It has been two years since the Business Roundtable’s statement on the purpose of a corporation, which read that companies should be concerned about serving all their stakeholders, not only their shareholders. This represents a mindset shift in business, consistent with the trend toward “stakeholder capitalism.” It has been especially evident during the global events of the past year and the ongoing pandemic, which have spurred some corporations to step up their philanthropic support and community service.
Grab, Southeast Asia’s ride-hailing company, demonstrates a tangible example of corporate purpose with heart for its stakeholders. In addition to transportation, the company offers food delivery and digital payment services via a mobile app. Although the company has grappled with some problems, it is interesting to learn how a focus on social impact led Grab to financial services. The company set up their drivers with bank accounts, thereby enabling them to receive their paychecks through direct deposit. This filled a need for their unbanked and underbanked drivers.
Grab’s approach demonstrates a stakeholder-focused program. Why? Because its choice to recognize a stakeholder need and to meet stakeholders where they are illustrates an effort to build trust through affective symmetry. By aligning with its stakeholders’ needs, Grab strengthened emotional connections, and thus increased trust with their drivers.
At The American College Cary M. Maguire Center for Ethics in Financial Services, our research has identified that balancing symmetries in relationships is an important element of stakeholder culture within the financial industry. The Relationship Balance Model, developed by our Maguire Fellow in Applied Ethics, Caterina Bulgarella, helps financial institutions identify trust opportunities and understand how stakeholders use trust as an accountability mechanism in reducing asymmetries and/or creating symmetries in their relationships. When businesses put purpose before profit, they can lead the way in addressing social challenges, while innovating in new products.
For financial institutions, one lesson to learn from Grab’s example is to more proactively identify and act on unmet stakeholder needs. Financial institutions could start by questioning how their actions (or inactions) affect people in their organizations as well as people impacted by them. This approach flips the typical business case equation from a traditional view of “what’s in it for the business” to a stakeholder-focused impact analysis, as recently remarked in a commentary for Fortune written by Azish Filabi, executive director of the Maguire Center for Ethics.
Companies can be more stakeholder-focused through strategies such as collecting feedback through periodic touchpoints with employees and clients to learn insights about important elements of the employee and client experiences.
For employees, such feedback might raise opportunities for the company to support volunteering in the community or managing life transitions, such as the need for child care or elder care. For clients, listening to experiences highlighted by client support staff and using email to communicate regularly with clients may reveal life changes meriting hardship assistance, such as when a terminal illness affects a family financially.
Although I am not endorsing any company or their specific approach, I believe financial institutions can use these examples to self-initiate opportunities for purpose-driven innovation. We all have heard the expression “Be kind — you never know what someone else is going through.” This saying calls forth the intentional practice of empathy. What would society look like if financial institutions operated with a central focus on humanity — asking their employees and clients questions such as “What’s happening in your life right now?” or “What do you need most?” and then helping to meet those needs. It may be a pipe dream, but I believe financial institutions could act on the insights these types of questions provide to create opportunities that nurture an impact-minded stakeholder culture.
Financial institutions may also consider adopting a framework for connecting their business strategy to quality-of-life improvements for the betterment of society. Drawing from my own professional experience, what I aspire to in my own research and that which I’ve helped enable, I suggest considering the spirit of the National Science Foundation’s Broader Impacts Framework. It is a guide to help social, behavioral and economic scientists more effectively communicate their projects’ potential benefit to society.
Leaders in the financial industry might adapt this framework to ask and answer questions such as “Who can our products empower?” “Who benefits from that empowerment?”, and “What concrete steps can we take to make these broader impacts more likely?”
By thoughtfully considering and articulating the potential broader impacts of financial products and services, the financial industry can advance business and social good. It may also help shift stakeholder mindsets of financial services from an industry perceived as transactional to one that is transformational.