CEOs Leading Social Impact: Purpose-Driven Strategies for Business Success
In 2018, an increasing number of CEOs publicly advocated for their companies, as well as those of other business leaders, to define their organizational purpose and work towards making a positive societal impact. These efforts ranged across diverse issues, including diversity and inclusion, education, climate change, and voting rights. This shift indicates that a purpose-driven mindset has emerged as a key focus for C-suite leaders and is now integral to broader business strategies.
A recent global survey by Deloitte Global and Forbes Insights, involving 350 business leaders, supports this trend. The survey found that 93% of respondents view companies as societal stewards, not just employers. Presently, 59% allocate between 1% and 5% of their revenues to purpose-driven programs, with two-thirds increasing their budgets for such initiatives in the past two years. Additionally, 95% plan to take stronger stances on social issues in the year ahead.
Deloitte Global Chairman David Cruickshank highlights that it's empowering to see business leaders discuss societal impact alongside traditional priorities. He notes this represents a shift in how purpose and profit are viewed, emphasizing that they no longer need to be at odds but can coexist in a company’s strategy.
While many societal impact programs are driven by genuine altruism, 58% of executives also measure their success based on the positive impact on profitability, nearly as much as the benefit to the program’s beneficiaries (55%). Talent-related issues, such as improving computer literacy and technology access, are prioritized over larger-scale challenges like global warming or poverty, which may be harder to address with immediate results.
The research suggests that 2019 will see more vocal and action-driven C-suites, with social responsibility becoming an increasing business priority. This raises the question of whether long-term social impact goals can coexist with short-term financial performance pressures.
Leadership and Strategy
The survey reveals that 46% of executives believe CEOs are the primary drivers of societal impact programs in their companies. However, while the CEO’s leadership is crucial, it can be challenging to move from vision to execution with measurable results. Interestingly, 45% of executives believe businesses are investing more in social impact because they have the financial resources to do so. This creates a balancing act for CEOs who must deliver short-term shareholder returns while making meaningful investments in social initiatives. Long-term social strategies can only succeed if organizations have strong foundations to implement them effectively.
The Link Between Profit and Purpose
Companies are increasingly taking a pragmatic approach to evaluating their societal impact efforts, equating factors like profitability, employee retention, and client acquisition with the number of beneficiaries served, locations impacted, and funds donated. This indicates that many leaders see doing well and doing good as interconnected. Notably, employee retention ranks second in assessing the success of societal impact programs, consistent with previous research showing that employee engagement is a top factor in evaluating the ROI of inclusive-growth initiatives.
Companies are also more likely to target communities where improvements benefit their operations, with 64% focusing on locations where they have a presence, compared to 28% for areas with a more generalized need.
Talent-focused initiatives, such as improving computer literacy and technology access, are the most urgent societal issues for companies. These efforts not only provide social benefits, like increasing access to opportunities and reducing income and gender inequality, but also help prepare the workforce for the challenges of Industry 4.0. The survey indicates that 90% of organizations have formal programs addressing job creation and mentorship for underserved communities.
Collaboration for Impact
Despite the emphasis on talent-related programs, a report from Deloitte Global and the Global Business Coalition for Education predicts that over half of the world’s youth will lack the skills needed to participate in the workforce by 2030. To help ensure future generations are prepared, businesses may need to form partnerships within and across industries. While collaborations between businesses are not new, they are less common in the context of societal impact. Generally, business leaders prefer to collaborate with nonprofits and NGOs rather than other companies.
Additionally, companies do not always vet their partners for their societal impact efforts. While two-thirds of survey respondents consider a company’s values and social programs when choosing business partners, fewer than a third prioritize social policies when deciding between vendors.
Though businesses are increasingly committed to social issues, they often approach these initiatives with an eye toward both long-term and short-term benefits. CEOs, who are responsible for both setting social agendas and delivering shareholder value, play a pivotal role in balancing these priorities. Some business leaders have found success in aligning social programs with core business strategies, ensuring these initiatives endure beyond a CEO’s tenure. There are also opportunities for businesses to take a more active role in addressing pressing global challenges. To maximize their impact, executives may need to rethink their approach to societal engagement and collaborate more broadly with stakeholders both inside and outside their business ecosystems.
A recent global survey by Deloitte Global and Forbes Insights, involving 350 business leaders, supports this trend. The survey found that 93% of respondents view companies as societal stewards, not just employers. Presently, 59% allocate between 1% and 5% of their revenues to purpose-driven programs, with two-thirds increasing their budgets for such initiatives in the past two years. Additionally, 95% plan to take stronger stances on social issues in the year ahead.
Deloitte Global Chairman David Cruickshank highlights that it's empowering to see business leaders discuss societal impact alongside traditional priorities. He notes this represents a shift in how purpose and profit are viewed, emphasizing that they no longer need to be at odds but can coexist in a company’s strategy.
While many societal impact programs are driven by genuine altruism, 58% of executives also measure their success based on the positive impact on profitability, nearly as much as the benefit to the program’s beneficiaries (55%). Talent-related issues, such as improving computer literacy and technology access, are prioritized over larger-scale challenges like global warming or poverty, which may be harder to address with immediate results.
The research suggests that 2019 will see more vocal and action-driven C-suites, with social responsibility becoming an increasing business priority. This raises the question of whether long-term social impact goals can coexist with short-term financial performance pressures.
Leadership and Strategy
The survey reveals that 46% of executives believe CEOs are the primary drivers of societal impact programs in their companies. However, while the CEO’s leadership is crucial, it can be challenging to move from vision to execution with measurable results. Interestingly, 45% of executives believe businesses are investing more in social impact because they have the financial resources to do so. This creates a balancing act for CEOs who must deliver short-term shareholder returns while making meaningful investments in social initiatives. Long-term social strategies can only succeed if organizations have strong foundations to implement them effectively.
The Link Between Profit and Purpose
Companies are increasingly taking a pragmatic approach to evaluating their societal impact efforts, equating factors like profitability, employee retention, and client acquisition with the number of beneficiaries served, locations impacted, and funds donated. This indicates that many leaders see doing well and doing good as interconnected. Notably, employee retention ranks second in assessing the success of societal impact programs, consistent with previous research showing that employee engagement is a top factor in evaluating the ROI of inclusive-growth initiatives.
Companies are also more likely to target communities where improvements benefit their operations, with 64% focusing on locations where they have a presence, compared to 28% for areas with a more generalized need.
Talent-focused initiatives, such as improving computer literacy and technology access, are the most urgent societal issues for companies. These efforts not only provide social benefits, like increasing access to opportunities and reducing income and gender inequality, but also help prepare the workforce for the challenges of Industry 4.0. The survey indicates that 90% of organizations have formal programs addressing job creation and mentorship for underserved communities.
Collaboration for Impact
Despite the emphasis on talent-related programs, a report from Deloitte Global and the Global Business Coalition for Education predicts that over half of the world’s youth will lack the skills needed to participate in the workforce by 2030. To help ensure future generations are prepared, businesses may need to form partnerships within and across industries. While collaborations between businesses are not new, they are less common in the context of societal impact. Generally, business leaders prefer to collaborate with nonprofits and NGOs rather than other companies.
Additionally, companies do not always vet their partners for their societal impact efforts. While two-thirds of survey respondents consider a company’s values and social programs when choosing business partners, fewer than a third prioritize social policies when deciding between vendors.
Though businesses are increasingly committed to social issues, they often approach these initiatives with an eye toward both long-term and short-term benefits. CEOs, who are responsible for both setting social agendas and delivering shareholder value, play a pivotal role in balancing these priorities. Some business leaders have found success in aligning social programs with core business strategies, ensuring these initiatives endure beyond a CEO’s tenure. There are also opportunities for businesses to take a more active role in addressing pressing global challenges. To maximize their impact, executives may need to rethink their approach to societal engagement and collaborate more broadly with stakeholders both inside and outside their business ecosystems.
Companies