Turning Risk into Opportunity as Businesses Grapple with Social Upheaval
As social justice incidents and general discord and divisiveness across society have increased, a growing number of companies are feeling pressure both from their employees and their customers to take a stand and provide leadership.
It’s not enough to issue a statement and be on one’s way; as numerous polls have shown, today’s stakeholders want to see the companies that employ them and sell them products take real, tangible and measurable steps to affect social change.
A recent study showed that 63% of Americans expect companies to provide leadership on social issues, and that 82% of companies want to do right by their workers, customers, community and the environment.
However, the range of issues has turned traditional crisis communications on its head, and at present, the survey suggested, only about 37% of companies think they are doing a good job responding to social issues as they arise.
Line this statistic up alongside another — that 72% of Americans said they would remember companies that took missteps in response to issues related to the COVID-19 pandemic, the economic security of their workforce or racial injustice, and it’s easy to understand why an increasing number of companies are realizing the importance of connecting compassion with corporate risk mitigation.
Recently, The Well News caught up with the former diversity, equity & inclusion expert at a global pharmaceutical company who recalled when she joined the company just a few years ago, it had no strategy for addressing what went on beyond the walls of its facilities.
“They really didn’t do anything when these larger, societal situations arose,” she said, speaking on background.
“Their inclination was always to be conservative and not to respond to the events of the day, and in fact, the driving notion was ‘Why would we involve ourselves with the outside?’” she said. “In their view, employees came to work, at least in part, to escape the noise of the outside world.”
That all began to change with the Pulse nightclub shooting in Orlando, Fla. in June 2016.
“I think what happened then, and has continued to happen since, is that while the social issues we all grapple with haven’t changed, they’ve been elevated to such a level of consciousness that we really can’t turn them off,” the expert said.
“At the same time, I think the marketplace has changed,” she said. “In a marketplace where we have more and more companies competing against each other, consumers become more empowered and they begin to ask themselves, ‘Well, what am I really aligned with?’
“As soon as consumers started saying, ‘I’m going to shop at Target rather than Wal-Mart, because Target is more aligned with my values,’ companies had no choice but to begin addressing these issues and present themselves as taking a stand.”
“Which isn’t to say there still wasn’t risk involved. But it’s actually more of a risk not to do or say anything,” she added.
For the sake of this article, a social risk will be defined as a risk in which a certain constituency is having their human rights threatened or there’s a situation in which a group of people is suffering from inequity or a lack of access to things they need like an education, health care, or simply tranquility.
These risks are considered related to the company either because it is directly or indirectly involved in creating the situation, or because they impact a company’s key audience, or because the company can take action that will influence the situation in a positive or negative way.
Of course, winning an argument over whether a company should address a social risk is likely to get one directed to the company’s legal department, where the questions are likely to be “Why don’t we have any social risk models?” “Why don’t we have a framework?” and “Why don’t we have a branching model?”
In the case of the pharmaceutical company’s expert, the answer was to call Steve Rochlin, CEO of Impact ROI and a senior advisor to ROKK Solutions.
“You see, I’m very passionate about this subject,” the expert said. “Bringing in outside counsel, if you will, immediately took the onus of subjectivity out of the equation.
“Tactically, I knew that bringing in a group like Impact ROI, a professional group with a deep base of research to back up its statements, was the quickest way to get to yes in the corporate culture I was dealing with.”
So what kind of environment were Impact ROI and ROKK Solutions walking into? The company’s Diversity, Equity & Inclusion expert said one of her employer’s informal, but quite serious slogans was that they “don’t want to make news.”
“Everybody in-house understands that, we are not going to make news,” she said.
Among the first things Rochlin wanted to know was how the company’s offices defined risk? What were their concerns about what the company could lose by taking a position on a hot-button issue, and what areas did they absolutely want to avoid.
“It makes a world of difference when you have someone like [the expert] to work with,” Rochlin said. “Someone who is uniquely able to blend a very, very strategic mindset with an incredible empathy for the employees, and where they are, and who also understands where the trends are going and can, on top of all that, effectively manage the challenging psychology of the leadership.”
Once he gathered all the intel he needed, Rochlin and Lindsay Singleton of RoKK Solutions developed a framework, weighted to reflect the company’s current level of risk tolerance.
“When we think about putting these kinds of models together, there are a few challenges that companies are experiencing, among them an incredible lack of discipline, process focus and rational objectivity on these issues,” Rochlin said.
“That’s understandable. These are highly emotional issues that tap into core value sets,” he continued. “And what we’re also seeing from a lot of the companies that we work with, is that, even if they have a successful process that allows the company to come together to form a decision about how to respond to one of these social issues, they find that it is a unique experience, and only applies to that one topic.
“And what happens in a case like that is when the next topic comes along the next week, the experience of making a decision on how to respond is 180 degrees opposite,” he said. “You literally have employees at each other’s throat, attacking each other and calling each other out …. Focusing on criticism and emotion.”
What Rochlin offers such firms is a way to navigate the process in a more efficient, repeatable and organized way.
As part of what Impact ROI and RoKK Solution call their STAR decision-making system, the strategic partners scour the marketplace and take a deep dive with their client’s internal stakeholders to understand the key issues and threats as they stand today, and as they are likely to evolve.
Then they work with cross-functional teams within the client company to develop a custom response framework, aligned with the organization’s unique set of issues and business priorities.
“Then we pressure test it, asking the tough questions and building a robust decision-making system,” SIngleton said.
Oftentimes, at this point, the only other challenge in formulating a company’s social impact communications strategy is getting final buy-in from the company’s CEO.
Again, Rochlin said, understandable.
“They feel they’re being put on the spot, and feeling very, very vulnerable,” he said. “Not only do they have to come in and referee internal disputes, but they then have to put themselves and their own reputations on the line to be the spokespeople for these issues.”
“And that’s uncomfortable for these individuals because they don’t want to admit that they’re not perfect and experienced and capable in all things, but on these social issues, they really do feel out of their depth,” Rochlin said.
“One way we address this is by getting them to start thinking of social issues as they do other organizational risks, and that you need to engage your lawyers, your risk management team and so on,” he said. “Once you get to that point, it becomes a little bit easier to try and engage the company and bring together cross functional teams that have different kinds of expertise and knowledge, and put them together in an organized way. So they’re bringing together their skills, their lived experience, but also their competencies in a way to evaluate with some objectivity what these social issues are and how they relate to the company.”
Rochlin explained that at this point, he and his clients can start to create “evaluative mechanisms” that allow companies to assess whether or not a social issue rises to a certain level of intensity that requires a response.
“Part of this is understanding the stakeholders, both internal and external,” Singleton added. “So much of the pressure to act is coming from employees, but there are also investors and even policymakers to consider. The backlash against companies that spoke out about the Georgia voting law is particularly instructive here.”
Once the evaluation phase is done, Impact ROI and ROKK Solutions can supply the client with another tool that will rate the level of risk identified and give it a series of choices in terms of the kind of responses it can make.
“The response might be issuing an internal statement, issuing an external statement, it might be changing your organizational policies, and processes. It might be doing something related to your product. It might be making some kind of corporate social responsibility, donation or engagement, or it might be something more substantial, where you’re really changing your strategy,” Rochlin said.
“Sometimes the best action is no action at all,” Singleton said. “But if you’re going to act, you better get it right. That’s where strategic and crisis communications come in.”
“What the most sophisticated companies are understanding is that a lot of times these kinds of issues arising are actually indicators of failures in the marketplace that they can productively take advantage of in a way that helps the bottom line and also helps people in need. And what’s wrong with that?” she said.
Disclosure: The Well News is partially owned by Kristen Hawn, a partner at ROKK Solutions.