Professor Diermeier began his talk by posing an interesting question for the audience to consider: “What do you think are the top two issues keeping CEOs up at night?” Drawing from his conversations with Fortune 500 executives who have participated in the CEO Perspectives program, Diermeier said the top two recurring issues are talent and brand.
After listening to Diermeier’s talk, I have been thinking more about how talent and brand relate to a company’s approach to creating shared value.
- Shared Value and Talent: As discussed in earlier blog posts, talent is an important dimension for a company to consider when creating joint business value and social value. In fact, many companies are using talent as a primary driver for taking a strategic approach to linking their social sector strategy to business value. For example, in a recent interview with the Chronicle of Philanthropy, IBM’s VP for corporate citizenship and corporate affairs, Stanley Litow, noted that his company’s approach to CSR helps IBM recruit and retain high-quality employees. While IBM does make cash grants, the majority of IBM’s non-cash giving is in the form of employee assistance. IBM’s emphasis on corporate volunteerism is consistent with findings from CECP’s Giving in Numbers: 2010 Report, which found that companies are continuing to enhance opportunities for employee volunteerism and pro bono service. Over the past three years, CECP found that the percentage of companies offering paid-release time during the normal workday for employees to volunteer increased by almost 20%, and the number of companies offering pro bono service programs continues to grow. The more that a company’s shared value strategy can bring in elements of talent recruitment and development, the more lasting and sustainable the approach will be.
- Shared Value and Brand: In addition to talent, the other primary concern for CEOs is their company’s reputation or brand. Brand concerns are amplified in today’s business climate due to global supply chains and increased public scrutiny from customers and other stakeholders. Improved reputation can be a great benefit that comes from engaging in and achieving shared value. However, the risk is that reputation be pursued as an end in itself. When reputation is pursued as an end in itself to appease customers, it does not have the sustaining power or impact of the more authentic approach to creating shared value. Given these concerns, companies should avoid using philanthropy purely for marketing purposes to address reputational concerns among customers. This approach misses bigger and more powerful opportunities to leverage philanthropy and engage customers. In an earlier FSG newsletter article, my colleague Kyle Peterson highlighted several examples of companies taking a more proactive approach to engaging customers in shared value initiatives. As noted in that article, reputation concerns can pull companies to short-term, unrelated activities that are highly local and don’t add up to larger scale solutions. Clearly, reputation concerns should be considered as part of a company’s approach to creating shared value, but it should not be the primary driver.