Purposeful Companies Challenged by a Disordered Era: The Critical Role of Communications
By Andrew Goldberg, Ulf Bauer, Rainer Ohler, Tim Orr
Partners, Metropolis Group and Senior Strategists
The recent formation, under Vatican aegis, of The Foundation for Inclusive Capitalism, compromising many of the world’s most prominent corporations, validates our colleague Tim Orr ‘s point -- that for many companies, the trigger of the Covid-19 epidemic is a renewed opportunity to meaningfully demonstrate that they value social good as much as profit, and that this is not just a marketing exercise but a real opportunity to transform the world.
Such an opportunity surely exists. But the fractured and turbulent world we are confronting as we emerge from the Covid-19 crisis makes purpose driven, environment, social, governance (ESG) strategies immensely more challenging. While a number of sectors, such as finance and technology, have so far been resilient in the face of a massive economic downturn, others are suffering and may yet see more difficulties.
There are several challenges to purpose driven business strategies in the future.
· Globalism hits a wall. Amidst rising US-China tensions, many companies are rethinking supply chains and gravitating toward more regional vs. global operations. Some are even considering more in-house sourcing of technical needs. The effects of these changes on managers and employees are not yet clear. But it is almost certainly the case that in a conflicted world, many purpose - driven, ESG issues that may resonate in one region may not in others. Equally the case: global shifts are coming on top of relentless grappling with accelerating technology challenges, and business leaders are continuously pressing their organizations to adapt to intensifying digitalization. Figuring out how ESG integrates in a resource pressured environment will be a challenge.
· More ESG issues crowd agendas. The current pandemic raised attention to what many scientists had already warned: epidemic triggers are becoming more common and pandemic breakouts threaten our urbanized and interconnected world. That situation may mean more risk mitigation resources needed for preventive health and safety for many stakeholders. Meanwhile, global sustainability remains in critical condition, and rising social instability surrounds many other issues of which diversity and inclusion, attentiveness to physical and mental challenges, and others are just a subset. The number and scale of challenges may be growing, but for many industries, resources are not.
· Disorder complicates values harmonization. We have seen in our social media penetrated world that divisiveness has become endemic in many parts of the world. Companies are certainly not immune. Thus, different levels or regions of management and employees may have very different perspectives on an ESG agenda.
· ESG strategies are harder to mobilize. Even in what now may look like the pre-pandemic golden age of ESG strategy, getting companies to live the values developed and articulated by upper management was a challenge. A study of 1000 companies on the link between corporate performance and ESG strategy indicated that clarity of purpose declined sharply from senior to middle management and then to the rest of the employee population. In the post-Covid-19 world, social dissonance may now exacerbate the potential lack of clarity in the purpose cascade. Our own experience working with different global companies indicates that top management is often unaware of this values misalignment in the wider organization.
· Trust Under Stress. Another limiting factor is the inevitable pressure on managers and employees under threat from technological change and cost-driven restructuring. Companies’ talent pools will remain limited, if not challenged. Size and availability, qualifications and motivation, opportunities and mobility - to name just a few critical people dimensions - all limit the ability to drive coherent strategies and actions. Regrettable loss has many faces. One face is trust - upwards and downwards. This disordered era requires even more trust – both ways. Management needs to have enough understanding to develop networks of trust inside the organization. And it needs to undertake the type of behavior and communications that enable management to be trusted. If not now, when will managements ever face a better time to build sustainable trust to “gain and retain” talent?
Facing up to these challenges squarely requires new strategies for developing and communicating ESG strategies that integrate with the new competitive landscape.
1. Bypass the top-down “cascade”. Top management must get closer to the wider company, listening closely, evaluating the ESG inputs shared by the wider organization and methodically prioritizing what it can and cannot accomplish—and then clearly communicating the “why” of these choices to the employees as directly and empathetically as possible. Management cannot just guess whether their employees, especially the critical level of middle management, is committed to a strategy. Strategy should already incorporate perspectives from the wider organization.
2. Place Communications and communicators at the heart of the values strategy. Communicators must be allowed by top management to play a greater role of values stewardship. Their professional expertise is understanding how to translate strategy into both language and action and to serve as a feed-back loop to upper management. Indeed, communicators must also be more closely joined to line managers and Human Resources, so that values communication is seamless across all channels.
3. It’s more about what you do, than what you say: Slack chats, podcasts and videos can’t be a surrogate for management and employees actually seeing values lived in the day-to-day practice of leadership. Management also needs to zero in on the best, most trusted managers that employees themselves identify, if values are not just to be explained but modeled and lived in the wider organization.
Values driven, purpose-based strategies by corporations will not only be relevant, but desperately needed in our tumultuous era. Making sure that these strategies are aligned with employee thinking, integrated in competitive strategy, communicated continuously and pervasively, and actually lived in the behavior of management are necessary preconditions for success.