Credit: Handelsbanken Denmark, CC BY-SA 4.0, via Wikimedia Commons
Trust isn’t a word most of us think of when considering large corporations, and research backs this up. The Pew Research Center found that only 29% of Americans trust large corporations and are far more likely to trust small businesses (86%). Americans root for small businesses because they see them as positive parts of their local communities, equating them with words like “local” or “mom-and-pop,” while they associate large corporations with words like “greed.”
Credit: From Businesses and Banks to Colleges and Churches: Americans’ Views of U.S. Institutions, Pew Research Center, Washington, D.C. (February 1, 2024)
Distrust in Business Quashes Potential
Trust from both consumers and employees is vital for success, and many business executives are unaware of just how much distrust there is. Business executives believe 90% of consumers trust them when it is only a meager 30%. The gap for employees isn’t as large but still exists. Executives are under the assumption that 86% of their employees trust them when, in reality, 67% do. Losing customer trust means risking them taking a chance with a new company, and losing employee trust leads to employees that pull back on effort, impacting the quality of products and services, operational efficiency, and profitability.
Trust is the cornerstone of profitability, yet it’s in troubling decline across industries. In an era where skepticism runs high, how can it be won back? Enter “corporate altruism.” The model of corporate altruism is a branch of altruism, the act of selfless concern for another’s wellbeing. It’s about putting social good at the forefront and profits second. Most companies will do well as long as it doesn’t affect their bottom line, but there are companies that go above and beyond and remain highly successful.
Business Can Be Done, and Done Right
Swedish Bank Handelsbanken and outdoor apparel maker Patagonia are two examples of this. Handelsbanken continues to outperform competitors with their model of focusing on the client and excluding cross-selling or promoting in-house products if they aren’t the best for their clients. During the COVID-19 pandemic, Handelsbanken staff reached out to customers to give financial guidance and worked nonstop in aiding urgent cases. Since 1900, the bank’s share value has multiplied by 1.9 million.
Patagonia’s founder, Yvon Chouinard, sold the company he owned for 50 years to use the profits to combat global warming. Now, the company’s stock is owned by a climate-focused trust and nonprofit organizations with the intention of protecting the planet. The company is expected to raise and donate around 100 million USD per year.
Altruistic Success Can Only Be Found Beyond the Bottom Line
How can these companies be successful when they aren’t focusing on profits? Corporate altruism is successful because the focus on employees, customers, and other stakeholders improves innovation and competitive advantage. Because corporate altruism promotes better connections and work relationships, they have access to more resources and information. This, in the end, positively impacts innovation. According to Newsletter Pro, companies using a corporate altruism model have happier employees as many offer generous benefits such as PTO and healthcare and promote a healthy work-life balance. These are all things that lower employee burnout, preventing the loss of employees. High-pressure companies that enforce a toxic workplace by discouraging the use of benefits or overloading employees end up spending more on healthcare costs, making this toxic environment more costly.
Focusing too heavily on profits can be a detriment to a company as well. This inevitably results in a focus on quick profits over long-term success, and this drive for money can lead to unethical decisions that end in costly lawsuits. Prioritizing employee well-being and social good not only enhances morale and loyalty but also customer trust. In the long run, corporate altruism isn’t just the right thing to do. It’s a smart investment.
Learning Cycle promotes a variety of programs to help deepen your understanding of DE&I. If you would like to know more about us, please click on About Us.
