If having a positive social impact is something that gets you out of bed to go to work in the morning, you’re not the only one – almost a quarter of Australian corporate executives say “having a positive societal impact as the most important measure in evaluating their annual performance,” according to global research by Deloitte.
Deloitte has released its second annual global Readiness Report, Leadership in the Fourth Industrial Revolution: Faces of Progress. The report focuses on the ways in which business leaders are “adapting and preparing for the future and their attitudes towards societal impact, strategy, technology and talent.”
Proving that profit and social purpose can co-exist, over half (52%) of Australian business leaders invest in initiatives they hope will have a positive social impact to generate new revenue streams, while 9% say they do so to meet shareholder expectations. The survey also showed that 57% of business leaders in Australia say they have generated new revenue by developing or changing products or services to be more socially or environmentally conscious, Deloitte says.
The uptick in executives focusing on social impact has been a significant change between the first and second global report, said Robert Hillard chief strategy and innovation officer, Deloitte Australia.
“Last year to this year is the most marked changed that I’ve ever seen,” Hillard said. “Last year, I spent a lot of time castigating business that there wasn’t enough awareness of the major forces that are changing the environment in which they operate, this year there has been significant movement. You see that in a strong desire to bring trust to the fore, and that’s driving purpose.”
The report surveyed 2,042 global executives – 134 of whom were based in Australia last year. Survey respondents represented 19 countries from the Americas, Asia and Europe, and came from all major industry sectors, Deloitte said. All survey respondents were C-level executives, including CEOs/presidents, COOs, CFOs, CMOs, CIOs and CTOs. All executives represented organisations with revenue of $1 billion or more, with half (50.1%) coming from organisations with more than $5 billion in revenue.
The survey was conducted in the context of the recently finished Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, and it appears from responses that business is responding to community trust concerns: almost a quarter (24%) of Australian corporate leaders now rank having a positive societal impact as the most important success measure in evaluating their annual performance. Deloitte notes that employee satisfaction and retention came in at 30%, and notably higher than financial performance 16%.
Hillard points out that making positive social impact central to company strategy also improves employee satisfaction, which also enhances customer satisfaction.
“That has a positive impact on public perception, and with it a positive impact on how employees consider working for an organisation,” he says. “The debate in boardrooms has been, what is the legal responsibility? Can boards show a linkage between the decisions they’re making and their responsibilities as directors to look after investors?
What more and more research is showing is that linkage between sustainable profits coming from sustainable rep in the market, but also happy customers. … There is a big link between customer satisfaction and employee engagement, and that’s the link we’re focusing more on.”
Hillard notes that these considerations go beyond volunteering projects and pro bono work, and into the heart of corporate strategy.
“It is a lot more profound. That idea of donating volunteer time is just the base level,” Hillard said. “Certainly a lot of organisations have done that. What they’re finding is that when it’s just done as a bulk donation of hours to any cause, it doesn’t actually achieve any lasting change and it is good for their workforce, but it’s not particularly sustainable way to develop brand or culture.”
In conversations with boards and executive, Hillard said the questions are what are the aspects of the organisation that can have the most positive impact on society , and then how the organisation can amplify those aspects.
“That can be through pro bono activities, but it’s more likely it will be through lo-bono where work is done at a substantially reduced cost,” he said. “But it is also done through positive investment and enhancing the impact of their work. So we’re seeing financial institutions being more focused on what the outcome of where their capital goes.”
The report also found that 49% of Australian business leaders reported investing in new technologies to disrupt their market, compared with 33% globally. Additionally, 61% of executives believe they have permission from leadership to fail and learn in the context of innovation.
“You need someone who is out there to innovate and challenge and say how could or should we be using technology effectively,” Hillard said. “In the last year, you’ve seen so much media and focus on tech that the C-Suite couldn’t fail to take notice. The conversation is about the effect of technology on the future of work. We’re seeing government inquiries into in the future of education, we’re seeing engagement by business on STEM education, these are all an indication that executives are getting it. The survey showed a dramatic increase from last year to this year. The majority aren’t there yet, so we shouldn’t get complacent, but it’s just such a stark, positive lift.”
The global research also identified four types of leaders who are thriving in a technology-disrupted world:
- Social Supers are leaders who consider societal initiatives fundamental to their businesses. They have figured out how to ‘do well by doing good.’ They generate new revenue streams by developing or changing products or services to be more socially conscious, and they believe societal initiatives, more often than not, contribute to their profitability.
- Data-Driven Decisives are confidently leading their organisations in Industry 4.0, taking a methodical approach to strategy development and using clearly defined decision-making processes that incorporate data-driven insights.
- Disruption Drivers invest in new technologies to disrupt the market. These leaders are more likely to feel ready to lead in Industry 4.0, and take an assertive, hands-on approach to leadership. Disruption Drivers have holistic decision-making processes, a rolled-up-sleeves approach to talent and a comfort with the unknown.
- Talent Champions are leaders who understand their organisation’s skills needs, and believe they currently have the correct workforce composition. Talent Champions are embracing the responsibility to train their employees with a proactive approach, while emphasising society and ethics.
“What we’re trying to do is find something to put a handle on leadership types, and we recognise , that would recognise that executives aren’t all of one or the other,” Hillard said. “We are seeing organisations that are trying to lead and are trusted by being social supers. One of the things we advice particularly CEOs to do is you’re trying to move organisations, you have to go further than you want the organisation to go. If you have a trust problem, and you’re trying to give permission to middle management to make purpose something that is constantly measured, you’re going to have to go further and keep on talking about social goals over and over again. Those are the social Super’s supers that have emerged over the past year.”