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Bill Novelli Speech at the Charities at Work Annual Best Practices Summit

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Charities at Work Annual Best Practices Summit on Employee Engagement in Corporate Citizenship: “Make it Matter” – April 3, 2013, New York City

Bill Novelli, Professor, McDonough School of Business, Georgetown University

I’ve had the opportunity to do a number of things in my career, in business and in public service. Now I’m at Georgetown University, in the business school—a different setting for me, but in my mind a continuation of public service.

Outside the school, I am co-chairing a large and growing coalition to reform advanced illness and end of life care in the U.S. It is called C-TAC, for the Coalition to Transform Advanced Care, and several companies here today, including Aetna and United HealthGroup, are active members.

Some years ago, I was on my way to speak to a class at Columbia University, and I asked a student for directions to the building. She inquired who the professor was, and when I told her, she said, “Oh, he’s famous.” I said, “Really, what for?” And she replied, “He’s famous for being a great teacher.” That really stuck with me. What wonderful praise. I admire great teachers, and now I aspire to be one.

But no matter what you’re doing these days, teaching, managing companies and lines of business, working in government or nonprofits or anything else, these are challenging times.

Climate change, combined with environmental difficulties like clean water, food security and deforestation, debt and deficit problems at home and abroad, unsustainable health care costs, major risk factors like diabetes, smoking and obesity, chronic poverty in many parts of the world and many other problems are all right here and right now.

I have a favorite Haiku that goes like this: “Problems worthy of attack, prove their worth by attacking back.” These are the big ones, the problems that don’t lend themselves to sitting back or muddling through.

I saw an article that said that scientists think there may be a mysterious bacterium that is eating a lot of the oil from the Gulf oil spill. If it’s true, wouldn’t that be great? And wouldn’t it be great if we had a bug that could eat our enormous national debt, our health care inefficiencies and our carbon emissions, and maybe a few other things as well.

But it’s almost surely not going to happen. Life doesn’t work that way. So we need to act, to create change, to work to solve big social and environmental problems. A useful definition of positive social change is the sustainable transformation of systems and institutions to create a safer, healthier, more prosperous and more equitable society.

My own career goal is to make significant contributions to solving major social problems. Those are the big ones from the haiku—the ones that attack us back.

There are many challenges to achieving real and sustainable change, including scaling up to a meaningful level, acquiring and marshaling resources, the need for continuity, problems in measuring impact and a lack of basic knowledge about what works, such as with the difficulties we face in controlling today’s obesity epidemic.

And there are many contributing factors to achieving positive social change. But perhaps the most important one is leadership – in the private sector, in government and in civil society. Someone once said that leadership is the cause, and all else is effect.

You don’t have to be at the top to lead. You can lead from anywhere in the ranks. Colin Powell recognized this. He said, “Have you ever noticed that people will personally commit to certain individuals who, on paper or on the organization chart, possess little authority, but instead possess…drive, expertise and genuine caring for teammates and products?” He’s right. We’ve all seen it. Many people are leaders from all parts of an organization.

Today, corporations are taking more and bigger roles in tackling social and environmental problems around the world. There are many labels for this: corporate social responsibility, corporate citizenship, triple bottom line, shared value and others. I prefer to call it corporate social enterprise.

You know a lot about this, so in a way I feel like I’m carrying coals to Newcastle in talking to you experts. But let me give you my point of view.

Why are companies getting more involved in social and environmental issues. For several reasons:

  1. Because they can. Large modern corporations have the talent and the resources and skills to do amazing things. And there is a certain moral imperative to use those resources to serve the planet and its people.
  2. But of course companies are required to serve shareholder interests, and so altruism isn’t enough. There has to be a good business case for engaging in social enterprise. And there is:
  • Companies can increase revenues through strategies of doing well by doing good. Look at Philips, the global company, which sees the world’s aging population and the opportunity to create and sell technologies to enable people to age in place, which usually means at home. Philips has a strong revenue interest in this, and at the same time — through enabling people to be at home as they age — Philips can create enormous social value for adult children, for the elderly themselves, and for taxpayers who don’t have to foot the bill for institutionalized care.
  • Companies can also save money, which flows to the bottom line. An often cited example is Wal-Mart’s successful efforts to reduce packaging costs and volume and to encourage its suppliers to do the same. The result is substantial savings for the company and a cleaner environment, with less waste in landfills around the world.
  • And then there are potential advantages with consumers. We’ve all seen the surveys that show that consumers favor companies they believe are socially responsible. Of course you need to have products and services people want to buy, but all things being equal, customers appear to gravitate to companies that care.
  • In addition, there are other stakeholders who may respond favorably to good corporate citizenship, such as regulators, legislators, the media, financial analysts and foreign governments. Procter & Gamble’s water purification program was said to be the catalyst for having the government of Malawi open the country to more P & G products because, as one government official put it, “You are the company doing the good water work.” Coca Cola demonstrates similar stakeholder value with its clean-up program on the Galapagos Islands, where it utilizes hundreds of volunteers in working with the Galapagos Ecuador Foundation.

These are all good business reasons for companies to be more strategically involved in creating both economic and social value.

You’re no doubt aware of this trend and are contributing to it. What I want to do now is to zero in on some other aspects of social enterprise that are specific to employee engagement and the focus of this conference.

Let’s start with the truism that there is nothing more important to a company’s success than its employees. In his book, “The Coming Jobs War,” Jim Clifton, the chairman of Gallup, writes that his firm has analyzed many surveys from many countries to answer the question: “What do people around the world invariably want?” The answer is a good job. This is – or should be — the currency for all world leaders, of countriesand companies.

Talented people gravitate to countries and organizations that offer the opportunity to be entrepreneurial, to achieve, to excel and to feel positively about where they work. These employees are engaged and involved, and they are as direct a connection as there can be to business success.

Towers Watson’s 2012 Global Workforce Study surveyed employees at 50 global companies on how well their employers engage them in the workplace. It’s no surprise that the companies with sustainable, holistic engagement programs did best, including better financial performance compared to peer companies with less employee engagement.

Towers Watson defined “engaged” as intensity of connection to the organization, based on commitment to achieving work goals, a supportive environment for productivity and the promotion of well-being.

Where do these talented, committed employees come from? From all over the world, drawn to multinational companies. And many of them come through business schools like Georgetown. To appeal to these prospective employees, companies offer a variety of inducements, as you know so well: good salaries, the opportunity for advancement, location, corporate reputation and more.

One of the most powerful inducements, I believe, is to appeal to today’s students’ demand for, and strong interest in, global social enterprise – the idea of doing well by doing good and making a difference on those big problems I talked about earlier – as a core social value and a key contributor to the bottom line.

Business students are hard-eyed realists, for the most part. They believe in free enterprise and in the rewards of capitalism. But they also want to understand the environmental dependencies of human society and modern business and the effects of economic activity on the environment.

They want to know the business case for sustainability. They are interested in socially beneficial business practices. And they want to know about how government and business intersect in these matters. In other words, they are attracted to financial performance—and more.

There are some who want an MBA or undergraduate business degree as preparation for government or nonprofit work, or who are motivated primarily by altruism. One of them approached a pharmaceutical executive on campus who was talking about malarial drugs in Africa. The student said, “I want to come to work for you and save the world.” He replied, “Saving the world is good, but I need people who understand supply chains.” Again, economic and social value are key.

At Georgetown, we take the position that our business faculty, students and graduates are in service to business and society. Our Global Social Enterprise Initiative – you have the handout at your tables– develops partnerships with corporations, government and nonprofits –and across these sectors — to tackle big social issues and provide the leadership and practical training for future business leaders in economic and social value creation. An example is our partnership with the State Department and the Tides Foundation, along with numerous corporations and NGOs regarding corporate investment to advance international development.

What do you employers think? In the current issue of BizEd Magazine, there is an article that looks across a number of surveys to identify what employers say they’re looking for in graduate hires and what business schools say they are teaching. In both instances, social responsibility, as well as leadership and business ethics, rank high.

Many of you compete hard for these young workers. PWC’s most recent survey of business leaders worldwide found that CEOs say that, in order to gain access to a continuing supply of skilled and enthusiastic employees, attracting and keeping younger workers is one of their biggest talent challenges.

And several studies of millennial generation employees indicate that, after they leave the university and enter, or re-enter employment, they continue to want social impact opportunities. The 2011 Deloitte Volunteer IMPACT survey of workers aged 21 to 35 showed that those who participate in workplace volunteer activities are twice as likely to be very satisfied with the progression of their careers.

They tend to want to be involved in causes. That’s a big reason why Blue Cross/Blue Shield, United HealthGroup, Adobe and other companies work with KaBoom! to build neighborhood playgrounds in partnership with communities all over the country.

Bank of America also has a major commitment to community development, along with philanthropic giving and investing in environmental initiatives.

America’s Charities report on Trends and Strategies to Engage Employees in Greater Giving finds that young workers are arriving in organizations with different expectations of their employers. They want their giving experiences to be engaging, empowering and catalyzing. These new expectations are causing employers to …find new ways to meaningfully engage Millennials in giving their time, talent and money.”

Cone Communications’ studies also support these findings about participation in volunteering and giving.

As I see it, there are strong connections between employee engagement and global social enterprise. First, employee engagement contributes to a companies’ ability to create both economic and social value for stockholders and other stakeholders, at home and abroad.

In addition, employee engagement benefits from a corporation’s work and success in social enterprise. As a P & G brand manager said about her companies’ clean water program in Africa, “It’s amazing when you know your work is serving a higher purpose.” She wasn’t talking about her brand manager initiatives; she was referring to the water program. But for her, it was the same company, and she was proud of it.

I use a case in one of my courses about IBM’s Corporate Service Corps. It sends employees to various developing and emerging markets for four-week assignments that are pre-screened by partner NGOs. The IBMers work on a variety of social and economic problems. The company believes that it gets a number of benefits from this employee engagement, with one of them being increased retention of valuable workers.

As important as motivated employees are to the financial and overall success of a company, you would think that employee engagement programs would be even better funded and utilized. They have great value, which is shown time and time again.

Employee engagement can, or should be, a strong competitive advantage, which everyone – management, stockholders, prospective employees and workers themselves – can recognize. In making this advantage as visible and valued as possible, there are three good business reasons to be made:

  • Productivity gains: Gallup studied over 150 organizations across numerous industries and countries, and found that productivity was some 18 % higher at companies where employees were more engaged. (reported in the Harvard Business Review blog)
  • Operating margins increase: The Towers Watson study I referred to earlier claimed that companies with high engagement scores had an average one-year operating margin of 27 % vs. 14 % for companies with traditional levels of employee engagement and 10 % for those with low engagement.
  • Stock performance: The Pamassus Workplace Fund – which is a portfolio of stocks of companies with outstanding workplaces—was reported in Fast Company to outperform the S & P Index by a substantial margin.

These benefits are supported by the study, Driving Business Results Through Continuous Engagement, by WorkUSA, which reported that companies with engaged employees experience 26 % higher revenue per employee, 13 % higher total returns to shareholders and a 50 % higher market premium.

A good way to improve employee engagement acceptance inside and outside a company may be betterintegration. I mean this two ways: first, improved alliances and integration of employee programs withinoverall corporate social enterprise initiatives. And second, better integration and alignment of employees into the core business, strategies and practices of the company.

In the IBM Corporate Service Corps example I mentioned, the company sees employee engagement as a component within its globally integrated business to serve clients around the world.

A former CSR executive of a Fortune 500 company recently told me,“ Corporate citizenship is about engaging employees to integrate the social agenda into their day-to-day work on behalf of the company.” She went on to offer this idea: “If a company wants to truly think of itself as socially responsible, it needs to hold its employees accountable for socially responsible behavior.” She gave, as an example, energy conservation and other eco-friendly behaviors.

That is a challenging idea.  For employees to be engaged and accountable for social enterprise, like anything else for which we hold people accountable, they would need the opportunity, the resources and the support to perform. I think they would rise to the occasion.

I was at a business conference talking about all this, and the subject came up about the challenge of social impact coming into conflict with the everyday  demands of running a business.

The COO of a large company said it was unfortunate that, “we can’t all do what we love” (referring to social issues and causes), and “so we have to learn to love what we do” (meaning business operations).

But what if management and employees could do both – economic and social performance and results? And what if they were integrated and aligned? Employee engagement in corporate social enterprise can help make this happen. More and more companies are figuring it out. And you are a big reason why.

Thanks very much.