INSIGHTS: HOW TO NAVIGATE GOVERNMENT AFFAIRS USING CORPORATE SOCIAL RESPONSIBILITY
By Guest Columnist Chris Lee:
CSR consultant currently advising the healthcare industry, Mile High United Way, and other organizations. She has 17 years of experience and is a JDA alumna. Chris can be reached via email at firstname.lastname@example.org.
“But I shouldn’t need to remind you that Congress will not hesitate to act, whenever necessary, to ensure your customers are treated with the respect they deserve. If we don’t see meaningful results that improve customer service, the next time this Committee meets to address this issue, I can assure you, you will not like the outcome.”
– Congressman Bill Shuster (R-PA)
That powerful statement came not from a House Democrat eager to regulate the airline industry, but from the Republican Chair of the House Committee on Transportation and Infrastructure. This is a clear demonstration of what happens when a company ignores or neglects the important work of Corporate Social Responsibility (CSR): it can result in reputational disasters like the one experienced by United last month.
In this instance, the public was treated to a stunning video of a passenger being forcefully dragged off a flight. The ensuing uproar led to a decline in United’s stock price, then a lawsuit, and finally culminated in a public lambasting of the entire airline industry by the House. In a rare show of unity between parties, Republicans and Democrats alike took their opportunity to voice the anger of their constituents at the airline industry. More importantly to government affairs professionals, the airline industry risks undoing years of hard won deregulation.
One could make the argument that United couldn’t have foreseen such a shocking incident. However, in the age of social media, all companies must be extremely vigilant or risk potential blowback when incidents go viral. Fact is, raw, unfiltered digital images can instantly become memes, turning what may seem like an isolated customer service issue into a reputational problem that lasts years if not decades.
CSR is more than a fancy way of giving money to charitable organizations and not a passing trend. CSR can help leaders spot problems before they do permanent damage to a brand’s reputation and image. Continuing with the United example, CEO Oscar Munoz made claims that the actions on the flight did not reflect United’s values. Yet, many people found that statement to ring patently false. That is because, let’s face it, the vast majority of the flying public has had at least one horrible experience while flying. The airline industry is consistently missing opportunities for meaningful brand interactions despite ample touch points with the customer.
How can CSR rectify these issues and help prevent future crises? CSR is not a giving program with better marketing. A well-conceived CSR program builds brand values shared by all stakeholders and helps center the most important aspects of the business. Too often, CSR efforts are a dangerous form of advertising which serves to expose the gap of sincerity between a company’s words and its actions –certainly the case with United’s “fly the friendly skies” tagline. True CSR can provide meaningful benefits to both the organization and the public, highlighting shared values as opposed to competing interests.
CSR is a deliberate and ongoing exercise by organizations to better understand how their values, products and stakeholders interact to create their brand image. In the contemporary environment, companies have lost control of their brand images, surrendering them to a larger community that includes employees, executive leadership, customers and of course the public. You are what the public thinks you are.
Given these parameters, CSR provides an elegant way for companies to present themselves through their values and beliefs, placing them in the forefront of their products or services. Had United taken a CSR approach instead of relying on an insincere tagline, they could have potentially saved themselves from the anger of the mob and corresponding drop in brand equity.
Using CSR, an organization identifies and aligns its guiding principles and integrates them into its products, services and broader corporate culture. This approach can result in enhanced brand value, along with increased market share, greater employee engagement, improved customer experience, and more positive media coverage.
The result for government affairs professionals is also clear: Good CSR programs result in fewer public relations issues along with enhanced brand image, making it easier to make further your organization’s legislative agenda.
ON THE ECONOMY: SITTIN’ ON THE DOCK OF THE BAY
By John Dunham:
Managing Partner, John Dunham & Associates
Sittin’ in the morning sun, I’ll be sittin’ when the evening comes. Watching the ships roll in, then I watch them roll away again, yeah. I’m sittin’ on the dock of the bay, watchin’ the tide roll away, ooh, I’m just sittin’ on the dock of the bay, wastin’ time. So begins the 1968 song co-written by Otis Redding and Steve Cropper.(As a side note, if you have never been to Stax Records in Memphis where this song was recorded it is well worth the visit). Redding recorded this song just before he tragically died in a plane crash, and it became a number one hit.
The business cycle in 1968 was in a similar place as it is today. The economy had just undergone a tremendous boom following the Kennedy tax cuts. In fact, the economy had been growing rapidly for nearly 9 years. In 1969, a mild recession sparked in part by the budget deficits of the Vietnam war put an end to what had at that time been the longest period of sustained growth in the country’s history. Fast forward to today. According to the powers that be at the NBER, the country came out of the last recession in June of 2009, so it has been growing (all be it slowly) for almost 8 years now.
We have opined in this column for some time about how this recovery may not be a recovery, or whether or not the country is going into another recession. One statistic that we have not really discussed; however, is the labor force participation rate. The Federal Reserve (in its FRED system) has data on this statistic going back to the Second World War. Between the end of the post-war recession in 1948 and the months leading up to the 9-11 attacks, the labor force participation rate in this country rose steadily, from about 58 or 59 percent following the war to nearly 70 percent by 2001. Then something changed.
The labor force participation rate is a statistic that measures the percentage of the adult population that is either non-institutionalized, or in the military that is either working or looking for work. The statistic will increase for a number of demographic or social reasons. If, for example, the percentage of the population that is of ‘working age” increases, so to will the labor force participation rate. It also increases after a war when people are discharged in mass from the military. The labor force participation rate increased dramatically in the 1960s and 1970s as women entered the workforce. These demographic and societal changes have a lot of influence on the overall trend in the statistic, and are the main reason for the dramatic increase between about 1970 and 1990. Similarly, they do explain much of the fall in the rate over the past roughly 20 years.
Since peaking at the turn of the century, the rate has fallen by about 4 percentage points – from about 67 to about 63 percent. While this seems small, it means that roughly 7 million more people would be working in America today.
While many pundits have suggested that the labor force participation rate has been falling as a result of a decrease in the working age population and the retirement of the baby-boomers, the statistics simply do not bear this out. In fact, the working age population (people roughly between 17 and 55 years of age) is about the same today as it was in 2001 – about 63.5 percent. So the labor force participation rate has not decreased because there are more older people.
What has happened is that the percent of people in the labor force (those either employed or looking for work) has fallen by 1.6 percentage points (or by about 5 million people). So half of the reduction in the labor force participation rate is due to a smaller percentage of the population entering the labor force. This can be due to societal reasons like Millennials dropping out and either living in their parents’ basement or maybe moving to Portland. There has also been a baby boom which may be leading more people to stay at home to take care of their kids.
In addition to this, the labor force as a percentage of the working age population is down by 2.8 percentage points. After subtracting those who did not enter the labor force at all, this means that an additional 700,000 people of working age are either institutionalized in prison or in the military than at the turn of the century.
The remaining million people have simply disappeared from the labor force. This could be because more people are involved in the underground economy (dealing drugs, smuggling, etc.), have started unregistered businesses, or have otherwise dropped from the labor force. This is not a surprise considering how weak the economy has been for the past 15 years. Part of this is also likely due to the growth in the number of people registered for disability insurance.
The bottom line is that the fall in the labor force participation rate is for the most part reversible, and upwards of 7 million people are available to work who for some reason are not. If more of these people would stop sittin’ on the dock of the bay, wastin’ time, it will be quite likely that real economic growth in America can rise well past 3 percent, well above the 2 percent or less of the past decade.
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