A Framework for Successful Corporate Citizenship
The most successful corporate citizens invest in more than compelling programs: What sets these companies apart?
Corporate citizenship at IBM means more than philanthropy and community involvement. The Smarter Cities Challenge not only provides funding to selected city partners to address critical challenges around basic resource provision, but also engages employees as advisors and leverages the company's core skills and resources. Clear goals for social impact are designated through efforts such as city infrastructure investments, and the initiative is also closely aligned with IBM's goals as a business. Business goals and ROI are clearly defined, tracked, and reported to senior management, further integrating the work into the business. Citizenship initiatives like Smarter Cities Challenge develop leadership and morale within the company, form valuable partnerships with cross-sector stakeholders, and encourage dialogue around public policy issues.1 Stan Litow, Vice President of Corporate Citizenship and Corporate Affairs & President of the IBM Foundation, explains, "IBM thinks of it as a growth strategy. Our corporate responsibility and philanthropic activities are deeply connected to our core values."2
With a mindset comparable to that of IBM, Howard Schultz, Chairman, President and CEO of Starbucks, sought to build Starbucks around core values and align its citizenship priorities with its business presence, referring to its use of "scale for good." As the company grows, its corporate citizenship investments mirror that scale and focus on issues relevant to its supply chain and expertise — such as farming, the environment, and water. Starbucks has set clear goals for 2015 on a range of issues, such as ethical sourcing (ensure 100% of our coffee is ethically sourced by 2015) and support of coffee bean farmers (invest in farmers and their communities by increasing farmer loans to $20 million by 2015).3
What are the characteristics common among companies like IBM and Starbucks that set them apart from others that invest, often millions of dollars, in corporate citizenship?
What consistently sets them apart as leaders? An increasing number of companies across all industries ask this question as the development of their costly corporate citizenship programs often fail to achieve the impact and gain the recognition that the companies seek.
At TCC Group, drawing from more than three decades of experience with companies across industries, we look beyond the success of standalone programs to deeper elements that support thriving corporate citizenship: leadership, culture, integration, and a comprehensive citizenship strategy that encompasses more than just programs. While the "fundamental" elements of integration and strategy form a strong foundation upon which a company's citizenship can grow and develop, the "accelerator" elements of leadership and culture amplify a citizenship strategy with genuine credibility and longerterm sustainability.
Like IBM and Starbucks, the most successful companies have clear goals that demonstrate the value of the company's investment internally, from the development of leaders to a greater sense of teamwork and morale. And the best companies have strong measurement and reporting systems, that ensure senior leaders are tracking progress against goals, and understand the positive impact corporate citizenship is having on the company. Both IBM and Starbucks excel at integrating their citizenship efforts with leaders across the company, rather than restricting the implementation in a silo within the company's foundation or a single citizenship department. IBM's Smarter Cities Challenge engages employees from multiple business units, contributing a range of skills. As demonstrated by Stan Litow, leaders at the highest level of the company are vested in the efforts, acting and speaking as ambassadors for corporate citizenship, by ensuring that business decisions align with citizenship values. In summary, this creates a culture that is unique among leading corporate citizens, one that is driven by leaders but perpetuated by employees, and integrated through the company at all levels.
The best companies not only have high impact programs that fall within a cohesive citizenship strategy and are supported by an integrated structure, but most importantly, their leaders are genuinely committed and their culture aligns with their values.
A FRAMEWORK OF FOUR ELEMENTS
The four elements described below form the framework that TCC Group has identified to help set true citizenship leaders apart. When companies approach us for assistance in developing corporate citizenship strategies and programs, the focus of the initial inquiry is often about creating a signature program that will deliver shared value for the community and the company. It is important to clarify that building a signature program or major initiative should be secondary to strengthening the core elements in the framework. We define these elements as follows:
- Strategy: The element of strategy refers to a broad set of social issues that form a citizenship platform and program portfolio for the company. Goals and roles for both the company and the citizenship department (in partnership with the foundation/community involvement team) to address these issues are clarified through the strategy, and the issues are informed by the concerns of priority stakeholders (external stakeholders and employees). Any individual program ideally stems from this wider strategy, rather than serving as a standalone initiative, and has clear goals for how it will impact its designated social issue(s) and meet the expectations of stakeholders.
- Integration: Integration refers to the need for citizenship issues to be shared and adopted across the company, rather than siloed within a foundation or independent corporate citizenship department. For a company to be a successful corporate citizen, the issues within its citizenship platform need clear roles, goals, and accountability across business units, regions, and levels of seniority within the company.
- Leadership: This element refers to the true engagement of leaders in the creation and implementation of the company's citizenship platform. Successful leadership entails more than approving grants or speaking on behalf of citizenship issues. Leaders understand the business impact and ROI and ensure that the issues are integrated into business decisions and day to day activities such as performance reviews and resource allocation and then tracked to ensure they are achieving strategic goals. Leaders must champion citizenship issues by prioritizing them as business issues, rather than simply citizenship concepts.
- Culture: Culture is an element that stems from the success of the other three elements — strategy, integration, and leadership — and ensures citizenship issues align with and reinforce company values. IBM and Starbucks built their companies around strong corporate citizenship cultures; companies without that historical foundation need strong leadership to ensure its development.
Companies that consistently set the bar as leading corporate citizens understand that all four elements need to be in balance. When fundamentals are strong and accelerators are weak, a citizenship platform can be challenged in terms of its sustainability. Impact and effectiveness will also be limited without the presence of engaged leaders and culture. When accelerators are strong and the fundamentals are waning, a company is in a situation of lost potential, failing to leverage the strength that a citizenship platform can gain from its strong leadership and culture.
The Unique and Pivotal Role of Leadership: A Growing Citizenship Need Across Industries
While all four elements are important to the success of corporate citizenship, the role of leadership is critical, given current trends we see across industries. According to the latest surveys from Gallup and Towers Perrin, employee engagement continues to present a challenge for companies. Despite increasing efforts by companies relating to corporate citizenship, the latest Gallup Employee Engagement survey noted: "Seventy-one (71) percent of American workers are ‘not engaged' or ‘actively disengaged' in their work, meaning they are emotionally disconnected from their workplaces and are less likely to be productive."4
As employee engagement and satisfaction become increasingly correlated to successful recruitment, retention, and productivity, it is crucial to address these challenges. The primary way to do so, as is becoming increasingly apparent, is through strong leadership. Employee engagement is the most important indicator of strong leadership. Without strong leadership, employee engagement will falter, and without strong employee engagement, culture can suffer.
Truly successful corporate citizenship incorporates all four elements of the framework, and recognizes leadership as something that informs culture, complements strategy and integration, and can play a major role in articulating a company's values and what it stands for — a core element for engaging employees.
HOW THIS PAPER CAN HELP YOU
This paper will explore each of the four elements of the framework — what they look like in an ideal setting and how they can be strengthened. An examination of the framework can help to address common challenges experienced by corporate citizenship professionals such as:
- An absence of engagement, understanding, and support from company leadership
- A lack of cooperation from mid-level leaders in different regions or business units
- A weak sense of shared responsibility for citizenship efforts and integration across the company, with activities siloed in a citizenship unit or foundation
- A lack of alignment between corporate culture and citizenship values, resulting in disengaged employees
- Inadequate goals in the company's core citizenship issue areas; unclear metrics and tracking against ROI
- Limited resources to develop and drive citizenship efforts, particularly staffing with strong leadership
The framework highlights the importance of the four elements and how they interplay to help you identify where your company is strong or weak. You and your team will be able to identify where to focus attention in order to improve the effectiveness and impact of your corporate citizenship platform.
You can then consider an approach that will help your company align both the fundamentals and the accelerators. In our experience, this often involves actively communicating with, educating, and engaging senior leaders throughout the company.
At Wells Fargo, for example, as part of a recent strategic planning process, the Community Relations team recognized the need to continuously educate and engage with both senior leaders and business lines across the country. The result: an integrated process that would increase ongoing engagement with senior leaders and teach them about their roles in supporting and leveraging the company's corporate citizenship work.
At the end of this paper, we look at the next steps that companies might consider as a result of exploring this framework.
"FUNDAMENTAL" ELEMENT: STRATEGY
A platform of issues that are important to the company's priority stakeholders, with employees designated as a key stakeholder group, is the basis for a citizenship strategy that has the potential to generate both company and community returns. In an ideal setting, all citizenship program strategies should stem from this broader strategy, which should include clear goals for all issues.
Addressing employee expectations cannot be overstated in its business value and implications for recruitment, retention, and productivity, as well as genuine support of the citizenship effort. Companies with little or no support or engagement from employees have a limited opportunity to build a strong reputation with external stakeholders and customers.
Internally, it is critical to engage company leaders and business units in understanding and acknowledging stakeholders' expectations, identifying the areas that are important for the company as well as stakeholders, and setting goals that leaders will be accountable for achieving. Leaders need to agree that addressing stakeholder expectations can yield business value — primarily in the form of reputation and loyalty, among other returns. Further, they should agree on the level and scope of the citizenship effort in addressing these expectations. This type of leader engagement can, in turn, encourage commitment from the entire company, and, most importantly, its employees.
Building on the importance of stakeholder expectations in guiding the strategy, it is most important that the process yield clear, measurable goals that will drive the approach. Concise social impact goals that communicate the value the company creates for society, and the specific change it will make, will build credibility and ultimately the stakeholder trust necessary for the company to thrive.
When leveraging unique company assets to attain those goals, and consistently engaging with and communicating results to stakeholders, a citizenship strategy should evolve over time to meet changing expectations. The following summarizes the critical components of an effective citizenship strategy:
- Stakeholders Drive the Process
Stakeholder expectations, particularly those of employees, influence the priorities and scope of the citizenship goals which will determine the strategy
- Leadership is Engaged in the Process
Leaders throughout the company understand stakeholder expectations and reach agreement on the prioritization of issues to be addressed
- Clear Goals are Set and Accountability is Defined
Leaders agree on the strategic goals and targets for success and understand their role in implementing an effective strategy that will achieve those goals
- The Company Leverages its Full Range of Assets
Leaders work collaboratively within the company to utilize expertise, knowledge, and resources in order to maximize impact
- Communication with Stakeholders is Consistent
Leaders provide employees and external stakeholders with regular reports on progress against goals to maintain engagement and collect feedback for refinement
Strategy Snapshot: Monsanto
Agriculture giant Monsanto understands that strategy formation can be swayed by countless demands and competing interests. When driven by priority stakeholder expectations, however, the company found that it can achieve goals that help build engagement with their stakeholders.
Monsanto's leaders were able to clarify goals and leverage company resources to create a strategy that serves as a fundamental building block of its successful citizenship initiatives. This process was critical for a company like Monsanto, where pressure from stakeholders is never-ending, and the need to advance their strategy to meet stakeholder expectations is ever present.
Monsanto's leaders invested significant time and energy to understand farmers' needs and expectations, leading to the following goals that not only benefit the farmers, who are the company's primary stakeholders, but also all of society:
- Producing More: Developing improved seeds that help farmers double yields by 2030
- Conserving More: Developing seeds that use one-third fewer resources by 2030
- Improving Lives: Helping farmers and the people who depend on them, including five million people in resource-poor farm families, by 2020
Once the goals were set, leaders needed to leverage the resources to achieve them. The company began a planning process to eliminate or reduce programs that were not aligned with its goals, developed new initiatives, and assigned accountability for these initiatives.
After farmers identified education as a critical issue that needed attention and support, Monsanto created the program, "America's Farmers Grow Rural Education," which provides funding to schools in targeted rural areas.
In addition, Monsanto developed a process to engage its leaders globally. Regional leaders united around the goals and developed approaches that are customized to the local culture and the regional needs of the farming communities.
Most importantly, using this framework, Monsanto developed a robust stakeholder engagement strategy — not only with farmers, but also with employees, government officials, and environmental groups.
"FUNDAMENTAL" ELEMENT: INTEGRATION
In order to build and implement a citizenship strategy successfully, integration should ensure that employees at all levels of the business — from the C-suite and department managers to business and regional unit leaders — understand the citizenship goals' value to both the company and their respective unit or department. When a citizenship effort is successfully integrated, collective value can be realized in the form of:
- Commitment from all units that play a role in the implementation of the strategy — from procurement to recruitment
- Accountability from those required to meet standards and attain results
- An understanding of the business value of the initiative and the rationale for its longevity if implemented successfully
These benefits can be realized through a process that establishes clear roles and the significance of each participating unit within the company. First, it is critical that each employee understands her/his role, specifically the tasks that must be completed. Second, accountability for goals, particularly against standards and metrics of the citizenship strategy, is key. Finally, in order to assume an integrated role in the strategy, each unit must understand the value it can realize through the initiative, including quantitative returns such as cost-savings or potential revenue, and qualitative returns, such as meeting stakeholder expectations, developing strong relationships, and building trust with stakeholders.
The clarity of each internal unit's goal, accountability, and value, shows shared commitment throughout the company. Most importantly, as the strategy's alignment with business goals becomes clear, the CEO and C-Suite leaders' buy-in and agreement becomes obvious — a crucial driver for buy-in at lower levels.
Leaders, now clear on their roles and accountability, can develop committees and teams to ensure the implementation of the strategies, as well as a tracking process towards goals. To build an integrated structure, leaders must also work with Human Resources to ensure that expectations are communicated clearly across the company and that job descriptions include the accountability for citizenship strategies and goals.
Companies with effectively integrated structures have corporate citizenship committees on the Board of Directors and, most importantly, a senior executive supervising the citizenship department who has direct access to the CEO and C-Suite. Further, a citizenship executive should have the ability to help leaders throughout the company communicate the value of each department's role in the citizenship effort, to ensure their involvement and engagement, and to leverage the appropriate resources of business units throughout the company.
Integrated Structure Snapshot: Medtronic
Medtronic, a medical device company headquartered in Minneapolis, has a mission-based culture and a long history as a leading corporate citizen. The company makes a deliberate effort to engage its leaders at different stages of its citizenship strategy development and integration, with participation increasing as citizenship goals are prioritized.
Medtronic developed corporate citizenship and leadership teams to ensure a coordinated process. Additionally, they found that meeting with leaders individually — to identify their challenges, priorities, and primary stakeholders — increased effectiveness.
The corporate citizenship team conducted interviews with senior leaders and initiated a materiality assessment which paired findings with long-term corporate citizenship goals, performance indicators, and metrics. The results of this assessment were presented to the Executive Committee members for discussion and next steps.
While the citizenship strategy continues to evolve at Medtronic, employees have successfully managed to engage leaders on specific issues. For example, a management structure for Global Inclusion, Diversity, and Engagement (GIDE) was developed to integrate diversity and participation into individual business units and employee groups and to secure their commitment and accountability to goals. A second group was also formed to focus specifically on sustainability issues related to products and packaging.
As companies develop clear roles, define accountability for specific goals, and create an understanding of the value the company can realize from corporate citizenship, a company's citizenship strategy will mature and benefit from the collective sense of sustainability.
"ACCELERATOR" ELEMENT: ENGAGED LEADERSHIP
A clear stakeholder-driven strategy and an integrated structure across the company form an important foundation for corporate citizenship. Without these elements, citizenship lacks clear goals for direction and growth, as well as accountability for those goals, internal buy-in, and content to support clear communications. However, as strong as the strategy and structure may be, impact will be limited without engaged leadership.
Through TCC Group's work with companies across industries, we have found that senior leaders are increasingly seeking innovative approaches to citizenship. This interest, coupled with the need for leaders to better understand their role in developing, implementing, and being accountable for citizenship initiatives, takes prominence over simply making a "business case" for implementing citizenship strategies. As corporate citizenship's value becomes more widely understood, the conversation has begun to shift toward the role and significance of company leaders.
Ultimately, stakeholders assess companies' actions based on leaders' credibility. Consequently, leaders that have a deep understanding of corporate citizenship spend the time to communicate and build the stakeholder relationships necessary for success. Companies that lost sight of the importance of the leadership role in recent years (BP, Goldman Sachs, Walmart) have been attacked and as a result, those company leaders are increasing their level of engagement and committing to building the corporate citizenship culture.
Leadership is not only critical in informing a comprehensive strategy that responds to stakeholder expectations, but also inspires commitment from employees who look to leaders to exemplify the values of the company. It is this employee engagement that is necessary for a citizenship effort to be truly integrated throughout the company. Leaders also play a valuable role in engaging with other stakeholders such as community leaders, NGOs, government regulators and customers.
Through a process that builds trust, leaders should be involved firsthand in understanding expectations and translating them into citizenship goals and business decisions. Leaders that are genuinely engaged should be able to articulate the values of the company to stakeholders, building credibility, commitment, and sustainability for the citizenship effort and creating a culture for the company that recognizes its importance and value.
When leaders understand and commit to a citizenship effort and assume active roles in educating and engaging employees and external stakeholders, citizenship becomes a part of workplace culture instead of a standalone strategy. Citizenship is not just something the company does, but something that reflects its very identity — aligning the company's values and its way of doing business.
Leadership Snapshot: Wells Fargo
From its early days serving gold miners on the West Coast to its current status as one of the largest financial services companies in the U.S., Wells Fargo has had a long history of citizenship. Leaders at Wells Fargo recognize the importance of building relationships with customers and stakeholders. CEO John Stumpf reinforced those values when he publicly committed to connecting with community and stakeholders as one of Wells Fargo's long-term strategic priorities.5
This culture of leadership and community engagement is embedded throughout the company's culture. Stumpf says "We expect all of our team members to be community leaders. We need all of them, regardless of rank or title, to be our eyes and ears, to help us identify and decide how Wells Fargo should respond to community needs."
Stumpf and members of the operating committee meet regularly with stakeholders, including community leaders, public officials, investors, customers, and team members, to listen and better understand their concerns. The company then uses that feedback to develop new policies, products, and approaches to better serve its employees, customers, and communities.
More important, Stumpf and the Wells Fargo Board of Directors hold the company's leaders accountable for progress. Wells Fargo's Corporate Responsibility Committee oversees the company's policies, programs, and strategies regarding social responsibility, including: development and reinvestment activities and performance; fair and responsible lending; government relations; and support for charitable organizations and environmental issues.
In addition, Wells Fargo's Government and Community Relations team manages its long-term relationships with several national-level organizations, which provide insights on broad-based and local issues, and partner with the company on initiatives to help solve those concerns. By combining resources, expertise, and distribution networks, they are able to greatly expand their impact. Wells Fargo teams formally meet with national partners a few times each year at conferences, community meetings, and other forums and consult informally with them throughout the year.
For example, Wells Fargo heard from long-time partner United Way Worldwide and its local affiliates that there was an increasing need for financial literacy and affordable financial products in underserved populations. Together, Wells Fargo and United Way established a new initiative to address these concerns and establish a support network for low and moderate-income households through several local chapters of the United Way, providing families with financial education, access to safe and effective financial products, and training on how to use them. It is a thoughtful strategy that targets local communities while maintaining its global footprint.
"ACCELERATOR" ELEMENT: CULTURE
While much is written about the concept of corporate culture, the majority of content revolves around its importance in engaging and retaining employees and in conveying genuine value to stakeholders. Further, in most workplaces, culture is also referenced as something fully dependent on leaders.
Leaders are indeed the crucial driver behind shaping and disseminating culture. However, middle management and, in fact, all employees should play a role in helping culture sustain and thrive. So before exploring the importance of culture, it is important to define it as a function that is influenced by, and in turn influences, all levels and facets of the company.
What Makes a Culture Strong?
The best corporate citizens understand the competitive advantage of having a strong culture and the importance of aligning it with a business strategy.
A survey by Deloitte contends that organizations that instill a Culture of Purpose are more successful and have a history of strong financial performance. As Deloitte Chairman Punit Renjen states, "Exceptional firms have always been good at aligning their mission or purpose with their execution, and as a result, have enjoyed category leadership in sales and profits."6
Evident in many top corporate citizens is a commitment to developing an ethical and responsible business model, such as Unilever's focus on sustainability and, as highlighted in the next culture snapshot section, Novo Nordisk's focus on finding a cure for diabetes.
According to the Deloitte survey, most employees and executives do not believe their companies understand the value
of building this sort of culture. "Sixty-eight
percent of employees and 66 percent of executives believe businesses do not do enough to create a sense of purpose and deliver meaningful impact." 7
Successful culture requires that leaders not only define and communicate values but demonstrate them through actions and in the way that business is conducted. Engaged leadership, the other "accelerating" element in TCC Group's framework, is critical to building and driving culture throughout a company and in helping employees adopt and sustain the culture. That is where the CEO plays an important role.
Building a Strong Culture: Pulling the Elements of the Framework Together
In companies like IBM, a "Culture of Purpose" is strong, and the business and its employees understand the organization's role in society. But what if a company needs help developing its culture? What role should corporate citizenship leaders play in helping to build that culture and how do they do it?
To answer these questions, we refer to the other elements of the framework — components that fall within, and contribute to, the overarching element of culture:
- Strategy: Citizenship strategy that is driven by stakeholder issues and aligns with the company's way of doing business builds a culture that is credible and engaging.
- Integrated Structure: Citizenship strategy that incorporates all business units fosters a culture of inclusion and creates accountability within the company.
- Leadership: Citizenship strategy is accelerated by executives who develop a culture of engaged employees and build reputation and respect among external stakeholders.
Culture Snapshot: Novo Nordisk
Since 1923, finding a cure for diabetes has remained Novo Nordisk's primary mission. Today, that focus is coupled with a strong commitment to the values of the founders, exemplified in "The Novo Nordisk Way." This set of statements describes how the company conducts business and serves as "a promise we make to each other and to our stakeholders."8 What makes these values unique is not simply their articulation but their connection with the company's ongoing business and culture. Several of the statements refer to Novo Nordisk's corporate citizenship goals, including: "We are accountable for our financial, environmental and social performance... We never compromise on quality and business ethics."
Complementing the Novo Nordisk Way is the company's foundation. Created in 1951 with a unique governance model, the foundation "owns" the company, which protects Novo Nordisk and ensures that it maintains its high ethical standards.
To safeguard the company's culture of responsible and sustainable business practices, Novo Nordisk keeps employees and stakeholders engaged and informed. Company leaders conduct interviews and discussion groups with employees throughout the organization. Trends and observations are shared with executive management and the Board of Directors.
This open dialogue and feedback loop not only helps safeguard the company's culture of responsible and sustainable business practices, but also keeps stakeholders engaged and renews the company's promise.
USING THE FRAMEWORK IN YOUR COMPANY
Developing a purposeful corporate culture can be challenging, and much hard work goes into ensuring its longevity beyond compelling programs. For corporate citizenship professionals looking to further develop and improve citizenship at their companies, there are several ways in which the framework can help. Revisiting some of the challenges faced by corporate citizenship professionals provides some possible next steps:
|A lack of support from company leadership at the top level, or a lack of alignment between corporate culture and citizenship values||Secure company leaders as partners by discussing the impact that leadership has on the rest of the framework and the company's key stakeholders, primarily employees; develop a business case centered around the value realized from a positive culture and engaged employees|
|A lack of support from mid-level leaders in different regions or business units, or a weak sense of shared responsibility for citizenship efforts||Use the "integration" element content to form a cross-company team that explores roles, accountabilities, and the potential value each unit can realize through citizenship participation|
|A weak sense of clear goals in the company's core citizenship issue areas||Engage both citizenship and business leaders in a discussion about the company's priority stakeholders and their expectations in order to inform goals that would yield returns for both the community and the company|
2 Ibid (back)
3 Starbucks Global Responsibility Report
4 Gallup Employee Engagement Index
5 "Our Five Strategic Priorities," Wells Fargo