The last year has seen sharper shifts in public opinion about business, capitalism, and corporate responsibility than perhaps the entire previous decade. However, those changes were no surprise to Martin Whittaker of JUST Capital and John Gerzema of the Harris Poll, whose organizations track public sentiment closely. Both of these men sat down to talk with Ethisphere’s Tyler Lawrence about how 2020 accelerated public opinion towards stakeholders, especially employees, and how we may see those shifts play out going forward.
Tyler Lawrence: To start us off, can you both briefly introduce yourselves and your organizations to our readers?
Martin Whittaker: I’m the CEO of JUST Capital, and our mission is to build a just economy. We’re trying to get big companies to do more of the heavy lifting, to solve society’s most complex and intractable challenges.
John Gerzema: I’m CEO of the Harris Poll, which is part of The Stagwell Group and has been doing a range of research-driven thought leadership investigations into ethics in the economy in partnership with JUST.
John Gerzema, CEO, The Harris Poll
Tyler Lawrence: JUST has been talking about how 2020 offered companies the chance for what you call “the great reset.” Can you tell me a little bit about what you mean by that, and whether the public thinks it’s actually happening?
Martin Whittaker: 2020 was a period of resetting how we interacted with the world, what we prioritized, how our day-to-day lives were led. The economy was reset as well. Nobody really knew what the future held for a period of time. JUST put up a tracker to monitor what big companies were doing in response to COVID-19, and it generated a huge amount of interest in our mission. People wanted to know, “What are companies doing now to support their workers, their customers, the communities where they operate, all of their stakeholders? What does that mean in terms of how we rebuild?” At the same time, the pandemic and economic lockdown revealed divisions in society, and this was reflected by the George Floyd protests, creating a national movement around black lives. We found that 89% of Americans agreed that this was a chance for corporate America to hit the reset button and begin to think, what does an economy that serves all of its stakeholders actually look like?
John Gerzema: The economic and social dislocation that Martin talked about is really evident in our data. In Harris Poll’s JUST survey, 85% said the pandemic has exposed structural problems in American society. In another question, 8 out of 10 Americans said that the pandemic has “opened my eyes to acceptable and unacceptable corporate behavior.”
Against those two points, what was really interesting was how business came to the rescue. We saw this in other data. The companies that thrived in our Reputation Quotient survey were heavy on logistics, companies that kept America running during the pandemic. In our data, 72% of Americans trust companies more than the government to find solutions, not only to COVID, but to racial equality.
Martin Whittaker: One of the things we’ve seen is that the number of people who think that companies are actually prioritizing workers as a key stakeholder has gone up. It’s still a minority, 37% of Americans, but it’s double what it was a year before the pandemic. So, people do feel as though companies are beginning to look after folks other than their shareholders.
Tyler Lawrence: JUST’s annual survey asks members of the public to rank the issues they believe companies should focus on to create this more just and inclusive economy. In this year’s rankings, five of the top seven issues involved employees. Can you talk a little bit about employees emerging as the most important stakeholder?
Martin Whittaker, CEO, JUST Capital
Martin Whittaker: My own view is that the pandemic accelerated something that was already happening. This is our seventh year of polling and from the beginning, workers and work-related issues have been at or close to the top of the issues included. It comes down to very kitchen table things, like fair pay. How am I treated at work? Do I feel as though I have a path to upward economic mobility? Those are the things that matter to individuals. In 2020, “the S” in ESG was accelerated. Frontline workers kept the economy going. We reconsidered the value of jobs, and good jobs, and the people doing those essential jobs. I don’t think that’s going to go away.
John Gerzema: I think it really goes back to your first point about how the pandemic exposed inequities in society, giving us concepts like a “K-shaped recovery” and frontline workers. We described them as everyday heroes and people who were really adversely hit. That’s why in these stats you see an awareness—the same way that we raised social awareness toward systemic racism.
Martin Whittaker: We have also been tracking the market performance of companies that do well on looking after their workers. Those companies that came into the pandemic already scoring well on our rankings, that we knew valued their workforce and invested in all the things you need to create a resilient workforce, they did better, and they’re continuing to do better.
Tyler Lawrence: There are five issues that you identify as all being employee-stakeholder related, including paying a living wage and providing workers upward mobility. What are the most serious companies actually doing to assess and act on this expanded notion of stakeholder performance?
Martin Whittaker: JUST tracks companies on what are they doing across 19 business issues. In the weekly JUST Report, we list what companies are doing. What we’ve found is that companies are at different stages on this stakeholder journey, that many believe that investing in workers, communities, the environment, customers is going to create value for shareholders.
It’s easy to be skeptical about what companies are doing, what they’re saying, and what they’re putting out into the public domain. I believe our job is to keep celebrating leadership, and continue to put the pressure on for disclosure and information, so the market can make its own mind up on who’s doing well and who’s not.
John Gerzema: When we look at our poll data, you see a significant shift in expectations among people of color and of younger people toward company action. For example, we asked Americans, “Which stakeholder should a CEO listen to most?” Across all respondents, 39% said customers, employees were at 28%, and shareholders were at 17%. However, when you look at the generation breakdown, 50% of Boomers say customers are most important, but Gen Z and Millennials favor employees.
Martin Whittaker: We’re about to enter proxy voting season for big publicly trading companies. Investors want it, as seen by the amount of capital flowing into ESG strategies. Those behind that capital are going to need to know that it’s having some kind of an impact.
Tyler Lawrence: We also have an interview with Judy Samuelson and in her latest book, she has this notion that employee voice is important for companies as a proxy for the concerns of society.
John Gerzema: Absolutely. I know from my private conversations that companies are using their employees as that barometer to try to test positions and understand the reactions. Employees at most large companies are highly diverse, a microcosm of society, and we see in our JUST data that you cannot be customer-centric without being employee-centric. Increasingly, consumers buy products from companies they admire. With social media, with the power of consumers, with the power of employees as activists, you are creating a new, very dynamic, highly influential stakeholder community that the companies need to listen to. A public company now today really has to understand what it means to be public.
Tyler Lawrence: On the topic of racial equity, what do we know about how the public grades the work that companies are doing right now? How does the public look at the relationship between the moral imperative for D&I and the bottom line?
John Gerzema: Our data shows that 36% of Americans believe that large companies have done enough to achieve racial equity in the workplace, while 64% say there is more work to be done. There is a significant gap between Black Americans and white Americans, with 58% of white Americans versus 83% of Black Americans saying that large companies have more work to do. There is also a significant political gap on that question: 81% of Democrats saying more work to be done, versus 39% of Republicans.
Martin Whittaker: We also know from our polling work and our interactions with companies that a lot of companies really are not quite sure what exactly to do. Last year, there was a huge amount of pressure on companies to do more. Putting out a statement in support of Black Lives Matter and making a donation to the NAACP clearly was not going to cut it. That’s one of the reasons why we created what we call a CEO Blueprint for Racial Equality which we’re now developing in partnership with PolicyLink.
We have released our first tracker on diversity, equity, and inclusion where we’ll be recording and logging what big companies say they’re doing. I hope that what happens in this case is we create a sense of competition. Companies want to do more; they want to be seen as doing more, and that creates forward momentum.
John Gerzema: To that point, we asked the question, “Do you think that promoting racial and ethnic diversity, equity, and inclusion in the workplace will ultimately have a positive, negative, or no effect on a company’s profitability?” And we found that 51% believed it will have a positive impact, and only 18% believed it would have a negative impact.
Martin Whittaker: Our research team has analyzed the performance and level of transparency among companies that have been leaders on D&I. We found consistent out-performance of companies who lead on those issues, not just in terms of share price but other elements of business and financial performance as well.
Tyler Lawrence: Thank you both so much for taking the time to chat.
About the Expert:
John Gerzema is CEO of The Harris Poll, a leading public opinion, market research, corporate, brand and reputation strategy firm and a pioneer in the use of data to identify social change and help leaders and organizations anticipate and adapt to new trends and demands.
Martin Whittaker is the founding CEO of JUST Capital and is responsible for the overall leadership of the organization. He is also co-founder and Board member of the CREO Syndicate, a Board member of the Carbon Disclosure Project U.S. and a member of the Forbes Finance Council.