Leadership Matters

Perspectives on the key issues impacting senior leaders and their organizations
December 19, 2018

Making Good on Doing Good: The Role of Organizational Culture and Talent in Social Responsibility

By Frank Birkel, Philiep Dedrijvere, Jonathan Harper, Eric Leventhal, Ricardo R. Rocco, Edward Speed

In the world of consumer companies, we’re witnessing a shift away from a singular focus on shareholder returns. Climate change, the #metoo movement and the influence of millennials in the marketplace are just some of the drivers of the increased push for more socially conscious businesses. The importance of social responsibility — how an organization interacts with and affects the world — is becoming a greater priority for a growing number of consumer packaged goods (CPG) companies today.

Consumer CEOs are under immense pressure to institute business practices that incorporate a socially aware mindset, and to encourage company-wide interest in the issues that affect society in general. Many of these leaders are building the legacies of their organizations beyond this year’s P&L statement. They’re trying to infuse both their day-to-day operations and their long-term strategies with a socially responsible perspective.

We talked to a range of consumer CEOs from Unilever to The Coca-Cola Company to KIND (and more) to find out what sort of challenges, opportunities, benefits and costs they’re seeing as they work to steer their organizations toward socially beneficial business practices and cultures.

The role of organizational culture in social responsibility
Daniel Lubetzky founded KIND in 2004 with a mission to “make the world a little kinder.” In addition to a product line of healthy snacks for kids and adults, KIND’s 501(c)(3) organization creates programming that invests in “kinder communities” by mobilizing young people. In Lubetzky’s view, the motivation is just as important as the action. “You need to do it for the right reasons, and it has to be because you really care and not because you’re trying to check some boxes on a marketing form,” he said. “Because if it’s the latter, it’s going to fail miserably and it’s actually probably going to backfire.”

Even with the best of intentions, trying to turn altruistic ideas into concrete operational practice is where many leaders flounder. As KIND and others have found, the path to get there is through culture.

Culture represents the “unwritten rules” of an organization. We define culture as the shared assumptions that drive the way organizations think, behave and act. Culture can make or break an organization’s strategy, determining the level of innovation, growth, market leadership, ethical behavior and customer satisfaction. It can elevate these areas or erode them. That’s why it’s essential that leaders start here when attempting to align employees with the mindset of social responsibility and to manifest social impact. The culture must support the belief that companies should err on the side of doing good, in part because of what culture says about a company’s values.

For societal impact initiatives to be successful, CEOs must strive to create a culture where they are pursued throughout the organization. As leaders, they both model good behavior and reward behaviors that support the ultimate mission.

“People pay attention to what the CEO does,” said James Quincey, CEO of The Coca-Cola Company. “They want to know, ‘What’s going to put me in the good books?’ and they take on those objectives. People pay attention to incentives, whether they’re hard, like financial incentives, or soft, like who gets the gold stars and who doesn’t.”

The idea of financial incentives for employees who act to support social missions is a somewhat contentious one for CEOs. Some believe that tying a company’s socially responsible efforts to compensation is highly effective. Natura &Co, for instance, evaluates executives using a “triple bottom line” approach that takes into consideration not just economic but environmental and social performance.

Other CEOs, like Paul Polman of Unilever, disagree: “I felt very strongly that people who work here need to feel this is just the right way of doing things. You don’t reward that — it’s just the norm. We’re not going to pay for behavior we expect.”

However, there is no denying that there is a financial benefit to corporate social responsibility. Thanks to its efforts, Unilever rates consistently highly in indexes like the GlobeScan SustainAbility Report, the Dow Jones Sustainability Index and Human Rights Watch.

Every company is different, and it’s up to leadership to determine the best way to both instill and evaluate a culture of social responsibility. When hiring for leadership, one of the biggest issues to consider is whether this person will influence and help shape a culture that prioritizes these efforts.

Doing the right thing helps attract the right talent
The generation that’s quickly saturating the workforce is vocal about its values and acts on those beliefs not only as consumers, but when looking for jobs. Much has been written about how younger generations are seeking a sense of purpose in their work and are drawn to roles at organizations whose values align with their own. In a market where competition for top talent is only becoming fiercer, social responsibility can help attract highly sought-after talent.

“People these days, they’re different from 15, 20 years ago,” said former Müller Group CEO Ronald Kers. “They want to know what kind of company they’re working for. They want to know the soul of the company.”

In addition to attracting a young, energetic workforce, socially responsible efforts invigorate workers and make them proud of the company’s larger aims. Having a progressive mindset plays a role in getting the right people on board to help create and maintain an engaged workforce. Hiring for purpose creates a sense of meaning and pride among all employees, which increases engagement and retention. As Quincy said, “In the end, employees are part of the real world, and they can see what needs to be done. People generally want to feel like they’re on the right side of an issue.”

Making a lasting change for the better
It can be daunting to think about the sheer scale of change needed to make a significant social impact. However, there are a lot of ways that organizations today can effect positive societal change, from small production tweaks to large-scale philanthropic efforts. Mondelez CEO Dirk Van de Put recommends picking a specific area that can have a positive impact and use the momentum from that success to expand efforts. Imbuing a sense of social responsibility in the organizational culture ensures that the impact will continue beyond any individual leader. CPG companies that commit to fostering a culture that promotes social responsibility stand to attract both consumers and top talent over the long term.