Top Corporate Citizens: The Usual Suspects, and Microsoft

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The U.S. public has voted on its top corporate citizens and the three medal winners are Johnson & Johnson, Walt Disney & Co., and Kraft—all top performers in prior years.  Next comes Microsoft who beat out Apple (barely), Google (significantly), as well as Sun, Dell, Intel, HP, and everybody else in its industry in public ratings of their CSR in 2010.  What’s going on here? 

While elements in the media and blogosphere portray Microsoft as a bully for its tough, some say ruthless, business practices, the public today seems to consider it in a favorable light.  Immediately our minds turn to possible explanations:

  1. A halo effect rubbing off from the good works of Bill Gates? 
  2. Sympathy for John Kellogg Hodgman—the PC guy who looked so congenial but clueless in Apple's"Get a Mac” commercials?
  3. The formidable Microsoft PR machine? The uplifting “I’m a PC” campaign!

Almost any explanation will do save for the possibility that Microsoft has become a very socially responsible company and is seen as such by the American public. So let’s start with a look at the study.

Rating Corporate Social Responsibility

The data comes from The Reputation Institute, a global polling and research firm that measures the reputations of over 600 companies annually through over 70,000 online interviews with the general public in thirty-two countries.  The Global Pulse results are published by Forbes.com.

Here’s how the study works:  interviewees are shown a list of companies in their country and asked to rate a few with which they are most familiar.  Four overall reputation questions ask to what extent people like, trust and admire the company.  Then people rate the firm on its leadership, products and services, financial performance, and so on. 

The CSR Index is comprised of the three questions that ask about a company’s citizenship (support for causes and protecting the environment), workplace (treatment of employees), and governance (ethics, openness and transparency).

Does CSR Matter to Reputation?

How much does CSR matter to the American public?  Public polls suggest a lot, even in the midst of the economic recession.  Various surveys show that people want to work for and do business with ‘green’ and ‘caring’ companies, prefer to buy products and services from companies that support worthy causes (all things being equal–wages, prices, quality, etc.), and expect firms to do business ethically and responsibly.

Obviously marketers find that CSR can be a differentiator:  Watch TV, browse a magazine, search the web:  lots of the ads are about how companies and their products are good for people and the planet.  Of course some of this is just BS aka greenwashing, but if you look at annual corporate social reports, particularly audited ones, there is evidence that some companies are making real improvements on these fronts.

Mirvis has studied to what extent CSR factors into company reputation ratings, in comparison to the other attributes.  Not surprisingly, perceptions of products and services are the top predictor of a company’s reputation.  These are tangible outputs that the public can see, comparison shop, and experience. But the next most important predictors are ratings on the CSR Index.  Knowledge about a company’s citizenship, governance, and workplace can come from direct experience, but more often from corporate websites and communications, social media postings and conversation, and word-of-mouth.

Now back to Microsoft and CSR.

Microsoft and CSR

Microsoft has steadily improved its CSR score with the American public the past three years (from 70.52 in 2008 to 78.66 in 2009 to 80.18 in 2010).  What is interesting about this trend is that that while CSR scores plummeted for almost every company (and the high tech industry overall) from 2008 to 2009, Microsoft’s CSR ratings skyrocketed. 

The overall score for most U.S. companies on the CSR Index improved somewhat in 2010 versus the lows of 2009.  (Trust in business in the U.S. has jumped this year).  Maybe it’s the rising tide, but Microsoft’s CSR score also improved.

How about the Bill Gate’s effect?  Ok, maybe the halo surrounding the Gate’s Foundation influences how the public rates Microsoft’s outreach to society (rated #4 today versus #12 in 2008).  But a closer look shows Microsoft’s charitable contributions, as a percentage of pretax profits, increased from 2.09% in 2008 to 2.61 in 2009 to 3.20% for fiscal 2010.  It seems that money talks–and the public is listening!

But Microsoft also walks its talk:  its Unlimited Potential aims to provide an additional 1 billion people worldwide with access to computing technology.  One component, Partners in Learning, has to date reached 200 million students and teachers across 115 countries (with 50 million more to achieve its 2013 goal).  Imagine Cup has engaged 325,000 students competing with ideas on how to apply technology to the world’s tough problems.  And Students to Business trained 233,000 students in FY2010 for job placement.

We had an able MBA grad and CSR-phile, Kiryl Harris, dig into these programs and he reports that Microsoft makes great use of its technology ($504 million “fair market value” in software donations to nonprofits) and its people (100 NGO Connection Days around the world, training more than 9,200 nonprofit professionals in technology solutions with the help of 700 Microsoft volunteers).  It also involves hundreds of its business partners in the effort.  These programs score very well on our Five Screens for Strategic Philanthropy best practices.

Now we know from Mike Judge’s movie, Office Space, that working in a software shop can drive you crazy.  But Microsoft seems to get it right:  it scored #2 on the workplace in U.S. public opinion in 2010.  Its latest Citizenship Report says that 89% of its employees feel proud to work for Microsoft.  Some 82% feel good about their job flexibility (a work/life issue). What we want to applaud is that Microsoft puts employee survey data in its annual social report (a rarity among corporations) and also provides details on the diversity of its workforce overall and in executive ranks (40 women/minority execs in 2010).  This kind of self-disclosure helps the public learn whether or not Microsoft treats its employees fairly and well.  Why don’t other companies share this inside look?

Finally, Microsoft sits at #11 on ethics and transparency (versus #41 in 2008).  This has been the company’s Achilles heel in years past when it comes to CSR.  We followed up with Dan Bross, Director of Corporate Citizenship at Microsoft, who updated us on governance reforms in his company, including a new “say on pay” policy and detailed disclosures about its political contributions.  Interestingly, Microsoft does not make contributions to noncandidate or nonparty political committees despite the recent U.S. Supreme Court decision allowing them.

Now we’re not shills for Microsoft, but it is our hunch that its CSR efforts have helped to soften its “Evil Empire” image and, along with “I’m a PC,” to humanize the corporation in the public’s eye.  To be fair, the computer industry overall has done a good job in the CSR space compared to other sectors and Google, IBM, AMD, Intel, Cisco, Sun, HP and Dell have all earned kudos in various other ranking schemes (and on the CSR index, too). 

As for the sympathy effect and the power of Microsoft’s PR machine—just kidding on both counts! If it was all about sympathy, rather than social responsibility, Toyota (who said “we’re sorry”) would not have dropped -11.43 points on the CSR Index this year.  And, if it was just about PR machinations, Manpower, a publicity-shy company with stalwart community service and an impressive international human rights campaign, wouldn’t have improved +10.65 this year.

What’s next?

On another upside note, Microsoft jumped into the U.S. top 10 on overall reputation rankings in 2010 (#8 just behind Google).  At the same time, it did not budge on Newsweek’s 2010 rankings of green companies, is not in the top 10 in its industry in those rankings, and especially doesn’t do as well as its peers in the opinions of CEOs, environmental officers, and green experts polled.  Apple leads Microsoft in greening in the eyes of these opinion leaders.  Here a better PR machine might help Microsoft!

To close, remember from an earlier blog that the USA scored 12thout of twenty-five nations in its company’s CSR performance (“No Medals for CSR”).  In 2010, Microsoft’s score on the CSR Index was 15 points higher than the U.S. average.  We think it is time for Microsoft, and the other high tech leaders, to share their CSR know-how, experience, and excellence in reporting with other U.S. firms, many of whom are their suppliers or customers.  It could be a strong CSR program for these firms in 2011!

Outfits like the Reputation Institute, the Boston College Center for Corporate Citizenship, and the BCLC do their part with information, education, and conferences.  But, to be honest, they’re small players facing a big challenge. 

Maybe the U.S. Chamber, with its big voice, money, and reach could get behind this?  Imagine, the U.S. Chamber exercising its social responsibilities by funding advocacy advertisements, supporting political candidates, and heading a national program of business leadership for, you go it, CSR!

Authors' note: For the past three years researchers at the Reputation Institute and the Boston College Center for Corporate Citizenship have partnered to analyze and rank the top U.S. companies on their CSR performance.  

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