GOOD LUCK, GENERAL POWELL. if you think getting Iraq out of Kuwait was tough, just wait until you try to get money and people out of corporate America to combat social problems. No matter how big a love fest the Presidents’ Summit for America’s Future turns out to be, don’t bet on corporate America’s becoming all warm and fuzzy and dedicated to charity after everyone goes home.
This has nothing to do with the Summit’s goals, which any reasonable person would support. It has to do with the way business is done these days in corporate America–or at least in the part of corporate America that’s owned by public investors. Most of the folks who run big companies are perfectly decent people who want to do the right thing. But the world in which much of corporate America lives isn’t set up for charity or mentoring kids–and it’s going to take much more than a conference to change that. That’s understandable. By and large, companies are for one thing, charities and government for another.
Corporate boardrooms are every bit as fashion driven as, say, the sneaker business. Everyone tends to follow the leader. Once upon a time the leaders were the folks who ran old-line companies that prided themselves on giving back something to the community. These guys–virtually all of them were men–made everyone else fall into line. In a few places, like Minneapolis-St. Paul, business is still done that way. “The message is “This is what we do here’,” said Jackie Reis, president of the Minnesota Council on Foundations. “There’s a lot of peer pressure.” During the recent Minnesota floods, for example, General Mills donated $50,000 to the Red Cross, 3M sent clean-up materials and Norwest Bank gave employees time off to help with sandbagging.
But this isn’t typical. These days, boardroom role models tend to be take-no-prisoners types like GE chairman Jack Welch, Microsoft’s Bill Gates or Sunbeam’s Al Dunlap. They aren’t big on corporate giving–Dunlap, in fact, rails against it as a confiscation of shareholders’ money. The emphasis on leanness and meanness seems to have been started by the wave of leveraged buyouts and hostile takeovers that swept the country in the 1980s. No matter how nice a company was to its community, raiders would turn it into toast if its stock price fell low enough for them to take it over. One of the first things these takeover types did was cut corporate charity. Forget the long-term good; we need money to repay our takeover loans. That set the tone. Rather than waiting to be taken over, many companies began chopping charitable donations as part of cutting “nonessential” costs to get their profits and stock price up.
Combine this pressure with the growing globalization of the world’s economy, which means that any competitor in any country can bite you in the butt if your prices get too high, and you can understand why many companies feel compelled to cut costs wherever possible. Fear–combined with greed, if you’ve got lots of stock options, as many CEOs do–will do that to you.
It’s obviously in the self-interest of business to get our social problems straightened out–if only because that would increase the number of people who can afford to buy goods and services. Spreading literacy and good work habits would also upgrade the quality of our work force. I think most chief executives would agree. However, I don’t think this ranks very high on their priority list. They think that being taken over or having their pay and perks cut if profits falter presents a more immediate danger to them than America’s underclass does.
Seattle offers a classic example of how the old concept of corporate charity has largely broken down. The city used to be dominated by industrial companies like Boeing, but high-tech companies like Microsoft are now the role models. “It used to be that the CEO of Boeing would call the CEO of Paccar [a Seattle truck manufacturer] or the Burlington Northern Railroad, and they would all fund each other’s project,” said Craig Smith, president of Corporate Citizen, a Seattle-based think tank. “Well, that system is falling apart. Bill Gates doesn’t play that game with Boeing, because they’re in different cultures.”
Or take San Francisco, where Crown-Zellerbach, once dominated by the mega-charitable Zellerbach family, fell on troubled days and was taken over in 1985 by Sir James Goldsmith, a corporate raider. Goldsmith sent Al Dunlap to straighten things out, and he axed everything in sight. “We would give employees time off to go out and volunteer,” recalls William Zellerbach, a top executive in pre-Goldsmith days. “Business leaders would get together and allocate what each business had to give. And that’s not going on anymore.” Retorts Dunlap: “When you create wealth for the shareholders, they can give some of it away if they want to.”
Even in Minneapolis, where the old order holds sway, companies have become less subtle about getting a return on their charity dollar. Consider Dayton-Hudson, the retailer that founded Minneapolis’s Five Percent Club–companies that donate 5 percent of pretax profits. Dayton used to give quietly. Now it widely publicizes its charity. For instance, a phone purchased at one of the company’s Target discount stores had a sticker boasting that 5 percent of profits “goes directly back into Target communities across the nation.”
I couldn’t get anyone from the Summit to explain why they think corporate America will suddenly change its ways. In an interview with my colleague Jonathan Alter, Colin Powell said, “Yeah, I’d like to give them a guilt trip. You’ve all been talking about less government and let the market work. Well, you’re the market.”
But the market isn’t very big on sentiment. Maybe General Powell will so wow them at the Summit that GE’s Jack Welch will become Nice Jack instead of Neutron Jack and Al Dunlap will metamorphose into Charity Al instead of Chain-Saw Al. Don’t bet on it, though. It’s more likely that much of whatever additional mentoring gets done will fall on the backs of middle managers and will become yet another one of their unpaid duties. Corporate fashion seems to be changing a tad–some companies have even felt pressured by Summit hype to make commitments, however feeble. And a lot of feeble commitments could add up to a few strong ones. Someday, maybe the prevailing corporate fashion will switch back to nice from the current nasty. Just don’t hold your breath waiting for it to happen.
