What triggers corporate action on a social issue

Featured in today's briefing:

• What triggers company action on social issues.
• How meetings are getting shorter and clumped more toward the middle of the week.
• Surcharges for taking business flights.

The Virus

The latest virus forecast: The US has had a 37% decrease from two weeks earlier, with about 30,000 new cases on Friday. Analysis of wastewater suggests that cases could be rising and not yet showing up on tests. And increasing infections in the UK amid the spread of the BA.2 Omicron variant (which researchers believe vaccination offers protection against) have raised concerns for the US.

The business impact: Amid high inflation, consumers spent more on cars and gas in February and less on online shopping and discretionary purchases such as electronics and furniture. Global food costs are about 40% higher than two years ago, driven up by increased costs of fertilizer, fuel, and labor.

Focus on What Leads Companies to Take Stands on Societal Issues

We focused last week on employees’ roles in some US companies’ exits from Russia, and noted the internal backlash at Disney over CEO Bob Chapek’s initial unwillingness to take a stand on LGBTQ+ rights in Florida.

Both are examples—which some observers have called “unprecedented”—of US business action on moral grounds. Stepping back, what are the situations that can trigger this? And what are the most effective ways to apply pressure to businesses to speak out on societal issues?

For answers, we spoke with Stephanie Creary, an assistant professor of management at Wharton. Her research suggests that a key ingredient for corporate action is what she calls “social authorization,” something she’s studied in the context of companies’ responses to George Floyd’s murder. Here are excerpts from a recent conversation, edited for space and clarity, where she explained that and its implications:

What is social authorization, and why is it important?

Social authorization is the idea that firms and related entities, like boards, are feeling that they are being granted the power from other groups, collectives, or other people in society to engage in societally based work. That's anything related to taking a stance on social issues or responding to social causes. The social authorization process is about corporations and boards now feeling as if they have the right to do this work that many of them previously were not so deeply immersed in.

What are examples of social authorization?

To understand social authorization, it's first important to understand who might be doing the authorization, giving firms the authority that they might not have felt that they had previously. This can be any number of entities. We can start with legislation and policymakers. One of the examples that I often think about, because it's in my research on board diversity, is how in California around 2019 legislation was passed to require that firms headquartered in the state have at least one woman on their board. The fact that boards then took up the responsibility of enacting this law and speaking to the law as their reason for increasing diversity on the board is an example of them now feeling authorized to do this work, including recruiting more women and underrepresented minorities to the board.

Another example is the Black Lives Matter movement following the murder of George Floyd. What I find in my research is that boards now feel licensed to not just recruit directors to the board—which is what the California legislation did. What happened following the murder of George Floyd is that Black board directors and their boards now felt authorized to take on diversity issues broadly and to engage more deeply in the company's DEI work as responsibilities of the board.

What else is on the list of mechanisms of social authorization?

Aside from legislation and the Black Lives Matter movement, we have peer authorization, which is social authorization coming from peer groups. There are any number of business leader collaboratives out there, like the Business Roundtable, chambers of commerce, and the Silicon Valley Leadership Group, and the Executive Leadership Council. There are now so many groups formed of business leaders who are finding ways to create an agenda that can span across firms. Developing this collective voice enables any single firm to feel authorized to engage in diversity work.

What are the takeaways from your research in terms of how we all can point organizations in the right direction around societal issues?

What those of us who care about social issues need to understand is there's a lot of anxiety among the corporate population. If we want anxiety to get to manageable levels so we can begin addressing these social issues, what needs to be done? Firms with the highest level of anxiety would probably feel more confident engaging in social issues if they are authorized to do so by any of these collectives. For corporate leaders, the business leader collaboratives are probably some of the more effective forms of social authorization because they're peers.

Certainly, an effective form of social authorization does come from the people—from employees and from social movements. But they're a little far away from the day-to-day decisions that firms have to make. For leaders, to be able to discuss it among their peers is really important. Peer group social authorization is something that we should encourage more of.

The second thing is related to the role of the employee, employee activism. For some time, what I've observed is corporations trying to ignore the fact that they have a lot of employees who are really passionate about these issues.

Just the other day, I was on a call with an unnamed company who talked about hiring a director of social activism. I thought that that was really interesting, and it's equated to companies hiring directors of ESGs or directors of diversity, equity, and inclusion. What would it look like to have a director and department of social activism—and treat this as a critical business issue just like marketing, communications, and finances—and shore up that department so they could help the firm respond effectively to these issues?

What does the social authorization framework tell us about the corporate responses to Russia's attack on Ukraine?

In terms of government bans as social authorization, I think it’s important to note that President Biden’s move to ban US imports of Russian oil, natural gas, and coal occurred after many US companies had already started ceasing their Russian operations. Shell seems to be a great example of a company that needed this type of social authorization in order to address this social issue in a meaningful way. Prior to the ban, they were actively purchasing Russian crude oil. They admitted that it wasn’t until they had engaged in ‘continuous discussions with governments about the need to disentangle society from Russian energy flows’ that they fully understood the consequences of their actions and what they needed to do going forward.

In terms of the ESG movement as social authorization, some suggest that these corporate responses are somehow tied to these companies’ ESG commitments. If this is the case, then this certainly would suggest a case of social authorization; that is, the ESG movement is granting companies the rights to suspend operations and services in Russia. An alternative point to consider is that companies that may have felt socially authorized by the ESG movement to respond to some social issues in the past (eg climate change, racial justices, etc.) might feel increasingly empowered to authorize themselves to respond to Russia’s attack on Ukraine. Thus, it could be the case that social authorization of some social issues might lead to companies to authorize themselves to engage with other social issues—suggesting a spillover effect of sorts.

Are these corporate responses unprecedented or notable from your perspective?

I think these corporate responses are notable because they don’t all seem to be stemming from active threats to corporations—such as boycotts or protests. That doesn’t mean that these companies don’t perceive risks if they don’t suspend operations in Russia. Rather, it is probable that they do. Yet, what is especially interesting about these corporate responses in relation to Russia’s attack on Ukraine is that the issue is deeply rooted in the political realm—and, historically, corporations have appeared more reluctant to take a stance on those types of issues.

Read a full transcript of our conversation, including discussion of the roles of employees, how organizations can choose which social issues they take stands on, and what makes the difference between whether businesses take action rather than just engaging in a PR exercise.

What Else You Need to Know

The gender pay gap hasn’t budged since the start of the pandemic. After years of narrowing, the pay gap for US women held steady at 82 cents for every dollar a man makes over the past two years, according to a report by Payscale.

• Native and Hispanic women earned 71 cents and 78 cents compared with White men.

Meetings are getting shorter—but there are still a lot of them. Meetings under 15 minutes now make up 60% of all meetings, according to a Microsoft analysis of Outlook Calendar data.

• Teams are starting meetings later on Mondays and wrapping up earlier on Fridays compared to a year ago. There are also fewer noon meetings.
• 9am to 11am is the most used meeting time, but 2pm to 3pm is rising in popularity.
• Out-of-office blocks on calendars are up 10% from a year ago, suggesting employees are taking more vacation.
• Still, the average Microsoft Teams user is spending 252% more time in meetings than they were in February 2020.
  

Microsoft is significantly hiking its internal charge for the carbon emissions generated by business travel. In July, that will rise to $100 per metric ton of carbon dioxide equivalent, up from $15.

• It said the money from the tax will be invested in areas that make Microsoft a greener company.
• While the move dissuades staff from making nonessential trips, it also encourages airlines and hotels to offer greener options.
• Microsoft recently reported that its emissions rose after several years of declines.
• We’ve written in detail about reinsurance company Swiss Re’s use of internal carbon charges to discourage unnecessary business travel. It estimated that a charge of $100 per metric ton added roughly $1,000 on top of the price of a Zurich-New York plane ticket, which is billed to the traveler’s corporate budget.
  

The SEC plans to require all publicly traded companies to disclose their greenhouse-gas emissions and their climate risks. Businesses will have to measure and disclose emissions in a standardized way for the first time.

• While some companies voluntarily share details, there are sometimes wide discrepancies as to how they arrive at their numbers.
• Critics say the financial regulatory agency lacks expertise and authority in the area.

You can still be fired for being overweight. Only the state of Michigan and a handful of cities currently ban weight-based discrimination.

• A pair of bills working their way through state legislatures in New York and Massachusetts would ban discrimination based on weight and height in housing, public accommodations, and employment.
• Judges have been hesitant to rule that weight should be considered protected under the Americans With Disabilities Act.
• For every six pounds an average American woman gains, her hourly pay drops 2%.
  

A growing number of companies are offering sabbaticals to reward long-term employees. Goldman Sachs started providing six weeks unpaid leave to employees after 15 years of service, and Citi launched a 12-week program for North American employees with five years of service.

• Proponents also say the perk helps workers return more energized and engaged.
• It’s a retention tactic amid the Great Resignation, though one survey found that 20% of professionals who take extended time off don’t return, as the break gives them time to reconsider their work identity, satisfaction, and job fit.

Part-time retirement is increasingly an option. About 38% of human-resources executives said they offer phased retirement compared with 17.2% before the pandemic, according to a Mercer survey.

• The demand for workers and a higher-than-expected retirement rate are motivating managers to find ways to retain older staff.
• Many programs involve employees helping train younger workers who will replace them.
  

Return to workplace speed round:

• Office occupancy hit a pandemic high of 40%, amid a flurry of company returns.
• Office rental firm IWG announced plans to add more than 1,000 new locations globally this year due to increasing demand for the hybrid work model.
• Some 54% of employees working from home said they would look for another job if their employer stopped offering remote-work options, according to a large Gallup survey.
• Sweetgreen is restarting its program to deliver food to locations in offices without charging customers a fee. The salad chain is hoping to benefit from companies’ discontinuation of corporate cafeterias as part of the shift to hybrid work.
• The state of Connecticut recently agreed to permanently allow most of its employees to work remotely as many as four days a week. The decision is a blow to local businesses in the state capital of Hartford.
• The CEO of online retailer Overstock said he has no plans to sell its $100 million, state-of-the-art office despite the fact it sits largely empty. “Two years from now, as we get together for our homecoming celebrations, employees may realize they like being around people, and want more in-office interactions,” Jonathan Johnson said.

Here are some of the best tips and insights from the past week for managing yourself and your team:

• Set clear rules of engagement for communications platforms. Can you wait to answer a direct message until the next day, for example?
• Don’t overshare at work. Called “floodlighting,” the practice of offering overly personal details can strain relationships. Colleagues can shut down to protect themselves from not feeling connected to what has been thrust upon them.
• Get rid of something. Periodically rid yourself and your organization of work practices like quarterly town hall meetings to gain time back in your schedule.
• Offer cash bonuses and better benefits to help offset inflation. If your company isn’t ready to raise salaries by 8% across the board, other perks like bonuses, subsidies for child care and student-loan repayment, and gas or food cards can help.

Coda

The business of nips and tucks continues to boom. Plastic surgeons say these days their patients are looking for quick procedures like Botox injections ahead of returning to the office.

• They had earlier in the pandemic seen a surge in more intensive work when people could expect to recover while working remotely.
  

Everyone is distracted by Zillow. An out-of-control housing market means would-be buyers are obsessively scouring listings, and others are voyeuristically cruising the real-estate site during the work day.

• Tuesday is the most popular day for browsing Zillow listings.
• Ten of the top 25 highest-traffic times on real-estate site Redfin are weekdays between 9am and 5pm, double the number pre-pandemic.
  

The handbook for this new era of business doesn’t exist. We’re all drafting our own as we go along—and now we’d like to start doing so together. You can sign up here to receive this briefing by email.