Increasing the public value of your business
With growing awareness among the corporate sector of the importance of a company’s public value, there is more recognition of the need to engage with local communities. While some companies struggle to make their mark, others are well versed in creating public value.
It took a famous American actor – with a sideline in salad dressings – to help drive corporate philanthropy.
Among his many accomplishments, in 1999, Paul Newman was a leading light in the foundation of the Committee Encouraging Corporate Philanthropy – now known simply as CECP. The organization aims to encourage companies to commit greater resources to charitable investments and can now boast more than 170 CEOs and chairpersons on board – representing US$10b of annual corporate giving.
“The job of our members is to meet both consumer and public needs,” explains CECP CEO Daryl Brewster. “Not-for-profits simply don’t have the capabilities – business can get stuff done.” CECP provides a mix of networking, research, benchmarking and thought leadership to encourage corporate giving – either through cash or non-cash means.
The organization doesn’t take the “activist shouting” route, believing that it is not a productive way of driving better business behavior: “We say ‘let’s solve some problems’,” explains Webster.
Longer-term external stakeholders in the corporate sphere see the benefit of using resource toward improving and working with communities local to business. “They see it as ‘societal investment’,” says Brewster.
And this is not simply window dressing. The actions of CECP and others are having an effect on the public’s perception of major organizations, which, in turn, can lead to very real movements in share price and investor sentiment. Edelman’s 2014 Trust Barometer1 finds that, since its nadir following the financial crisis in 2008, the level of trust in business from the public has settled at a sentiment score of 58%.
And where there are concerns about a lack of business regulation – four in five Chinese respondents to the survey want the food sector to be more strictly managed, while one in five in the UK want stronger financial services regulation – a big problem arises. The public’s perception of government and its officials is at its widest gap in business perception, at 44%.
Edelman President and CEO Richard Edelman says this “unfamiliar” situation for businesses means a new direction for its top executives. CEO should stand for “chief engagement officer,” he believes, with business leaders taking a more public, discursive approach to help them drive strategy, rather than lobbying officials and regulators.
“There should be the usual strong economic rationale, but there must be thoughtful consideration given to arguments that address emotion and risk, as well as societal beneﬁt,” says Edelman in the study.
“This is especially important in industries such as energy, technology and food, where there are important personal consequences to systemic failures such as spills or hacking of personal ﬁnancial data,” he continues. “And the CEO must have the courage to hear what is being said in the debate and be willing to change accordingly.”
But if the “medium is the message,” a conduit for getting the message across may be required, given the public’s perception of CEOs: generally wary, tending toward cynical in certain sectors. A management strategy that involves – and places at the forefront – other trusted individuals and bodies, such as academics, NGOs, technical experts, or even their own employees, will garner businesses more credibility.
With the barometer finding improvements in business transparency, the supply chain and product quality, businesses must now seize the moment and help formulate sector strategies and regulation.
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