Contributor, Korn Ferry Institute
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This special COVID-19 issue of Briefings is available online and at selected newsstands.
In one respect, the curtailing of air travel brought on by this year’s outbreak was helpful for the environment. Less flying equals less carbon emissions. But there’s another side too: with airlines taking such a financial hit—revenues are declining worldwide—the industry, experts say, may be forced to deemphasize voluntary efforts to reduce carbon emissions.
So begins the first true test of the purpose movement. After more than a year of solid momentum built around the notion that corporations need to move beyond just making money, their efforts to improve everything from diversity to environmental standards to satisfy more stakeholders could be in jeopardy. With business flailing in one industry after another, companies from retail to healthcare to banking are finding themselves occupied with keeping operations going instead of focusing on purpose as much.
“It’s easy to be committed to social impact when things are good,” says Kate Shattuck, coleader of Korn Ferry’s Impact Investing practice. “But it is a true leadership test when things are bad.”
The purpose movement has no doubt been one of the most powerful forces changing business in recent years, rivaling digital disruption. Momentum for equal pay, diversity and inclusion, and sustainability reached something of a crescendo last year among consumers, employees, and investors. Nearly 200 CEOs signed on to a statement from the Business Roundtable proclaiming that shareholder value is no longer an organization’s overarching priority, for instance. BlackRock, which has $6 trillion in assets under management, said it wanted more women appointed to boards, and a social return as well as a financial one from the companies in which it invests.
Shattuck says putting financial goals over purpose commitments now could have fallout down the road. “People who care about purpose will be watching, and if business leaders hedge or put asterisks around their commitment because of a tough year, they will lose credibility and goodwill,” she says.
Already some companies are pushing for relief. At least one European airline cited the virus as a reason to delay imposing new environmental taxes on air travel. Similarly, despite new laws in the United States that require female representation on public company boards, noncompliant organizations could use the coronavirus as an excuse for delaying appointments, says Jane Stevenson, vice chairman of Korn Ferry’s Board and CEO Services practice. “If an organization’s purpose is really just smoke and mirrors, then it will be easy for them to reposition,” she says.
But rather than retreat from their purpose, leaders should use the outbreak to think about where their organizations are uniquely aligned to contribute and help, Stevenson says. “Maybe companies can’t fulfill all their goals,” she says, “but leaders can use this as an opportunity to get creative about ways to honor their purpose.”
To be sure, the outbreak underscores much of what the purpose movement is about. Taking care of employees, physically and mentally, is a core tenet, for instance, as is providing a healthy work-life balance so employees can take care of family members. Contributing positively to the community is perhaps the biggest aspect on display. Consider that after the SXSW Festival was canceled for the first time in its 34-year history, conference organizers, attendees, and community residents set up funds to help offset some of the expenses incurred and revenue lost by the restaurants, artists, and local small businesses that rely on the festival every year.
Divina Gamble, coleader of Korn Ferry’s Nonprofit, Philanthropy, and Social Enterprise practice, says that the coronavirus outbreak can ultimately strengthen the purpose movement. She sees an opportunity for investors, entrepreneurs, and governments to create companies and organizations in healthcare and other fields to help better prepare for future crises. “This will lead to a lot of innovation from a public-health standpoint,” Gamble says.
But, she says, to really show that organizations and leaders are authentic in their desire to demonstrate how positive social impact is equal to financial performance, “they will have to prove it now when the stakes are this high.”