In this episode of All Things Work, host Tony Lee speaks with Alan Murray, the CEO of Fortune Media and a veteran business journalist, on the importance of corporate social responsibility as employers respond to talent shortages and employee engagement issues spurred by the Great Resignation.
Employees today feel called to make an impact as they make a living. In this episode of All Things Work, host Tony Lee speaks with Alan Murray, the CEO of Fortune Media and a veteran business journalist, on the importance of corporate social responsibility as employers respond to talent shortages and employee engagement issues spurred by the Great Resignation.
Murray is the author of Tomorrow's Capitalist (2022).
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This episode of All Things Work is sponsored by Greenhouse.
Music courtesy of bensound.
Speaker 1:
This episode of All Things Work is sponsored by Greenhouse. Greenhouse customizes, streamlines, and scales, the hiring process for organizations of all sizes, helping to reduce bias, source the best talent, and create a more structured hiring process, so you can hire for what's next. Visit greenhouse.io or search Greenhouse Software to learn more.
Tony Lee:
Welcome to All Things Work a podcast from the Society for Human Resource Management. I'm your host, Tony Lee, Head of Content here at SHRM. Thank you for joining us. All Things Work is an audio adventure, where we talk with thought leaders and taste makers to bring you an insider's perspective on all things work.
Today, we'll be discussing Corporate Social Responsibility, as it applies to the workplace. Three years ago, nearly 200 CEOs who make up the business round table, declared that the purpose of a corporation is to provide value for all of its stakeholders. That includes shareholders, of course, but also employees, communities, local governments, and more. This vision of what a corporation should be, was hailed as a watershed event by many, but skeptics also emerged, to say it was a PR moment that failed to include any actionable measures. Now, from a workplace perspective, the business round table pledge has held up fairly well in the time since the announcement. Diversity, equity and inclusion efforts have been on overdrive since the George Floyd murder, and pay equity measures have received widespread attention and legislative action in some locales.
Joining me today to discuss corporate social responsibility is Alan Murray. Alan is a veteran business journalist, columnist and broadcaster, who spent almost 19 years at the Wall Street Journal and CNBC before becoming editor of Fortune Magazine. He's now the CEO of Fortune Media, an author of the new book, Tomorrow's Capitalist, which documents the rise of stakeholder capitalism, drawing on interviews with hundreds of CEOs, Alan, welcome to All Things Work.
Alan Murray:
Thanks, Tony. Great to be with you.
Tony Lee:
Yeah, thank you. So let's start with a look back at the Business Roundtable pledge. How do you think it's working out so far?
Alan Murray:
Well, I think the Business Roundtable pledge was a moment in time. It sort of reflected something that started a few years before that and has continued since, but I think it's very significant. Look, I've covered the intersection between business and society for almost four decades. And I don't think I've ever seen during those four decades, anything quite as significant or as big as what's happening right now. For a variety of reasons that I try to go into in the book, businesses are really shifting towards a much greater focus on their social impact, whether it's for their workers or their communities, or for the environment. It's just rapidly accelerated in the years, since the round table statement.
Tony Lee:
Now your book does dive into the details, but at a high level, why do you think CEOs are more willing to look beyond shareholders to serve a greater good?
Alan Murray:
I think it has to do with the changing nature of the corporation. I think they're fundamental forces that are driving this. Let me just take a second to give you one statistic that illustrates the change that's happened in business in the last say 50 years, if you look at the Fortune 500, the balance sheets of the Fortune 500 in the 1970s, what you would find is 80% of the value on those balance sheets was physical stuff. It was plant, it was equipment, it was oil in the ground, it was inventory on the shelves, all physical things that you needed financial capital to support. So it makes sense that there was a big focus on return to capital and return to shareholders.
Do the same exercise today, and what you find is more than 85% of the value on the books of Fortune 500 companies is intangibles, it's intellectual property, or software, or brand value tied to an emotional connection to the product. Those are all things tied to people. They're tied to human ingenuity and human emotion. And so the fundamental drivers of value in the business world have changed. They're much more people focus. And I think that's what's behind this broader change in the business environment, to focus more on people and planet and less exclusively on return to capital and return to shareholders.
Tony Lee:
Well, I mean, Fortune and SHRM and pretty much every everyone else has written about the great resignation. So do you think there is less of an altruistic moment behind this, that CEOs are saying, we've got to sound like we care about a bigger picture and a greater good if we're going to attract and retain the employees we need.
Alan Murray:
Yeah. I don't think it's based on altruism. I think it is fundamental business drivers, that employers are there, you know, their greatest assets can walk out the door every night and may not come back. And so the great resignation, I mean, there's some particular pandemic related forces in play that have accelerated it, but it really is part of this 50 year trend towards successful businesses recognizing that to do well. They have to increase their attention to people and to the planet.
Tony Lee:
So, from a workplace perspective, a commitment to DE&I, and to pay equity has been shown to be an effective business strategy for a bunch of reasons, higher profitability and greater employee attraction, engagement, as we said, do you see CEOs, any CEOs shying away from this commitment? Or is it more than PR?
Alan Murray:
It's definitely more than PR. I have kind of a unique position to be able to have lots of conversations with these folks on a regular basis. And as you pointed out at the beginning, the kinds of things that they are doing since the George Floyd killing on DE&I are substantially different than they had done in the past. One thing to watch is a sign that there's more here than just talk and just purpose washing, is the slow but steady increase in companies that are willing to publicly disclose their diversity numbers, because it's hard, no company does as well as they'd like to be doing. And when you expose them publicly, you expose yourself to criticism and ridicule, but you also make yourself accountable. And so, look at a company like PWC that has done this. I was talking earlier this week with Charlie Lowry, who is the CEO of Prudential. They've done this. I would keep an eye on that as a sign of the seriousness of the commitments that companies make.
Tony Lee:
Now, there are some folks, employment attorneys tend to take this counter view, that say when a CEO takes a stand on a single issue, such as accommodating pay equity or embracing the rights of employees with disabilities or LBGTQ employees, that they're basically following the law, and shouldn't be put on a pedestal, what would you say to that?
Alan Murray:
Well, I'm in favor of not putting them on pedestals. So if that's what we're talking about, I would say sure, but you know, I think what that misses is that, yes, CEOs need to follow the law and yes, they are going to continue to try and make money for their shareholders. But within those two constraints, they still have a lot of room to operate. And what's good about what's happening right now is that they are moving towards the more socially responsible side of that equation. They have a lot of flexibility on how they go about their jobs, even if they insist on sticking to the law and insist on maximizing profits. And so, what we're seeing right now is within that range of flexibility, a desire by CEOs for a bunch of reasons, and you and I can talk about the reasons, but a desire by CEOs to make sure they're on the good side of that equation.
Tony Lee:
Okay. So let's talk about those reasons. What would you say is the primary driver? Are there boards that are more focused on it or is there something else?
Alan Murray:
So as a journalist, I've talked to literally hundreds of CEOs over the last decade, and I watched this increased focus on social impact rise. And every time a CEO talks to me about it, I ask the question, why? Why are you doing this? What's the reason you're doing this? The number one answer is, because my employees want me to. They're doing it because they are in a battle for talent that started long before the pandemic, and has only been exacerbated by the pandemic. And they're dealing with a generation of workers who want to know that they're working for somebody who's doing good in the world. I think about this in terms of my own family. If I look at my father who was a child of the depression, he worked no question in my mind, he worked to make money.
And if he wanted to do good in the world, he did that through his church. He did that through his social organizations. He was a member of the Rotary Club, et cetera. I look at my children who were 29 and 31, and they don't belong to an organized church. They're not members of social clubs. They put all those expectations on their employer. Their employer is their most important and in some ways their only connection with society. So yes, they want to be paid well, yes, they want to make a good salary, but they also want to know they're working for a company that's doing good in the world. I think that is the number one driver. You're starting in more recent years to see pressure from customers, to see pressures even from investors, look at the Larry Fink, the CEO of BlackRock, the letters he's written over the last couple of years, pressuring companies to increase their ESG commitments, environment, social and governance. But it's clear to me that the first and the number one source of the pressure to do this is from employees.
Tony Lee:
So by extension, our audience tends to be HR professionals. Where do you see HR's role here? I mean, are they the conduits from employees to the C-suite? I mean, there are a lot of HR folks who are now in the C-suite in a role they've never had before, thanks to the pandemic and the focus on employees. So where do you see that evolving?
Alan Murray:
Yeah, I think they have to be, and they have to work with CEOs to help them understand that their job isn't just about pay and benefits. It's also about the fundamental purpose of the corporation, and how it exercises that purpose, and its authentic expression of that purpose, because that has become more and more the glue that holds companies together. This is one more thing by the way, that has been accelerated by the pandemic. When you don't have an office place, offices have a tendency to create their own kind of culture, right? You see people every day, you socialize with them after work, and it creates a certain bonding and glue for the organization. If you're not together in the office, it becomes even more important that the company is run in a way that gives you that emotional connection, that holds it together. And so, I think this focus on purpose and on social impact is actually more important than ever before in the aftermath of the pandemic and this rethinking of how we work.
Tony Lee:
And when you're talking to the CEOs, as you do, and they're talking about human issues, are they saying that I'm relying on my CHRO for guidance here? Or is there something else going on?
Alan Murray:
I think it depends on the CEO. I mean, in some cases they have to push their CHROs to stretch. I was in a conversation with a group of CEOs the other day who were working hard on creating alternative pathways, to get people into jobs in the organization. And to do that, they've got to go to their HR departments and say, Hey, you know, most of these job postings you put out say that you have to have a four year degree, but not all of these jobs really require a four year degree. So can we rethink that? Or in the case of some of the professional service firms, Hey, you're sourcing these jobs from best universities in the country.
That's great. But the truth is, to create truly diverse opportunities, we need to find some alternative pathways to bring employees into the company that aren't just the credentials from the big name university. So, I actually think there are a lot of cases where the most far thinking CEOs are pressuring their HR departments to act differently about talent and where they find talent, how they source talent, as well as how they engage talent once on the job.
Tony Lee:
Yeah. That's great. And, completely ironic, our research has talking to the CHROs, say that they're the ones pushing to drop four year college degrees, to consider people with criminal histories, to hire older employees, and bring back retired employees. And the CEOs say, no, no, no, we don't want to do that. So.
Alan Murray:
Yeah, no, I think it depends on the company. I'm sure there are many cases where HR is in the lead, but I think there are other cases where these things always at the end of the day, they always have to be embraced at the top. And there are certainly other cases where the CEOs are pressing for more action.
Tony Lee:
Yeah. So let's dive into some specifics from the book and folks you talk to, I mean, I have to say as a native Texan, I have always admired John Mackey, the founder of Whole Foods and his philosophy of conscious capitalism, which for our listeners outlines a way of doing business, that's grounded in ethical consciousness. Is he an outlier or are you seeing more CEOs take on that type of position?
Alan Murray:
I think he was an outlier when he first started doing it, which was at least a decade ago, maybe over a decade ago. At that time it was fairly rare, but over the course of the last decade, I think a lot of this was sparked by the great recession, which really kind of shook people's confidence in markets, and in the economic system. And there was a speech that Bill Gates, who was stepping down as the CEO of Microsoft at the time, gave in Davos in 2008, where he called for a more creative capitalism. And you had Michael Porter, the Harvard Business School professor talking about shared value capitalism, and Mark Benioff talked about compassionate capitalism, and all of a sudden like John Mackey, people wanted to put an adjective in front of capitalism, like it wasn't working the way they thought it should. It needed to be modified. I think that was an important signal and really kind of the precursor to the business round table statement and some of the more aggressive actions you've seen in the last couple of years.
Tony Lee:
Yeah. So to that point, let's fast forward to today, you're interviewing CEOs for your book. Who really stood out to you in terms of their approach to workplace issues.
Alan Murray:
You know, one of my favorites is Dan Schulman, who is the CEO of PayPal. One of the things he did early on was, he looked at his call center. He has call centers around the world and those tend to be fairly low wage jobs and the standard practice at PayPal, and really every place else was, figure out what the market wage is, offer something 10% above the market wage. And you get all the people that you want, but he said, wait a minute, that's not good enough. If we truly want to have engaged, committed employees, we need to look at whether we're paying them enough to live their lives. You know, is this truly a living wage or is the market wage not high enough? That gets back to that whole notion of markets not doing their job, right?
And so he reinvented the pay levels for all his call center workers based on a living wage calculation, rather than what the market will bear calculation. To me, that was really a farsighted example of how to deal with this. I'll give you one other example, the CEO of AT&T a few years back sort of recognized that when the world is pivoting from switching, which is what the phone companies had always done, to a kind of a software controlled direction of calls. They had tens of thousands of people who were going to become obsolete over a fairly short period of time. So what do you do? One thing you can do is sort of begin the process of culling all those people and firing them and hiring a bunch of software coders, but they said, no, that's not the way we're going to do it.
What we're going to do is offer every one of those switchers, the opportunity to take a course at, I think they worked with Georgia Tech. We'll pay the cost of the course. You have to do it on your own time, but we'll pick up the cost. If you take this course, we'll have a job for you on the other side, if you don't take this course, we'll try and keep you on as long as we can, but sooner or later you'll be without a job. I thought that was a pretty enlightened way to deal with the kind of changes in the workforce that technology is driving.
Tony Lee:
Yeah. And you know, it's interesting, in terms of climate change, I've noticed some CEOs saying, I'm going to embrace the hybrid work model now, and let you work from home as many days a week as you think you need to, because it's good for the planet. You buy that?
Alan Murray:
Yeah. Well, they say money too. Look-
Tony Lee:
Yes they do.
Alan Murray:
Look, there's no question that CEOs are good for society and also good for their bottom line. They're going to do it. And I think that's fine. I agree things get tougher when there are clear trade offs. And the interesting thing about that, Tony is that, in the short term, there are lots of clear trade offs. You and I could spend the next two hours thinking of things that companies can do in the short term that hurt their employees or hurt their workers or hurt the climate, but help their quarterly earnings.
But what's interesting about this movement is that, it's really going along with longer term thinking, that if you're looking at not the next quarter, but the next 10 years or 20 years or 30 years, you really have to do these things in order to be sure you can survive. You can't have a successful company in a planet that's on fire. You can't have a successful company in a society that's in revolution. You can't have a successful company if you're workers at some point turn against you. So all of these things, I think become win-win solutions in the long term. It's just figuring out how you navigate through the short term to get there.
Tony Lee:
Yeah, no, well said. Well, we're almost out of time. One last question for you. So, we've got inflation running very high rates. We've got people speculating that we've got a recession around the corner. What impact do you think either of those would have on corporate social responsibility?
Alan Murray:
Well, it's a great question. Look, when the pandemic hit and it became clear that the economy was going into recession, my first impulse was the same as yours, which is, oh, well this talk about stakeholder capitalism is going to go on the back burner, because they got to worry about fixing the bottom line. And in fact, the exact opposite happened. I kept hearing more and more conversations about social impact, in part because, the pandemic itself was kind of a stakeholder crisis. They had to worry about their employees, safety and health and whether they would live and their mental health.
But it also affected climate commitments. There was kind of a sense of the mutual vulnerability that came out of the pandemic that caused companies to accelerate their climate commitments. So that makes me hopeful, having been through one recession where this actually accelerated rather than slowed down, that we can make it through another. I think the forces that are driving this, this is not a fad. This is not a bunch of woke CEOs trying to play politics. There are, as I said at the beginning, some very fundamental forces in business and the way business is developing that are driving this and I don't think they're going away.
Tony Lee:
Well, that's great. I'm so happy to end on such a note of optimism. Well, that is going to do it for today's episode of All Things Work. A big thank you to Alan Murray for joining me to discuss the workplace aspects of corporate social responsibility, as well as his new book, Tomorrow's Capitalist.
Before we get out of here, I want to encourage everyone to follow All Things Work wherever you listen to your podcast. And also listener reviews have a real impact on podcast visibility. So if you enjoyed today's episode, please take a moment to leave a review and help others find the show. Finally, you can find all of our episodes on our website at shrm.org/atwpodcast. Thanks for listening. And we'll catch you next time on all things work.
Speaker 1:
This episode of All Things Work is sponsored by Greenhouse. The hiring landscape, it's changed dramatically, with top talent seeking better opportunities, and increased focus on DE&I, companies have to change how they hire, and for recruiters it's never been more important to have effective tools that make hiring easier and more inclusive.
Greenhouse makes companies great at hiring, by using a structured data driven approach that reduces bias, improves collaboration and delivers better hiring results. Discover how Greenhouse can help you hire for what's next at greenhouse.io.