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 Two weeks ago I spoke at the annual conference of the Cause Marketing Forum in New York City. The event is a
meeting ground for businesses and non-profits to connect on projects for
mutual benefit. It was very encouraging to meet personally a growing
movement of entrepreneurs who are using their acumen in finance and
marketing for the sake of a better world. Doing so, they are pioneering new
ways for companies to engage their customers.
Rob Anderson, executive vice president of the ad agency GolinHarris,
delivered one of the more intriguing keynotes at the event. He highlighted
the drivers that determine public recognition of a company as a good
corporate citizen.
Anderson first established that corporate citizenship has a significant
impact on consumer behavior - 40% of American consumers say that they are
more likely to try a company's product if the company contributes to the
well-being of their community. Now the bad news: only 25 percent of
consumers surveyed believe corporate America is doing an "excellent" or
"good" job in its commitment to corporate citizenship.
So what constitutes a good corporate citizen? GolinHarris consumer research
identifies the following as the top 7 key drivers that determine a company's
performance as a good corporate citizen (data reflects the percentage of
consumers that identified a specific business practice as a major factor in
judging a company's reputation):
- Values its employees well and treats them fairly (85%)
- Executives and business practices are honest and accountable (83%)
- Goes beyond what is required to provide safe and reliable products and
services (75%)
- Responsibly markets its products and services (72%)
- Committed to social responsibility, economic opportunity, environmental
protection, etc. (72%)
- Listens to community or customer input before making business decisions
(68%)
- Is active and involved in the communities where it does business (68%)
Note that consumers pay the most attention to how a company treats its own
workers. For many years I have preached that marketing and brand begin close
to home, with the people who walk in the doors every morning. No doubt about
it, a company's employees are their most important ambassadors to potential
consumers. It's also clear that once a firm gets a reputation for being a
lousy employer, consumers sour on doing business with it.
Since World War II, the firm and its workers had an implicit agreement. If
the company did reasonably well, the workers could be more or less assured
of job security and rising compensation. That's no longer the case; even
very profitable companies lay off their workers or slice wages and benefits.
Certainly, cutting jobs and benefits as a cost-savings measure is inevitable
at times. I have worked with companies that have had no other option than to
do so because otherwise it would not make their payroll. But there are other
times where I have seen firms use layoffs and benefit cuts as a quick fix
for solving problems that have nothing to do with payroll.
Downsizing, for example, may buttress the financials in the short run, but
it rarely makes a company more efficient or drives its profitability. Alan
Downs once was a corporate manager responsible for enacting sizeable layoffs
- he relates being in a strategy room at AT&T where the fate of employees
was decided by moving their photos around on a panel board. But he
eventually reassessed its benefits to a company's performance. He points out
four myths that prop up its credibility among managers all the same:
Myth #1: Downsized companies are leaner
Myth #2: Layoffs increase productivity
Myth #3: New, better jobs are being created
Myth #4: Downsizing increases profits
To satisfy his curiosity, Downs did a careful analysis of business
operations at major corporations both before and after massive downsizing.
Here¹s what he found: a broken trail of communication, stalled productivity
and battered morale.
Consumers, it appears, are paying attention to employee morale as well.Ignore at your peril its impact on your brand.
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