Businesses like to devote part of their marketing and public relations budget to promote how they are giving back to society. We are not just about profits, they try to say. And the message is arguably true, not just propaganda, as far as it goes.
But we are starting to hear a different kind of message from business people, and it goes like this:
“Around the world, frustration with years of stagnant wages, the effect of technology on jobs, and uncertainty about the future have fueled popular anger, nationalism, and xenophobia. In response, some of the world’s leading democracies have descended into wrenching political dysfunction, which has exacerbated, rather than quelled, this public frustration. Trust in multilateralism and official institutions is crumbling.” — Larry Fink,
(emphasis mine)
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| Fink, from BlackRock.com |
Business people will have to fill the gap left by polarized and paralyzed national governments: this is the message of Larry Fink, CEO of BlackRock, the world’s largest mutual fund company. Businesses have to show that they have a higher purpose than just making money. And, by the way, it’s in your own interest to do so, he says. BlackRock has used its position as a major shareholder of some companies to push for more socially conscious policies.
(More coverage of Fink’s letter was in Bloomberg, Forbes, and Reuters, among others.)
The limits of national policy
In a world of global communication, global financial markets, global labor markets, and global supply chains, mere nations with their individual politics, languages, cultures, and economies, cannot begin to respond adequately to some of these global trends.
Working people’s wages are stagnant while an elite class of highly educated and well connected people in technology and finance are growing ever richer. Ordinary workers without a pension or health insurance (or whose plan has with crushingly high deductibles) have a precarious existence, their jobs threatened by technology, in which a job loss or major health problem could leave them in crisis.
Politicians driven by the ideology of supply-side economics are cutting spending on the social safety net and badly needed investment in infrastructure while reducing taxes for the elite and, hypocritically, increasing the budget deficits they say they oppose. And then they tell their struggling constituents, Just trust us, eventually things will get better.
Fink and others are telling business people that they are positioned to alleviate some of the economic and social trends that are creating big winners and big losers in society.
Fink’s to-dos
- For starters, businesses should do more to ensure that their employees have well funded pension plans. Otherwise, workers worry about their job security, which reduces productivity and leaves them vulnerable to populist messages that blame immigrants for wage declines and job losses.
- Identify employees’ social goals and include them in strategy. He cited a survey of millennial employees in which, when asked what the primary purpose of their company was, 63% more of them said “improving society” than “producing profit”.
- Make investments that contribute to the long-term sustainability of the company and the community not just shareholder benefits like stock buybacks.
- They need to go beyond public relations and look at their entire company culture to encourage behavior that results in long-term sustainability rather than short-term profit goals.
Domestic disturbances like those seen in France, with its yellow vest demonstrations, and in Greece, with its anti-austerity marches, lead to increasing violence and public divisiveness. Violence is bad for business. Even the Godfather, Don Corleone, knew that.
The takeaway for media: the old strategies of short-term profit have failed in the media marketplace. The advertising subsidy has gone to the technology platforms that encourage engagement in sensationalism and gossip. Now people are looking for high-quality media to support — media that address the everyday problems faced by most people, such as job insecurity, wage inequality, public corruption, social injustice, and environmental degradation. They are looking for credible, trustworthy news services. The media that fill this market gap and think long term rather than chasing page views and short-term profits have a chance to prosper in this new media environment.
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