Ross conference examines social impact of business
The Positive Business Conference, hosted by the Ross School of Business this past week, brought industry leaders, faculty experts and students together to discuss the influence of business on social issues.
Addressing an audience in the Robertson Auditorium last Thursday, Alex Edmans — a professor of finance at the London Business School — laid out the fundamental question for the two-day conference: “Do businesses exist for shareholders or society?”
He further questioned whether or not maximizing profit for shareholders precludes a company from improving working conditions for rank-and-file employees— as well as whether or not corporate social responsibility is simply a public relations buzzword with no bearing on the bottom line.
Over 370 people attended the conference, the majority of which were executives and managers from a variety of industries. Ten percent of attendees were international, hailing from Europe, Japan, Canada and Latin America. Over the course of the conference’s two days, participants heard from both industry leaders and faculty members about the use of business for positive social impact.
Edmans pointed to historical anecdotes as well as his own research to argue that profit and social impact are actually complementary in a manner that many — including top investment analysts — would find counterintuitive.
“Treating your workers well is costly, and that makes accounting and finance people mad,” Edmans joked.
Despite this percieved notion, his own research showed that companies with higher levels of employee satisfaction exhibited two to three percent higher growth than competitors in the same industry over a sustained period of time.
Edmans further argued that metrics of social responsibility — including employee satisfaction and environmental sustainability — are underrated predictors for a company’s long-term strength suggesting investors can incentivize responsible corporate practices while benefiting themselves.
“It is our responsibility as investors to support management’s pursuit of the long term by looking to the long-term ourselves,” Edmans said.
Jim Miller, Google’s vice president of global operations, emphasized how Google’s overarching mission statement emphasizes adding value to the world, rather than simply maximizing profit.
“Our mission statement is not to make money,” Miller said. “But it’s to organize all the world’s information— to make it universally available and put it to good use.”
Miller additionally attributed Google’s broader mission to its ability to generate long-term value, emphasizing the company’s continued startup employee culture and his efforts to power Google’s data centers with self-generated, green energy and advocacy for the broader adoption of renewable energy.
Miller also emphasized Google’s Moonshot initiatives — ranging from projects in computational genetics for cancer treatment to special utensils that allow sufferers of Parkinson’s disease to feed themselves. Though these ventures have little to add to Google’s core business and are unlikely to be profitable in the near future, Miller said they contribute to Google’s commitment to positively impact the world.
“This is not going to enrich the next generation of stock options or increase our market cap by a billion dollars,” Miller said. “But we think it’s something cool to go do.”
Hank Mercier, a 2005 Ross graduate and the vice president of sales at People Against Dirty –– commonly known for Method cleaning products –– spoke about aligning positive business practices with consumers' wants and needs.
Mercier expressed his desire for positive business not to be relegated to a niche market by explaining his own company’s ambitions to expand beyond its core.
"We are now the People Against Dirty, which is the largest green cleaning company in the world, which is also like saying it's the best Division III football team," Mercier joked. "We have no interest in being the largest green cleaning company in the world; we have every interest in being the largest cleaning company in the world."
Mercier also took issue with a business model he witnessed frequently.
"I wish companies spent more time developing great products than trying to figure out how to convince people to buy crappy ones," Mercier said, paraphrasing a quote from a professor at Northwestern University's Kellog School of Management.
Joshua-Marc Tanenbaum, a senior advisor at Tau Investment Management, attempted to ease concerns that taking care of employees was not profitable. Tanenbaum argued that the cost of neglecting workers is higher than the cost of taking care of them.
"Human turnover is very expensive," Tanenbaum said, referencing the 2013 Savar building collapse, which saw over one thousand workers die after the collapse of a building with failing foundations.
Business junior Emily Gorman said this example of human neglect in the business world was one of the biggest takeaways from the conference, pointing to the importance of positive practices.
"I think the most valuable thing I gained was that having these positive practices doesn't only help foster the humanity within organizations and help people really flourish, but it also has clear business implications that can really help people succeed moving forward," Gorman said. "I think that says a lot— that positivity can foster a healthier economy, which can be seen as counterintuitive at times."
Michigan alumnus Austin Anderson, now a consulting manager at Ernst & Young, said the conference better informed him on best practices for relationships with customers.
"I would say there's a couple of positive practices that I want to take back to my teams that I learned specifically, so I wrote those down and I'm going to start to try to implement them with my team," Anderson said. "Specifically in the way that you engage people and a lot of the things that don't take up a lot of time or don't have much cost to them; just giving people gratitude or giving them some recognition … that has a significant impact on how they feel, their engagement, their performance."
Cindy Danko, an administrative manager senior with the University Health System, said the conference allowed her to network with other business managers and learn about their best practices.
"I'm leaving here feeling very positive," Danko said. "I'll be back next year for sure."