Is taking on social issues good for business or good for society?

Posted by Allan Steinmetz on 31 March 2015

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Over the last month or so we have been reading reports about how several companies have been adopting new policies in regard to important social issues such as racial diversity and increasing the minimum wage. Just this past week Howard Schultz, CEO of Starbucks, fostered a conversation about race relations in America by asking all of his baristas to write #racetogether on all of their Starbucks cup orders. In January, Aetna raised the public conversation around increasing the minimum wage for its hourly employees suggesting that it is time for American business to be more engaged in improving the lives of people across the country. Walmart has made similar moves to increase hourly wages in recent weeks.

In the case of Starbucks and Mr. Schulz, people say he is driven by a genuine desire to drive change for important issues that he believes are part of Starbucks’ core identity.  In a recent letter to employees, Mr. Schulz wrote:  “An issue as tough as racial and ethnic inequality requires risk-taking and tough-minded actions.”

In January Aetna’s CEO, Mark T. Bertolini, said in an internal announcement to employees: "The turnover, lost productivity and recruitment costs that this should help address are significant. I'm willing to make this investment." He added: "I hope it benefits our employees, and we will learn how it helps our overall business. That is the nature of innovation versus just managing a business." CBS Morning Show also interviewed him last week where he reinforced promoting health and wellness as a strategic imperative both internally and with customers. 

In announcing the wage increase at Walmart, the company’s CEO Doug McMillan said:  “As important as a starting wage is, what’s even more important is opportunity, and we’ll continue to provide that ladder that any of you can climb. If you work hard, develop new skills and care for others, there should be no limit to what you can do here. That’s what makes this place special.  I’ve seen it.  I’ve lived it.  And I want nothing more than for every Walmart associate today to feel that same connection to the company that I feel and to have the same opportunities I’ve had.  Let’s work together to serve our customers, grow our company, and take care of one another.”

I think it is about cultural transformation and longevity, and creating a bond amongst employees by uniting them through the company’s values.  For Starbucks it’s social justice. For Walmart, it’s saving money so customers and associates can live better. For Aetna, it is improving employee’s lives through having the resources and wages to improve wellness and lower healthcare costs.

Are companies making these moves to improve our society or improve their reputations? I’d like to think it is a little bit of both. Corporations have a moral obligation to the communities in which they operate.  In the case of large multinationals that obligation spans the entire United States and the world. I believe these companies and their leaders are genuine. They care about their people, communities and this nation. Yes, there are business reasons for taking on social issues but there are also practical reasons such as higher employee engagement, pride in your brand, talent recruitment, meaningful customer experiences and lifetime customer and employee loyalty. We know from research that companies who have higher engagement and passion among their employees perform better.

Including social issues into corporate business strategy should not be an either or proposition. Today’s leaders need to focus on social responsibility, shareholder value and employee and customer engagement. As is the case in any corporate environment it is a balancing act that improves corporate performance and cultural transformation. So back to my original question… Is taking on social issues good for business or good for society? The answer, for both instances, is yes.