Publication: U.S. News and World Report
Date: 22 August 2008
Headline: How Your Business Can Help Save the World – and Reap
the Benefits
How Your Business Can Help Save the World—and Reap the Benefits
Q&A with Tim Sanders, author of "Saving the World at Work"
By Matthew Bandyk
Posted August 22, 2008
"Going green" is one of the most frequently used buzzwords in the business world today. Tim Sanders, a former
chief solutions officer at Yahoo! and a New York Times bestselling author, says "going green" is just one trendy
facet of a much bigger movement that business owners ignore at their own peril. We talked to Sanders about his
book Saving the World at Work: What Companies and Individuals Can Do to Go Beyond Making a Profit to Making
a Difference, which is due out in September. Excerpts:
Tim Sanders
(Ron Ranieri)
What is this revolution in business that your book focuses on?
I call it the responsibility revolution. Consumers across the country have become very sensitive to the impact of
how their dollars are spent. In other words, they want to make a difference. They're very alarmed about the
environment, communities in crisis, and people who don't make a living wage. Over the last 10 years, they've
started to use their money to make a difference. That's why the theme for the last year has been businesses going
green—that's what the customer wants. In my research, we've found that it even affects if someone is going to
take a job. Companies that have an outstanding reputation for being good for the planet and their communities are
going to get the brightest minds, the most profit, and they're going to attract the best types of customers—
customers who are loyal and willing to pay a bit extra. In a few years from now, this will be how companies win
and lose.
What's the best evidence that this is happening?
We did about a million pages of research across all the vertical industries to see how customer loyalty is changing.
Study after study proves that when it comes to people under the age of 30, they will not work at a company they
could not be proud to say they worked at. One example: Almost 97 percent of the top MBAs in the country,
Source: U.S. News and World Report © 2008 U.S. News and World Report. Permission required for reproduction.
Publication: U.S. News and World Report
Date: 22 August 2008
Headline: How Your Business Can Help Save the World – and Reap
the Benefits
according to a Stanford study, would work for less money for a company "with a better reputation for corporate
social responsibility and ethics." They use reputation as a tiebreaker between companies that are otherwise the
same.
In Europe or Scandinavia, this is already happening. They call it "ethical consumerism." The companies that
haven't made the leap there have suffered tremendous loss in market share.
The subtitle of your book says that businesses should "go beyond making a profit." But you also talk
about how becoming socially responsible actually helps profitability. So is this really about looking
beyond profits?
The problem is many big companies focus on just the next 90 days. They think the only thing they need to worry
about is making money for their shareholders. The problem is that will not resonate with tomorrow's talent. They
will view that as Gordon Gekko, and they will organize against it. But when you say, "We're going to return money
to the shareholders and make a difference to the planet"—when you combine those two—productivity goes up,
marketing costs go down, and profit lines increase because people spread your product by word of mouth.
Will people really pay a premium for companies that are socially responsible? Or is this just a fad?
You have to look at it over a 10-year period and not a 10-month period. Look at American Apparel and the apparel
industry. We're talking about a shirt that costs $4 more than the average. Patagonia, for example—many people
call it Patagucci. Here's a product line at least 25 percent bigger than its competitors. There is a lot of good
evidence that people will pay more. The Toyota Prius was highly successful even before gas prices went up.
But here's the second point: It's not so much that people will pay more but that people will require less marketing.
In a business right now, it costs somewhere between 11 to 18 cents on every dollar for marketing and promotion.
What we've found is that when you are doing the right things for the planet, taking care of your employees, and
giving back to your community, you unleash viral marketing. That's person-to-person and blog-to-blog marketing. I
don't know if you've ever seen a Google ad on TV. I haven't. Google spread by word of mouth.
How do small businesses play into all of this?
I think this could be a new renaissance period for small businesses. It all comes down to your reputation. Our
research says that how people feel about your company's social standing determines everything. A small business
has an advantage already. They can market what they're doing to the local community with credibility. You should
have seen how hard it was for Wal-Mart when it rolled out its sustainability program.
Second, small business people can retool their businesses faster. A lot of the stuff we do is highly wasteful. In the
book, I talk about this small restaurant chain in Ohio called Figlio's. For it to become sustainable and start to get
Source: U.S. News and World Report © 2008 U.S. News and World Report. Permission required for reproduction.
Publication: U.S. News and World Report
Date: 22 August 2008
Headline: How Your Business Can Help Save the World – and Reap
the Benefits
attention in the press for it to grow, it had to make some changes. It had to make radical changes in how stuff was
disposed of and to switch from disposable to biodegradable. But they did it, and they were able to do it much
faster than the Applebee's or Chili's down the road because there it would take months to even get those kinds of
conceptual changes approved.
What about in terms of going green? What advantages do small businesses have there?
Going green cannot be done by the CEO alone. Your people have to participate. Here's an example. There was a
heating and electrical contracting company called Johnson Hybrid, out of Texas. They made a radical change.
They created eco-profit-sharing. This is something you can do as a very small company. You say, "These are our
electricity costs today, these are the conservation methods I want all our employees to participate in, and at the
end of the 90 days we will calculate the savings, and we will pipe them back to the employees." By doing that you
completely rewire the incentives inside the company, and you will see a lot of innovation going on.
What are some other practical steps that small businesses can take to take part in this responsibility
revolution you're talking about?
One of the first things a small business can do that a larger business has a tough time doing is guaranteeing
health coverage. For the small business, believe it or not, it's not any more difficult than it used to be because of
the rise of the small-business association.
Businesses can also take advantage of social responsibility by creating more access to their resources to the
community. For example, a small restaurant can be a community eating place, especially for nonprofits making a
difference. For a big company, it's hard to justify, but for a small company, it's easy to do. A lot of small businesses
were built by supporting community organizations like the United Way.
The last thing is waste elimination. Somewhere between 20 and 40 percent of your money is wasted on legacy
habits that are done just because they're convenient. A small business can go after those sacred cows. One
legacy habit has to do with companies that have trucks that deliver their products. They idle all day long. Every
time they stop and make a delivery, they leave it on. Very small companies have realized, though, that's a legacy
idea that doesn't making any sense. Almost 30 percent of gas that a truck uses is idling. Green Mountain Coffee
Roasters in Vermont saved 5,000 gallons of gas in a first year after it told its drivers to turn off their trucks. That's a
very small fleet of trucks in the Northeast. A Fortune 500 company can't just announce one day they're going to do
that. They have to go through the labor union and layers of management. But a small-business owner can change
that on a dime.
Source: U.S. News and World Report © 2008 U.S. News and World Report. Permission required for reproduction.
Publication: U.S. News and World Report
Date: 22 August 2008
Headline: How Your Business Can Help Save the World – and Reap
the Benefits
MBAs Seek Caring, Ethical Employers
The fall of WorldCom, Enron, and Arthur Andersen, and the public humiliation of Kenneth
Lay, Dennis Kozlowski, and Richard Grasso have caused the passage of the SarbanesOxley Act, prompted the New York Stock Exchange to create new corporate governance
standards for listed companies, and spurred major firms like the Walt Disney Company to
adopt new, stringent, and wide-reaching guidelines for corporate ethics.
These events also have dramatically changed the way that MBAs view their job choices.
A survey of more than 800 MBAs from 11 leading North American and European schools
found a substantial number were willing to forgo some financial benefits to work for an
organization with a better reputation for corporate social responsibility and ethics. The
research was by the School's David B. Montgomery and Catherine A. Ramus of UC
ILLUSTRATION BY
LEIGH WELLS
Santa Barbara. "We were quite surprised by these results," said Montgomery, the Sebastian S. Kresge Professor
of Marketing Strategy, Emeritus, and also dean of the School of Business at Singapore Management University.
Attempting to figure out what influences MBA job choices is not a new activity. Researchers in the 1970s and
1980s used the advanced market research technique of conjoint analysis to examine the relative importance of
such things as financial compensation, the geographical location of the work, the volume and extent of business
travel, and opportunities for advancement. There was evidence of substantial predictive validity from these studies
indicating that conjoint analysis is an excellent tool for determining which attributes are most important in job
choice decisions.
But missing from the earlier conjoint studies were attributes that the professors believed might affect MBA job
choices in the 21st century. Montgomery and Ramus' most recent study explored whether a reputation for high
ethical standards or caring about employees, environmental sustainability, and community stakeholders makes an
organization more attractive to MBA candidates. They also examined whether intellectual challenge of the job is
an important selection attribute.
"There were no previous empirical studies that indicated how important these additional job choice-related factors
might be," Montgomery said.
The results were stunning: Intellectual challenge topped the list as the most important attribute for MBAs in their
job choice decision. Interestingly enough, the financial package was only 80 percent as important as intellectual
challenge.
Source: U.S. News and World Report © 2008 U.S. News and World Report. Permission required for reproduction.
Publication: U.S. News and World Report
Date: 22 August 2008
Headline: How Your Business Can Help Save the World – and Reap
the Benefits
Even more surprising was that reputation for ethics and caring about employees both rose to the top third of the
list of 14 attributes, proving to be approximately 77 percent as important as the top criterion of intellectual
challenge. Moreover, more than 97 percent of the MBAs in the sample said they were willing to forgo financial
benefits to work for an organization with a better reputation for corporate social responsibility and ethics.
How much were they willing to give up? Again, the numbers were surprisingly high. On average, MBAs were
willing to forgo 14 percent of their expected income.
Just as expectations of the public with regard to corporate social responsibility have changed dramatically in the
past several years—as a direct result of the Enron and WorldCom debacles, among others—so, too, did Ramus
and Montgomery find that MBAs' expectations changed. A preliminary, pre-Enron study of the subject found that
94 percent of the MBAs were willing to forgo an average of only 12 percent of their income to work for ethically
and socially responsible companies—a number that grew nearly 20 percent in the 2003 final report.
What does this portend for the future? There is a strong argument for firms to become more ethically and socially
responsible in order to attract MBA candidates. There are important practical implications for both recruitment and
retention related to maintaining a reputation for caring about employees and stakeholders; for a commitment to
environmental sustainability; and for providing products and services that are considered ethically sound. MBAs
want jobs where they can be intellectually challenged, but they prefer positions in organizations that demonstrate a
set of socially responsible values in the way they do business.
Human resources and career experts already have been advising corporations that ethics is important to the best
and brightest job hunters of the future. Indeed, a poll of career transition and career management professionals in
26 countries found that 82 percent cite corporate leadership ethics as of critical importance to job seekers, and
that therefore ethics is fast becoming a major factor in the battle for top talent, according to a recent global survey
by New York-based consulting firm DBM.
"The big surprise was that no one thought that corporate ethics was all that important" to jobseekers, said
Montgomery. Conventional wisdom dictated that the major incentives to join a company were financial, financial,
and financial. The implications? "Everyone thinks they know that MBAs are avaricious and greedy. And while no
one is claiming that they are perfect, it turns out that MBAs are willing to forgo a significant percent of their income
to be more moral across a number of dimensions."
ALICE LaPLANTE
Source: U.S. News and World Report © 2008 U.S. News and World Report. Permission required for reproduction.