It was not always this way. Local companies used to serve local communities, and the value they produced stayed in the community. As firms prospered and expanded, stakeholders throughout the community benefited. The system was hardly perfect, but it was far more equitable than in our era of global corporations.
The questions facing today's corporate leaders are not easy to answer. How can we develop a model that integrates a commitment to all our stakeholders, not solely our shareholders? How do we bridge the digital divide between the "haves" and "have-nots," those that "can" and the "can-nots"? And how can we accomplish this while preserving the concept and the economic benefits of a global corporation?
The problem is that corporate acts of goodwill typically occur in isolation, separate from the forces that created them, and are the exception rather than the rule. We must develop a new architecture for globalization--with full awareness of the constraints of the current system--that makes "doing good" an integral part of doing business and herald what some have called the end of philanthropy.
The integrated corporation
The integrated corporation not only creates value for its traditional shareholders, but just as importantly, plays a vital role in supporting local and global communities by using diverse resources unavailable to smaller, local companies. Creating value within the community is an integral piece of the socially engaged corporation's goals.
Four areas are immediately apparent: corporate value, corporate profits and products, corporate time, and government influence. Accordingly, four models have emerged:
Place a percentage of corporate equity into a public charity.
Return a percentage of profits to the global communities served.
Encourage employees to dedicate a percentage of their time for community service activities.
Use government influence to positively affect policies for global communities.
Research verifies that companies can make a major difference with relatively small investments. Alan Hassenfeld, chief executive of Hasbro, has pioneered many of the concepts of the integrated corporation with a goal to have 1 percent of corporate time dedicated to local community service. Employees have four hours of paid time-off a month to volunteer with children and simply log on to the company's Web site, where nonprofit agencies list their needs.
We must develop a new architecture for globalization--with full awareness of the constraints of the current system--that makes "doing good" an integral part of doing business.
In 1992, Timberland, one of the largest outdoor-clothing companies, created its Path of Service program through which each employee dedicates 16 hours of paid service to his or her community. This fully integrated project has resulted in more than 200,000 hours of service through more than 200 social-service agencies in communities spanning 30 states and 18 foreign countries.
Merck, one of the world's most successful pharmaceutical companies, decided several years ago to donate to African villages the drug Mectizan, used to control river blindness. Working with the World Health Organization, the World Bank, dozens of NGOs and local ministries, Merck provides a valuable resource to more than 25 million people annually.
Ben and Jerry's, the popular ice-cream maker, has taken the idea of integrated service furthest of all by fully integrating philanthropy into its products, marketing and human-resource practices. The company donates 7.5 percent of its pretax earnings and has a director of social mission development to oversee corporate grants. It also supports the Ben & Jerry's Foundation and employee community-action teams. No other company has such an explicit program for donating profits and time.
As U.N. Secretary-General Kofi Annan has said, "Those who have the power and means, governments and businesses, must show that economics, properly applied, and profits, wisely invested, can bring social benefits within reach not only for the few, but for the many and eventually for all."
While we will be able to witness the benefit of programs like these on society, we should also be conscious of the effect it will have on the companies providing the service. Employees seeking greater levels of fulfillment in their own lives will have to look no further than their workplace. As corporate leaders, we can come forward and use our leadership skills for a higher purpose: to fully integrate our global companies into the systems of which we are a part.