Fireside Chat: Community investment benefits the business that invests
The Business Roundtable, a nonprofit organization formed by executive members of the top 200 companies in America to give guidance to U.S. corporations, released their 2019 Principles of Corporate Governance report in August 2019. This report was significant because the definition of a corporation’s purpose was changed for the first time since 1997. The document’s language changed from corporations existing to serve their “shareholders” to corporations that exist to serve “all stakeholders.” This might not seem like much, but the keyword change from “shareholders” to “all stakeholders” created a fundamental shift in corporate goal setting. Instead of being driven by profit alone, The Business Roundtable now encourages businesses to be driven by five goals – with profit the least important:
- Deliver value to our customers
- Investing in our employees
- Dealing fairly and ethically with our suppliers
- Supporting the communities in which we work
- Generating long-term value for shareholders
The Greater Phoenix business community has a long-standing history of giving back and supporting one another. The focus of the 2019 Corporate Governance Report aligns with our community’s desire to invest in programs that benefit businesses as well as our customers, suppliers, employees and community.
It was an honor to continue our fireside chat series at Chicanos Por La Causa (CPLC), one of the largest Hispanic nonprofits in the country. CPLC was founded in 1969 to give equality of opportunity to everyone in Phoenix, Arizona. Today, CPLC promotes stronger and healthier communities throughout the southwestern United States. More than 378,103 people receive direct services from CPLC impacting their opportunities and future.
Our team met with the President and CEO of CPLC, David Adame, and his executive team to discuss how businesses can invest in all of their stakeholders to increase the success of the entire region, including the business’ bottom line. This was a perfect opportunity to see how business investments are impacting the community, and how CPLC has become a leader in helping communities rise up and create a Greater Phoenix that is Greater Together. Here are three investments that businesses can make today to create a better tomorrow for our community.
Investment #1 – Educated workforce
The number one influencer of a company’s success is the quality of its workforce. Yes, companies can always import the talent needed, although studies show that the most effective, long-term supply of reliable, skilled employees come out of an engaged and educated local community. According to the study, people that work in the community that they consider home are less likely to leave for a different opportunity and take more pride in the company they work for.
One of the most fruitful methods of developing a local labor pool is investing in the local education system. For example, a company that needs tech talent can invest or partner with educational institutions to enhance science, technology, engineering and math (STEM) programs that educate the future workforce by providing skills and education they’ll need to fill roles.
The quality of the program can be measured on two different scales, outputs or outcomes. The company will receive positive brand and strategic positioning benefits including community goodwill, differentiation from the competition and generating affinity among consumers from both approaches. Adame suggests that focusing on outcomes by measuring changes in either the individuals or in the overall diversity in talent in the community leads to greater business outcomes in the long-term. When the focus is outward toward the community everyone succeeds.
Investment #2 – Investing in a local business incubator
Adame suggests that local business leaders invest in and work with local incubators. Business incubators such as CPLC’s Pickle House in downtown Phoenix support early-stage startup companies. Built out of a historic pickle factory originally built in 1905, CPLC hopes the Pickle House accelerates the number of Hispanic–owned businesses by giving entrepreneurs access to a workplace and technologies that otherwise wouldn’t be available. Business incubators like the Pickle House provide reduced overhead while startups grow. The best incubators give entrepreneurs access to benefits that help “incubate” their businesses by providing things like office space, services, mentorship and sometimes capital. On the community level, having an incubator encourages budding entrepreneurs to innovate by providing resources, support and encouragement to develop an idea from conception into an actual product or service.
Being part of the mentorship and capital investments engages the business with the community and increases the community’s interest in the company’s success. Being involved in the incubator gives a company the ability to be hands-on with the future of the market in general and its industry. This gives unique insights into what upcoming innovations will be complementary or disruptive. In short, a company engaged in their local incubator is better situated to prepare for or invest in what is coming next.
Investment #3 – Affordable Housing support through EAH programs
From 2000 to 2010, Greater Phoenix grew by 28.9 percent and is projected to be home to over 7 million people by 2030 due to a growth rate three times the national average. This population growth is driven by the economic growth Greater Phoenix continues to experience with a 15.15 percent employment increase projected over the next decade. While great growth brings many opportunities, it can also bring some challenges. Greater Phoenix is known for being one of the most affordable places to live in the West but has seen the cost of housing increase, a trend that is only expected to continue. What is fortunate is that businesses can get involved and help alleviate the pressure housing costs are placing on the average employee.
Germán Reyes, the executive vice president of real estate operations at CPLC, explained how private businesses can help reverse that trend with an Employer Assisted Housing (EAH) program. Implementing an EAH can be done in a multitude of ways, from loan assistance to equity investment. The best part is that it can be done to best fit the needs of the company and its employees. EAH programs give similar benefits to the community as an investment in education. The same study showed that employees who own their homes in the community where they work are:
- Willing to work harder and longer for that company
- Less likely to leave the state for a different job
- Willing to go the extra mile to help their company grow and succeed
- Will vote more often in local ballots
- Engaged in higher levels of volunteerism
Employees who own homes often end up laying down roots, starting and supporting families and becoming part of a community. In turn, they are less likely to leave a community they are heavily invested in.
Investing in the community is a valuable and profitable venture for local businesses and builds up the entire community. If you are a business owner, innovator or entrepreneur that wants to invest in their community and Greater Phoenix Greater Together connect with us here.
Want to share your growth and success with the community? Tell us about it.