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November 19, 2021
Domarina Oshana, PhD, is a social scientist and research development professional. She is the Research Director for Corporate Programs for the American College Cary M. Maguire Center for Ethics in Financial Services. An edited version of this article originally appeared in InsuranceNewsNet.
It has been two years since the Business Roundtable’s statement on the purpose of a corporation, which read that companies should be concerned about serving all of their stakeholders, not only their shareholders. This represents a mindset shift in business, consistent with the trends toward “stakeholder capitalism.” It has been especially evident during the global events of the last year and the ongoing pandemic, which have spurred some corporations to step up their philanthropic support and community service.
“Doing well by doing good,” a quote attributed to Benjamin Franklin, is a concept that today articulates how corporations could affect the communities in which they operate, if they run their business with purpose in mind. A related term, “social impact,” describes the intersection between for-profit practices and charitable missions, which can demonstrate measurable positive impact on stakeholders. It is about corporations making the world a better place, helping to improve quality of life while also running their businesses well, and solving big problems while serving humanity in positive ways. In a world that cynically views “business ethics” as an oxymoron, really, what does that look like?
Grab, Southeast Asia’s ride-hailing company, demonstrates a tangible example of corporate purpose with heart for its stakeholders. In addition to transportation, the company offers food delivery and digital payment services via a mobile app. While the company has had blemishes to grapple with, it is interesting to learn how a focus on social impact led Grab, a transportation tech company, to financial services. They identified and filled a real need for their unbanked and underbanked drivers. The company set up their drivers with bank accounts, thereby, enabling them to receive their paychecks through direct deposit.
Grab’s approach demonstrates a stakeholder-focused program. Why? Because its choice to recognize a stakeholder need and to meet stakeholders where they are illustrates an effort to build trust through affective symmetry. By aligning with its stakeholders’ need, Grab strengthened emotional connection, strengthening trust with their drivers. At the American College Cary M. Maguire Center for Ethics, our research has also identified that balancing symmetries in relationships is an important element of stakeholder culture within the financial industry. The Relationship Balance Model, developed by our Maguire Fellow in Applied Ethics, Caterina Bulgarella, PhD, helps financial institutions identify trust opportunities and understand how stakeholders use trust as an accountability mechanism in reducing asymmetries and/or creating symmetries in their relationships. When businesses put purpose before profit, they can lead the way in addressing social challenges, while innovating in new products.
For financial institutions, one lesson to learn from Grab’s example is to more proactively identify and act on unmet stakeholder needs. Financial institutions could start by questioning how their actions (or inactions) affect people in their organizations, as well as people impacted by them. This approach flips the typical business case equation, from a traditional view of “what’s in it for the business” to a stakeholder-focused impact analysis, as recently remarked in a commentary for Fortune by Azish Filabi, the Executive Director of the Maguire Center for Ethics.
Client advocacy initiatives that involve working closely with client support teams along with research and analytic teams could improve client experience and provide more value. Through such initiatives, financial institutions may discover first-hand the connection between employee satisfaction and client satisfaction.
Companies can be more stakeholder focused through strategies such as collecting feedback through periodic touchpoints with employees and clients, to learn insights about important elements of the employee and client experience, respectively. For employees, such feedback might raise opportunities for the company to support volunteering in the community or managing life transitions, such as the need for childcare or elder care. As an example of the former, BCG provides employees the opportunity to take a social impact leave of absence for up to 12 months. For clients, listening to experiences highlighted by client support staff and using email to communicate regularly with clients may reveal life changes meriting hardship assistance, such as when a terminal illness affects a family financially. One father shines a light on this crushing financial hardship in his deeply moving guest essay for The New York Times, “I Will Mourn My Daughter Forever. But I Was One of the Lucky Ones.”
While I’m not endorsing any company or their specific approach, I believe financial institutions can use these examples to self-initiate opportunities for purpose-driven innovation. We have all heard the expression, “Be kind – you never know what someone else is going through.” This saying calls forth the intentional practice of empathy. What would society look like if financial institutions operated with a central focus on humanity – unceasingly asking their employees and clients questions such as, “What’s happening in your life right now?” or “What do you need most?” and then audaciously helping to meet those needs. It may be a pipe dream, but I do think financial institutions could act on the insights these types of questions provide to create opportunities that nurture an impact-minded stakeholder culture.
Financial institutions may also consider adopting a framework for connecting their business strategy to quality of life improvements for the betterment of society. Drawing from my own professional experience, what I aspire to in my own research, and that which I’ve helped enable, I suggest considering the spirit of the National Science Foundation’s Broader Impacts (BI) Framework. It is a guide to help social, behavioral, and economic scientists more effectively communicate their projects’ potential benefit to society.
Leaders in the financial industry might adapt this framework to ask and answer questions such as “Who can our products empower?” “Who benefits from that empowerment?” “What concrete steps can we take to make these broader impacts more likely?”
By thoughtfully considering and articulating the potential broader impacts of financial products and services, the financial industry can advance business and social good. It may also help shift stakeholder mindsets of financial services from an industry perceived as transactional to one that is transformational.