Note: this is the first in a periodic series of posts containing items from earlier drafts of Good Company that did not make it into the final published version, largely because of space constraints. We hope you enjoy our “cutting room floor” excerpts…
Dave Buzzelli thought being green in the 1980s would destroy his career at chemical giant Dow. Instead, it ultimately led to an invitation from the White House—encapsulating the way sustainability has gradually become mainstream if not a formula for success for business leaders.
Buzzelli was a young executive in charge of agricultural chemicals at Dow in 1983 when a controversy erupted about the toxic substance dioxin. Dioxin was a byproduct of Dow operations, and Buzzelli led the firm’s public affairs on the issue. As someone who “grew up in the outdoors” hunting and fishing in Minnesota, Buzzelli eventually began to see the perspective of the environmentalists criticizing Dow and other industrial firms.
But it was rare in the 1970s and early 1980s for business leaders to talk directly with activists let alone concede some of their points. Hence Buzzelli’s fear when Dow public relations official Sue Dupree wrote a story about him for an internal publication in 1984. Dupree planned to title the piece “Dow’s Environmentalist.”
“I said, ‘Sue, you’re going to kill my career,’” Buzzelli recalls.
But the piece ran, title intact. And Buzzelli continued to rise up the corporate ladder.
He became CEO of Dow Canada in the late 1980s, where he was part of a government panel about economic and ecological issues. It included industry leaders, environmental activists and public officials. “Nothing like that had ever been done in the U.S.,” Buzzelli recalls. “The Canadians had this different philosophy of trying to get all the stakeholders in the room at the same time.”
Buzzelli’s ability to see both the business and environmental sides brought Al Gore to his door. While serving as Vice President, Gore recruited Buzzelli to help lead President Bill Clinton’s Council on Sustainable Development. The group was co-chaired by Buzzelli and the president of the World Resources Institute, Jonathan Lash, and included leaders from other non-governmental organizations–such as The Nature Conservancy and the Sierra Club—as well as other corporate heavy hitters–such as Chevron, Georgia Pacific and General Motors. Members of President Clinton’s cabinet, such as Department of the Interior Secretary Bruce Babbitt, also served on the council.
Buzzelli says the group was an early example of greater dialog between business leaders and other stakeholders about environmental concerns. For years now, he points out, Dow and other companies have held regular meetings with academics and non-governmental organizations about the effects of products and operations on the planet.
By now, it is absolutely acceptable—if not fashionable–for executives to proclaim their greenness. But Buzzelli says business leaders have to be vigilant about preserving a stakeholder perspective rather than a narrow focus on the bottom line. In other words, he warns against a return to the closed-minded mindset he feared a few decades ago. “Business people need to be exposed constantly to people who don’t share their views,” he says.
A recent story on business skepticism about the Obama jobs plan struck me for the way companies came across as whiny—or worse.
In the article by Motoko Rich, a variety of business leaders pooh-poohed the President’s plan as unlikely to boost their hiring.
Jeffery Braverman, owner of an e-commerce company that sells nuts and dried fruit, told the New York Times that the plan’s proposed $4,000 credit for hiring the long-term unemployed would not spur him to hire someone. “Business demand is what drives hiring,” he said.
Perhaps the demand for Mr. Braverman’s dried fruit and nuts is drooping. But overall, business demand in the United States has been inching upward in recent quarters. As importantly, corporate profits have been climbing. Profits from current production increased $57 billion in the second quarter, on top of an increase of $19 billion in the first quarter.
In many cases, the revenue and earnings growth has been coming at the expense of workers. Workers who are stressed as they shoulder heavier and heavier loads.
In the emerging Worthiness Era, companies that want to succeed will have to avoid taxing their workforce overly much. And besides acting as a Good Employer, they will need to be Good Stewards of society—which includes playing a role in providing employment in their communities.
In this context, dismissing Obama’s plan—which includes cutting in half the taxes paid by businesses on their first $5 million in payroll and eliminating payroll taxes for firms that increase their payroll by adding new workers—amounts to unseemly griping.
Even worse than the whining, though, is the way bias against the long-term unemployed persists. In the article, Jen-Hsun Huang, chief executive of computer chip maker Nvidia, said his firm is hiring. But the jobs proposal wouldn’t keep him from looking askance at the long-term jobless. “The people we hire tend not to be out of work for six months,” said Mr. Huang. Instead, he told the Times, the company recruits recent graduates from the country’s top engineering schools. “The guys we hire are like sports stars,” he said.
Huang must never have heard of stars like Kurt Warner or Aubrey Huff—who were effectively out of work before helping to lead the St. Louis Rams and San Francisco Giants to championships. Evidence and common sense make clear that discriminating against the jobless is bad for business—and will become illegal nationwide if Obama’s plan becomes law.
It’s unclear whether Obama’s plan, at least in its entirety, will become law. Still, it is disconcerting to see businesses react so negatively to the jobs plan. After decades of corporations complaining that government rules make it too hard to hire, here is a proposal to ease the burden significantly. Companies ought to welcome these ideas for themselves, for their workers and for the country.
A version of this post originally appeared at Ed’s Work in Progress blog at Workforce.com.
A couple of weeks ago, the New York Times noted that at least 25 major US companies, averaging $1.9 billion per year in profits, somehow paid more to their chief executives in 2010 than they paid in taxes. The companies include Boeing, GE, and Verizon.
This behavior speaks loudly. Those firms that engage in aggressive tax avoidance reveal that profit “earned” at the expense of taxpayers is a higher priority than social responsibility.
PR spin that, “We fully comply with all tax laws” doesn’t cut it. These firms are not interested in doing business in an “all-win” way. They are interested in shareholders and executives winning – at the expense of taxpayers.
Yes, it’s true that U.S. corporate tax rates are high and need to be lowered. But using that as an excuse to pay little or no taxes is greed, pure and simple.
A huge shift in public opinion is underway. Greed is being restored to its rightful place – a vice that will no longer be tolerated, rather than a virtue to be admired.
Those firms that shirk their tax-paying responsibilities can expect to be punished by a public that has grown weary of their greed.
We recently explored the role of the good environmental steward on Matter Network. This took a close look at household and personal care company Seventh Generation (and includes excerpts from chapter 9 of Good Company).
(The article is also available on Reuters.)
The scandal that has battered News Corp. shares and given legendary leader Rupert Murdoch a black eye could be remembered as the moment that corporate reputation became really important.
That’s the argument Geoff Colvin, Fortune magazine senior editor-at-large, made in the publication’s Aug. 15 issue. I agree.
Colvin notes that News Corp. lost about $5 billion of value in the few weeks after phone hacking and alleged bribery by the company became headline news.
“Previous major scandals were mostly financial: the numbers were lies. Not this time. The damage so far derives entirely from behavior—phone hacking and possible police bribery—that appears to be illegal but has nothing to do with reported financial results,” Colvin writes. “Whether it’s illegal doesn’t matter anyway; it’s slimy, and that’s enough. News Corp. is deeply tarnished, and the financial effects could be significantly bad.”
That privacy invasions and the possibility of bribery could so badly damage News Corp.’s stock and its prospects dovetails with our belief that the business world is at the dawn of the “Worthiness Era.” In this new economic epoch, people are setting higher expectations for the companies in their lives. A reputation for upstanding behavior, for example, is becoming a key part of consumer calculations.
Consider a 2009 paper by researchers Remi Trudel and June Cotte. They found that customers will pay a premium for ethically produced goods and punish companies (by demanding a lower price) that are not seen as ethical. What’s more, Trudel and Cotte discovered, a bad rep is particularly bad for business: “The negative effects of unethical behavior have a substantially greater impact on consumer willingness to pay than the positive effects of ethical behavior.”
How did News Corp. get into unethical habits? Colvin says one answer is the “one-man problem.” That is, too much power has been concentrated in the hands of Murdoch himself, which led good-governance group the Corporate Library to give News Corp. an “F” grade for six years straight.
Thus far into the controversy, not much has been written about the long-term effects on the News Corp. corps of employees. But that too is likely to suffer. People—especially civic-minded Millennials—are going to think twice about casting their lot with Murdoch and his sullied empire. A 2009 study by public relations firm Edelman found that globally, 56 percent of people want a job that allows them to give back to society versus 44 percent who value personal achievement more. Slimy stuff like hacking into the phones of families of slain soldiers is like the opposite of giving back to society.
When public outrage persisted despite his shutting down a tabloid and dropping a bid for greater control of a satellite TV firm, Murdoch turned to Edelman itself to help manage the hacking scandal. It’s not clear whether that move will salvage the company’s reputation. But it’s another sign that a good name now matters like never before.
This post originally appeared at Ed’s Work in Progress blog at Workforce.com.