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The importance of corporate support for both CAVE and other community centered organizations are a key ingredient in the succession to improving social justice in our country. The below abstract details the positive benefits of community involvement for corporates. If you and your business would like to get involved, contact us at info@communitycave.com. 

The new mantra for success

Daniel Muzyka and Darcy Rezac

The Globe and Mail

June 25, 2007

While recently attending an international conference, we ran into the CEO of a struggling manufacturing company - call him Bill - who had just been sacked by new owners. He was still dazed by it all. After all, he had been president for 10 years and had posted admirable growth and excellent profits for all but the last year of his tenure. He had even been the president of his industry association and made the cover of an industry magazine. His outplacement counsellor encouraged Bill to attend this conference in order to network.

The problem is that he had never been engaged in his community and wasn't comfortable networking outside his close circle of contacts. As a result, he had not contributed to the social capital in his community - which reflected both on him and his company - and he lacked the network to help him and his company when problems arose. Bill was a classic "Silo CEO" who was respected for his good leadership skills, narrowly defined, but who lacked both the motivation and skills to engage in his community.

Bill and his company had embraced the popular mythology that profit was the sole objective of any business. Early in his tenure as CEO, Bill decided to resign his firm's membership in the chamber of commerce and cut back staff involvement in all community activities, a common practice among his industry colleagues. His personnel were expected to focus their time and energy, without distraction, strictly on actions that would directly enhance the bottom line and therefore, maximize shareholder value. Bill and his company had thus concluded that maximizing shareholder value was best served through community disengagement. After all, aren't society's problems ones that government and private citizens - on their own time - deal with by taxes and individual contributions to the United Way?

The truth is that the business of business is much more complex than what these simplistic, and misguided, beliefs allow. What some don't realize is that this management theory, popularized in the 1980s and 1990s by some Wall Street pundits and celebrity CEOs, is now under attack. It neither maximizes shareholder value nor social capital in the longer term.

Conventionally accepted management theories that de facto marginalize community engagement in the name of shareholder value have recently been challenged. The late Sumantra Ghoshal of London Business School maintained that such flawed management theories contributed to the well-documented failures at companies like Enron, Tyco, WorldCom and others. Mr. Ghoshal, along with McGill University's Henry Mintzberg and the late Peter Frost from UBC's Sauder School of Business, argued for greater recognition of the human aspects of business and the need for a broader definition of corporations' stakeholders, and the importance of these stakeholders in creating shareholder value.

"Disengaged thinking," like Bill's, is a holdover from incomplete management theories and common practices from the last century. They are as inappropriate now as they were then. If a corporation is to be sustainable and successful over the long run it must take a multi-stakeholder approach. Of course, shareholders are important and satisfactory profits necessary. But successful managers and organizations are increasingly cognizant that connectedness to community not only enhances the civic and economic environment, it can also be essential for the company's reputation, value creation and bottom line.

The importance of individual and corporate engagement has been well documented over the past decade. Harvard's Robert Putnam chronicles compelling research in his book Bowling Alone: The Collapse and Revival of American Society. The fact is, disengagement has been widespread, starting about 40 years ago. For example, club meeting attendance, political involvement, voter turnout, PTA membership, philanthropic giving and volunteerism are all down, and substantially. Imagine Canada shows that a mere 12 per cent of Canadians do fully 76 per cent of the volunteering in this country. It seems as a society, we have withdrawn into our respective silos - just like Bill - to "focus."

The benefits to society of engaged individuals and corporations are clear. Well-trained volunteers bring a wealth of expertise and perspectives to the workplace as well as helping their communities, where the firm's customers and employees live and work, and realize social and economic goals.

Engaged companies benefit through improved brand awareness and image, and thus increased sales. They also gain from improved employee engagement, realized through increased retention and enhanced recruitment. Finally, it is reasonable to expect that the happier the community is with a business, the more protective it is of that business.

In the 1940s, Johnson & Johnson formalized its own views on public and social responsibility. Their credo highlighted the company's responsibilities to four key stakeholders: its customers, its employees, the communities in which it operated, and finally, its shareholders (i.e., the shareholders will benefit if we do everything else right). J&J's credo remains a cornerstone of its corporate culture today, and a key ingredient to the firm's long-standing success as a sustainable enterprise.

For the individual executive and employee, there are also sound benefits to engagement. They gain valuable expanded networks and new skills. In addition, employees also achieve a sense of purpose that is necessary to their personal sense of self-worth and wellbeing. Non-work-related group activities have also been shown to enhance teamwork within companies and to strengthen individual bonds with organizations. There is research that demonstrates the value of engagement on health, both physical and mental.

In the end, we make a simple case: Being engaged with all our stakeholders, including the broader community, best enhances corporate wellbeing and long-term shareholder value. The single-purpose mission, so fashionable in the late 20th century, which had executives focus solely on 'minding their own business' - while ignoring everyone else - does not work in the long term. Bill learned the hard way that success in business and life requires a focus well beyond the bottom line.

Daniel F. Muzyka is dean of the Sauder School of Business where he is the RBC Financial Group professor of entrepreneurship and is immediate past chair of the Vancouver Board of Trade.

Darcy Rezac is managing director and chief engagement officer, Vancouver Board of Trade, author and international speaker on engaged leadership and networking.

"Never doubt that a small group of committed individuals can change the world, indeed, it is the only thing that ever has." ~ Margaret Mead