Corporate Responsibility in the Face of Global Economic Integration
Mr. John Paul DeJoria
Chairman and Chief Executive Officer
John Paul Mitchell Systems
I applaud the Pacific Basin Economic Council for focusing on the issue of corporate responsibility, which is sometimes defined so differently from country to country. Regardless of the definition, however, CEO's have a special responsibility to communicate to employees, to shareholders, and to customers, that the changing world landscape does not necessarily mean less attention to philanthropy, less attention to the environment and less attention to education.
I would like to share with you a 60-second Public Service Announcement produced by John Paul Mitchell Systems which aired on 115,000 American Airlines, Delta Air Lines, and United Airlines domestic flights and international flights during the holiday months of November and December 1999.
[VIEW PSA]
This Public Service Announcement was the first of its type to be aired simultaneously on the three largest United States air carriers. My company is proud of that.
The fact that we produced this is not what is most significant about the Public Service Announcement. Most significant is what the Public Service Announcement is about. It is about giving. For success unshared is failure.
Corporate, and, yes, individual responsibility, is about giving- the giving of time, the giving of money. The only un-replaceable commodity that each of us has, and that each of our company's have, is time. As our world becomes smaller by virtue of technological advances, companies must continue to address the complexities of how to manage their local, regional, national, and international responsibilities. But how? Here are some suggestions:
First, remember your roots, the foundation of your company. In my business, we only sell our products, either directly or through specific distributors, to more than 110,000 salons within the United States and other countries. Our priorities are the salon owner, the hair stylist working within the salon, and the customer of the salon. These are the people who started my business who are maintaining my business and who will permit my business to grow.
Second, be honest. This sounds, I am certain, as quite logical. Yet, everyone in this room can share a story about how dishonesty caused a business to suffer. As some of you know, my company has been a leader in the national effort to support bipartisan legislation currently before the United States Congress to make tampering with product identification codes a federal crime. Informing the public about the importance of safety issues, even if doing so might have a short term negative impact upon your company's bottom line, will have overall benefits. In our case, I have no problem with sharing with the media that there have been instances where our products have been tampered with and counterfeited, and what our company is doing about the problem.
Corporate responsibility is as much about how a company may handle adversity as it is about preventing adversity. Customers will forgive a mistake, they will not forgive deceit. How you handle a problem is often more important than the problem itself. Regardless, there must be transparency to the honesty and immediacy to the honesty. While employees and customers are the ultimate audience, there is one audience whose confidence a company must obtain as well, the media. A CEO has a responsibility to earn the credibility of the media.
Third, choose a few national causes and also support regional and local causes. Stay with the causes. Our company focuses upon issues that reflect the interests of our customers and our employees. Some of these issues are not mainstream, for example, Native American Indians, protecting endangered wildlife, inner city gang educational programs, the environment, innovations such as A55 (which cleans 30% to 50% of NOX). Our customers are passionate; therefore, our company reflects their passion in whatever we do- from our attention to quality to our attention to issues effecting their lives.
Fourth, participate. When your company hosts an event for employees or when the company is participating in an event to support a philanthropic endeavor, the CEO should attend. My participation means far more to my employees and to my customers than simply sending someone on my behalf to present a check.
Here is one example of why participation means so much and provides so much value. Each year during the holidays, United States Secretary of Defense William Cohen travels with a group of entertainers to visit members of the armed forces throughout the world. During the trip last December, the countries included Italy, Macedonia, Bosnia, and Kosovo. Incredibly, never before had a representative of the United States business community participated. I was honored when Secretary Cohen extended the invitation to me. When I accepted, I did so as a representative of the professional beauty industry- which has made possible the success that I have today. Regardless of whether I agree with any particular policy of the United States government, an opportunity to say "thank you" to the men and woman who are serving their country is above politics. At each stop on the trip, I heard the same comment, "I can't believe that corporate America cares about us."
Recently, the public relations firm, Burson-Marsteller, reported that 45% of a company's reputation is based upon the reputation of the CEO. With this in mind, we have an obligation to lead, not only manage. Take, for example, the actor Paul Newman. He and a partner created a food company with current revenues exceeding US$100 million that donates 100% of its profits to charities. Does Mr. Newman support some issues that may be "hot?" Yes, he does. Being issue safe is not always a virtue. Mr. Newman's trust from the consumer derives not only from his reputation as an actor, but from his reputation as a philanthropist. One does not need be 100% in support of someone to still support their overall efforts. Consumers trust Mr. Newman, and the ever-increasing sales of his products attest to that.
Fifth, let your employees and customers know about your company' philanthropic efforts. Far too often, employees and, yes, even senior management, are unaware of what their company is doing to support a specific cause. During our twenty years in business, a total of approximately 20 employees have left the company. Why? Yes, we pay well. In addition, our employees feel good about the company and, therefore, about themselves. Having meaning within your workplace is a key to employee satisfaction and, thus, customer satisfaction.
Sixth, instill the future in the present. Empowerment does not simply mean authorizing an employee to initiate your idea. Let me repeat. Empowerment does not simply mean authorizing an employee to initiate your idea. Empowerment is creating a working environment within which every employee feels comfortable and confident that they can create or help to create the foundation upon which the future of a company is based.
To end where I began, CEO's have a special responsibility to communicate to employees, to shareholders, and to customers, that the changing world landscape does not necessarily mean less attention to philanthropy, less attention to the environment and less attention to education.
Thank you.