In our third podcast on The Responsible Technology Firm of the Future, we focus on corporate social responsibility. Brand is built on trust. How is corporate social responsibility affecting that trust? Are companies proactive enough in setting up responsible policies, with boards engaged and setting the tone from the top? Is the lack of diversity – particularly gender diversity – affecting the performance and, indeed, the future of technology companies? What is humane digital transformation? Is social responsibility commensurate with the impact tech companies have on society and individuals? These and other questions are the topic of a conversation with Protiviti leaders Gordon Tucker, Jim DeLoach and Matt Moore. Full transcript provided below.
Responsible Technology Firm of the Future – Corporate Social Responsibility
Kevin Donahue: Welcome to a new edition of Powerful Insights and the third podcast in our series on the Responsible Technology Firm of the Future. This is Kevin Donahue, a Senior Director with the Protiviti Marketing Group.
I recently spoke at length with a number of managing directors and leaders from Protiviti about key issues and considerations for executive management and board members with organizations in the technology industry. These companies are facing new demands to build stronger corporate governance, compliance and social responsibility programs while continuing to focus on innovation. In this episode, our discussion focuses specifically on corporate social responsibility.
Gordon Tucker is a Managing Director with Protiviti and leader of our global technology industry practice. Gordon observes that tech industry organizations have faced their fair share of challenges and crises as of late, but nothing from which they cannot recover.
Gordon Tucker: I think when you look at the current landscape, let’s face it, a lot of the brands have been damaged. Not forever: They can come back certainly, but there is damage in the brands. There are negative issues around gender imbalance across the executive and board positions, the lack of diversity, all of the consumer data issues that have come up and the security around that, lack of controls around social media sites, and a variety of other corrosive issues that have found their ways into these organizations. My point of view is that, fairly rapidly, companies could recover from this in the tech industry, as they have demonstrated over and over again in how they’ve driven change across numerous industries. So, I hold a lot of hope that companies can, really quickly, address these issues.
Kevin Donahue: Jim DeLoach, a Protiviti Managing Director, is a member of our solutions leadership team and leads our global thought leadership program. He agrees with Gordon’s comments, noting that the board needs to take the lead in ensuring these issues are addressed.
Jim DeLoach: The board and the tech industry have the opportunity to set the tone and ensure that this is a priority for the CEO and for the executive team. It’s all in the agenda that the board establishes.
I think it does suggest that when you look at the board’s approach to oversight, if the emphasis is on performance and reporting, then that’s a lost opportunity. The emphasis here really needs to be on strategy and policy. There are a lot of policy questions around this. Some within the industry are referring to this as the ethics problem, the ethics issue. Are we just going to continue the unrelenting pace of change and implement technology regardless of what the consequences might be? Or are we going to try to approach things a little bit more thoughtfully? That’s a question that is being raised outside of the industry by very powerful stakeholders. So, this is a matter of being proactive as opposed to having to react to artificial boundaries set for the industry, which would not be a good thing for the industry.
I think part of it is, “Is the board future ready?” There’s this term that I am hearing in board circles. Is the board future ready? So, this explains, then, the impact of the need for technology-related skills, specialty skills, whether someone’s sitting in a seat on the board, or whether it’s accessing outside experts. That certainly impacts the speed – again, I think the danger is that the board just continues with business as usual and allows the pace to be set by a CEO who may be focused on business as usual.
Kevin Donahue: When it comes to corporate social responsibility, an increasingly critical issue for any organization, and especially those in the technology industry, is diversity and inclusion, particularly in the so-called STEM fields: Science, Technology, Engineering and Mathematics. Gordon Tucker explains:
Gordon Tucker: Women make up half of the U.S. college-educated labor force, but account for just under 30 percent of employees in the STEM fields, which, just on its face, doesn’t seem to make a whole lot of sense. Furthermore, what surprised me when I went through and did some background research on this is that the percentage of women in STEM fields has actually fallen over the last 20 years or so, from the mid 30s to 25 percent. So, something foundationally is happening in terms of graduating with a STEM background and then continuing in that field. So foundationally, that’s an issue.
Those in the STEM fields, those with greater balance of gender on their board and in their executive management suites, perform better, return better. Then, I think it has to be said that, for a lot of the negative headlines we’ve seen around certain companies, there’s a cultural impact, a reputational impact for companies that operate in a male-dominated way.
It is not hard to see the direct-line connection between fewer women at executive levels and the behavior, if you will, of executive management teams. So, I think culturally, it’s essential. It reflects society. Frankly, I think the products and services that come out will be better because they’ll be appreciated and adapted by more people in society. So, I just think it’s inherent that having a better balance across gender makes all the sense in the world for these companies, and frankly, all companies.
What it takes is kind of a bold approach by companies to really focus on creating balance within their organizations. There are many, many good examples in the technology industry of companies who’ve taken a hard look at their own situation and, whether it’s a pay disparity or whether it’s just a simple disparity in the balance of employees, have gone out, addressed it, and fixed it. And they come back and they look, year after year. “Are we doing it well? Are we maintaining that balance?” When they don’t, they correct it.
Kevin Donahue: Protiviti Managing Director Matthew Moore is the leader of our Risk and Compliance practice. Matt notes that on top of the points Gordon makes, there are important brand reputation issues to consider.
Matthew Moore: Brand is predicated upon trust. As these technology companies have really expanded and grown, the impact they have on society, in general, and on individuals, in particular, has grown at an even faster rate. With that impact comes a great responsibility to protect the customer’s impact, to be responsible contributors to society. Frankly, that responsibility extends to the assets that their customers entrusted them, data being one of those. So, it’s really viewed as integral to and consistent with the importance of the tone at the top, managing the brand and reputation. Not so much to prevent bad things or negative outcomes from occurring, but more so to elevating and strengthening the brand, enhancing the reputation to build further trust with the societies that these companies are impacting, and then ultimately, the customers that are utilizing their platforms, that are integrating them into their daily lives and becoming, essentially, pretty dependent upon the products, the services and the platforms that these companies are providing.
Kevin Donahue: Another important corporate social responsibility issue for technology organizations to address and manage is the potential displacement of workers resulting from new technologies. Protiviti has termed this issue humane digital transformation. Jim DeLoach explains:
Jim DeLoach: Continuous digital transformation will drive the need for retooling the workforce, deploying new labor models, and managing the effective change on the employee experience and corporate culture. When you look at the incredibly rapid pace of technological advances, questions arise as to the impact of products and services offered by the largest technology companies on our society. This is the conversation that touches on such topics as the effects on mental health, on our democracy, social relationships, and even children. This conversation has found its way into the hallways of Congress through highly effective lobbying and continuing communications efforts. The point is, for the tech giants, and quite possibly, companies driving artificial intelligence capabilities, they cannot ignore the ongoing debate regarding unintended consequences.
Kevin Donahue: Gordon Tucker concurs. He sees this as an opportunity for the technology industry not only to fulfill this important responsibility, but also to lead the way for how other industries address this issue.
Gordon Tucker: This is coming. We can see it coming. I believe the tech firms, as innovative as they are, can lead in the space of, “How do we retain the dignity of people that comes from work? How do we retrain, set a new skill set, in their careers?” There are jobs that we don’t even know about yet that are going to emerge. So staying ahead of that, and again, preparing people for the inevitable is a critical aspect for the board and for tech companies overall.
What we see, especially at the emerging level, there’s an energy that has created these companies and has driven them to be successful as emerging companies. Once they head into a public company status, all of a sudden, there’s a little bit more oversight and, some might say, bureaucracy that comes down through reporting, etc. Oftentimes, there’s a cultural shift that takes place within companies at that point in time. It can be jarring, to be honest, for these young companies that have grown up and bootstrapped and created these huge innovations. So, preparing for that and not harming the culture that brought them there, but adapting to the new reality, is an important thing. That does not change as these companies grow and become much more established entities in our culture. There is a responsibility. I think the responsible term is a good one. The breadth of their impact on our lives is massive. With that comes a sense of responsibility.
Kevin Donahue: For more information, read our Responsible Technology Firm of the Future series and listen to other podcasts in this series, all of which are available at protiviti.com/techbalance.