The Search For a Purpose-Driven Corporation
Last week I blogged about the social responsibilities of corporations and what their purpose should be. Today, I look at those obligations from the point of view of millennials. But first, here’s a brief summary of last week’s blog.
Social Responsibilities of Business
The incorporation of a company is an artificial entity recognized by law as a legal person that exists independently with rights and liability. What this means is corporations have a right to enter into contracts with other parties and sue or be sued in a court in the same way as natural persons. This legal notion of a corporation recognized as such under the law means it exists independently of its owners, managers or employees.
Milton Friedman wrote in his book. Capitalism and Freedom, that “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
What constitutes deception or fraud? A good place to start is the financial recession of 2008 when it was disclosed that financial institutions made home loan mortgages to unqualified buyers, packaged those loans into investment securities and then sold them off to unsuspecting buyers as safe investments all the time knowing of the risks. Once homeowners stopped making their loan payments, the investments declined in value and lots of people lost lots of many ushering in the recession.
There are many other instances of corporate fraud including selling cars with defects (i.e., Takata airbags), pushing opioids while knowing about their addictive effects (Johnson & Johnson), setting up bank accounts for customers that were not requested/charging fees for services not receiving (Wells Fargo), selling e-cigarettes regardless of the potential effects of vaping, etc.
What Do Millennials Want?
Millennials have a strong preference to work for organizations that behave ethically; do good work. According to LinkedIn’s 2018 Workplace Culture Trends, 71 percent of employees said they would take a pay cut to work for a company whose values they share and 39% would quit if asked to do something unethical by their boss.
Ivy Walker, writing for Forbes, states that “Now more than ever before, employees are indicating a strong preference for working for organizations they believe are ethical; organizations they believe they can trust.” She points out that according to the 2019 Edelman Trust Barometer, the U.S. is facing an unprecedented crisis of trust in institutions and employees are looking to their employers to fill the void.
Carol McCarthy, an entrepreneur, suggests that “ethical business goes beyond a company’s actions toward its clients” and includes ‘working with clients who demonstrate strong ethical practices themselves.’” She says her business has turned down multi-million dollar accounts that don’t match its moral compass. “We won’t help clients who we believe don’t have the right motives. This is important to our brand and to what we do.”
These are encouraging results that show millennials are concerned about corporate social responsibilities and it may be trickling down to corporate management. However, millennials have a different view than corporations what this should be.
Traditionally, corporations followed the Milton Friedman theory of wealth maximization notwithstanding his statement about fraud. In the early years following Friedman’s seminal book, corporations looked at CSR as a way to provide a safe environment to work in, provide “fair” wages, support community activities and so on. But, recent surveys show that millennials want corporations to go much further.
The 2018 Deloitte Millennial Survey reports the results of 10,455 millennials questioned across 36 countries. The survey shows millennials’ opinion of business motivation and ethics is at the lowest point in three years. About 20 percent said reputation for ethical behavior, diversity and inclusion, as well as workplace well-being were important when choosing an employer. So, wellness is a key component of corporate behavior. Perhaps this is why we hear of companies like Apple and Google providing healthy-types of activities for their employees.
Millennials look for purpose in gravitating to a business. In the 2015 Global Corporate Sustainability report, 73 percent of millennials said they were willing to pay extra for more sustainable brands while 81 percent of millennials expected their preferred companies to make public declarations of corporate citizenship.
Most surveys have shown similar results. Still, employers lag in transitioning their objectives to include a purpose-driven mission. Of course, CSR is still a priority for most employers, but the scope of that objective has not widened to include issues broadly thought of as “social enterprise.”
Social enterprise supports the notion of a “triple-bottom-line” organization – those simultaneously seeking profits, social impact, and environmental sustainability. Enterprises that tackle social impact and/or environmental sustainability issues are involved in causes such as free clinics for low-income communities, providing access to affordable prescription glasses to people in the developing world who are otherwise functionally blind, upcycling packaging and other non-recyclable consumer waste, providing access to water and providing reliable energy resources to those in the developing world.
Having taught millennials for many years, I am heartened by the results of recent surveys that show millennials really care about what business does, what motivates its actions, whether actions are ethical and trustworthy, and that a purpose-driven culture exists that puts benefitting society and other cultures front and center in their mission statement. It’s now time for corporations to revisit their mission and make a strong commitment to social causes, realizing they are members of a community with significant power and influence, not just an employer that provides salary and benefits to employees.
Posted by Steven Mintz, aka Ethics Sage, on January 14, 2020. Dr. Mintz is an award-winning blogger. His Ethics Sage blog was recognized as one the top 100 in philosophy (#23) by Feedspot (https://blog.feedspot.com/philosophy_blogs/). Steve's Workplace Ethics Advice blog was included in a list of the 30 Exceptional blogs on CSR by Market Inspector (https://www.market-inspector.co.uk/blog/2015/09/30-exceptional-csr-blogs). He recently published a book Beyond Happiness and Meaning: Transforming Your Life Through Ethical Behavior that is available on Amazon. You can sign up for his newsletter and learn more about his activities on his website: https://www.stevenmintzethics.com/. Follow him on Facebook at: https://www.facebook.com/StevenMintzEthics.