Strategic Corporate Social Responsibility: Strategic CSR

Tuesday, November 17, 2020

Strategic CSR - Free speech

The articles in the two urls below, together, cover both sides of an issue that is becoming ever-more pressing for corporate leaders – whether employees should be encouraged to debate topics of concern, irrespective of whether they relate directly to operations. Facebook and Google have been wrestling with this issue publicly (see Strategic CSR – Google); the articles summarized here focus on two smaller firms (Coinbase and Spotify), but illustrate both the empowering benefits of allowing employees to vent, as well as the potential distractions such debates can become.

The article in the first url below is about Coinbase (a digital currency exchange), which I think tracks more closely to the Strategic CSR framework – i.e., that, for the most part, the firm should stick to issues most directly related to operations and, by extension, avoid social or political issues that are unrelated:

"Specifically, [CEO and co-founder, Brian] Armstrong said that the company 'won't debate causes or political candidates internally,' and will not engage when the issues are 'unrelated to our core mission, because we believe impact only comes with focus.' The cryptocurrency company is 'laser focused' on the use of digital currencies, and on profits, Armstrong said."

More controversially, Coinbase's CEO does not hesitate to say that those employees who do not like the focus of his company should leave:

"Coinbase is offering to pay employees who decide to quit the cryptocurrency company after it discouraged employee activism and discussing of political and social issues at work.

CEO Brian Armstrong told Coinbase staff in an email that the company would offer severance packages for anyone 'who doesn't feel comfortable with this new direction.' The pay packages range from four to six months, depending on how long an employee had been with the company."

In many ways, it is difficult to argue with the CEO's perspective:

"'Life is too short to work at a company that you aren't excited about,' Armstrong said in the email. …. 'Hopefully this package helps create a win-win outcome for those who choose to opt out.'"

The reasoning behind his uncompromising stance, at least to Armstrong, is clear:

"'While I think these efforts [to discuss social and political issues] are well intentioned, they have the potential to destroy a lot of value at most companies, both by being a distraction, and by creating internal division,' Armstrong said. 'I believe most employees don't want to work in these divisive environments.' The approach stands apart from many Silicon Valley companies, which have embraced social justice causes in the wake of widespread protests over racial injustice this year."

In contrast, the article in the second url below is about Spotify (the streaming music company), which has benefitted from signing the controversial podcaster, Joe Rogan, to its streaming service:

"The deal to bring Mr. Rogan to Spotify is already showing signs of success. His millions of loyal fans have made 'The Joe Rogan Experience' podcast Spotify's No. 1 show since arriving on the platform in September, 'outperforming our audience expectations,' the company said when reporting its earnings Thursday. The company's stock has run up more than 50% since the deal was announced in May."

As controversial guests have been interviewed on Rogan's show, however, the signing has increasingly distressed employees:

"Recent appearances on the show from two guests—first Abigail Shrier, an author critical of transgender issues; then Alex Jones, a radio host and the publisher of InfoWars, whose content has been removed from Facebook, Apple, YouTube and Spotify—have sparked outrage from listeners inside and outside the company who have posted on social media to express their disagreement."

Spotify encourages debate among employees on all manner of topics on its online forum, which is divided into specific "clubs":

"A recent thread in the company's #ethics-club channel centered on Mr. Rogan's episode with Mr. Jones. Employees circulated information on how to flag content for review by Spotify's trust-and-safety team, according to people familiar with the matter. That team is responsible for determining whether shows or music on the platform violate company policies barring content that incites violence or hatred, and can remove content if it crosses those lines."

Spotify is standing by Rogan for now, saying none of his content has breached the company's rules. Even so, it is clear that many employees feel offended by the platform Spotify is providing for Rogan:

"The deal with Mr. Rogan, a comedian and former mixed-martial-arts commentator who last year said his show had 190 million monthly downloads, brings the Stockholm-based Spotify into more edgy territory. The reaction to his arrival suggests that listeners and employees are increasingly trying to hold the company responsible for the content it hosts, similar to the issues encountered by Silicon Valley tech companies."

In other words, Rogan's signing illustrates the potential exception to the 'related to operations' rule of Strategic CSR – i.e., that, any issue can be justified as 'operationally relevant' if it is valued by a key stakeholder group. This applies particularly in the case of employees, whose morale and productivity can be directly affected if an issue that is important to them is left unaddressed. But, this does not mean it is necessarily easy for the company to determine where to draw the line, particularly on sensitive issues such as free speech:

"Mr. Rogan retains full creative control in his licensing deal with Spotify, he has said, though his show is subject to the company's content policy guidelines. At one point in September amid discontent over the episode with Ms. Shrier, some Spotify employees asked for editorial supervision over Mr. Rogan's podcast, according to people familiar with the matter. The company denied the request and stood with Mr. Rogan, who later retweeted an internet comedian's video mocking the employees as oversensitive."

In looking at the response of these two companies to expansive debate among their employees, what is interesting is that Coinbase's Armstrong does not hesitate to define his company as "mission focused" (see here). The value of a strong mission, of course, is that it identifies what the firm does (and, therefore, is 'ok' for employees to discuss) and what it does not do (and, therefore, is 'off limits'):

"In short, I want Coinbase to be laser focused on achieving its mission, because I believe that this is the way that we can have the biggest impact on the world. … Change happens in the world only when a smart, talented, group of people come together to focus on a hard problem for a decade or more. Many companies never stand the test of time, because they decide to dabble in unrelated efforts, and distract and divide their workforce in the process. Paradoxically, by being laser focused on our mission, we will likely have an even greater impact on the world, through our products and growing customer base."

I guess the difference between the two, ultimately, comes down to whether that mission is defined narrowly and is disciplined, or whether it is defined broadly and is more abstract. My sense is that those firms who apply this framework with greater discipline, as a general rule, are going to create greater stakeholder value over the medium to long term.

Take care

David

David Chandler

Strategic Corporate Social Responsibility: Sustainable Value Creation (5e)

Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler5e

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Coinbase CEO discourages politics at work, offers generous severance to employees who want to quit

By Kate Rooney

September 30, 2020

CNBC

https://www.cnbc.com/2020/09/30/coinbase-ceo-offers-severance-to-employees-leaving-over-politics.html