Construction Risks, Part 3: Purpose

This is the third installment in a series on key risks facing the construction industry.

Nearly three years ago, the Business Roundtable issued a remarkable statement that was signed by 181 CEOs. Since it was founded in 1978, this organization has promoted shareholder primacy, the belief that corporations exist mainly to serve shareholders. Its latest Statement on the Purpose of a Corporation changed that. The Roundtable now believes leaders must lead their organizations for the benefit of all stakeholders, including customers, employees, suppliers, and communities, in addition to shareholders.

"This new statement better reflects the way corporations can and should operate today," wrote Alex Gorsky, Johnson & Johnson's former CEO and the Business Roundtable's board chairman at the time. "It affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders."

The statement sent shockwaves through the business world, but it was not entirely unexpected. For a few years before the Roundtable updated its corporate governance principles, businesses had been shrugging off their neutrality and staking positions on societal issues. Even knowing that taking a stand could alienate some customers and employees, it was growing more and more clear that doing the right thing was more important than avoiding some potential controversy.

The simple fact is that our stakeholders increasingly expect us to play a significant role in addressing society's woes. In fact, earning trust depends on it. According to the 2022 Edelman Trust Barometer -- an annual study of more than 36,000 people from 26 countries -- societal leadership has become a core business function. When considering a job, 60 percent of employees want their CEO to speak out on controversial issues they care about. Eighty percent of the population want CEOs to be personally visible when discussing public policy with external stakeholders or work their company has done to benefit society.

In particular, the Trust Barometer reports, CEOs are expected to shape conversation and policy on jobs and the economy, wage inequity, technology and automation, and global warming and climate change.

Business is in a strong position to undertake this challenge. The Trust Barometer explores levels of trust in media, government, NGOs, and business. While business is the most trusted of the four institutions, far too many people believe we are not doing enough to address societal problems.

These are not just simple desires on the part of the public; they are acting on it. Edelman reports that nearly 60 percent of respondents buy or advocate for companies based on their beliefs and values and 60 percent choose where they will work based on those same beliefs. Even institutional investors subject a company's ESG to the same degree of scrutiny as operational and financial considerations.

In addition to the societal challenges that emerged from the Trust Barometer, it is clear that in the United States, the public expects business to influence policy on DE&I, assaults on democracy, and several other issues. It is in our interest, both commercially and morally, to pay heed to these calls to action.

Businesses run a risk when taking a stand on these issues: the Business Roundtable CEOs signed their pledge in August of 2019, and it took less than a month for a business columnist in the LA Times to point out that Jeff Bezos of Amazon was the first CEO to break the pledge when Amazon subsidiary Whole Foods eliminated benefits for part-time employees.

And there are risks in taking sides on polarizing issues. Consider the recent turmoil at The Walt Disney Company over its position on the Florida legislation nicknamed "Don't Say Gay." It cannot be comfortable for Disney's leaders to know they have angered some of their customers and other stakeholders while trying to stand for diversity and inclusion. But they are standing by their position based on their belief in diversity and equity.

The risks of taking a stand are offset by the risks associated with staying in the shadows. Consider these risks:

• Performance -- Our employees cannot do their best work or share their best thinking when they do not feel included and accepted for who they are in the workplace. Being authentic, being willing to question and challenge ideas and decisions, only happens when people feel secure, included, and supported. As we seek solutions to the many challenges we face in construction -- from situations that arise on projects to charting the path forward on climate and other issues -- we must get the best performance from every one of our employees. That will happen only if they all feel included.
• Diversity -- There is a mountain of evidence showing that the more diverse an organization is, the higher performing and more profitable it is. That objective fact has not been enough to inspire our industry that has traditionally preferred to hire people who look like those doing the hiring, who think the same, dress the same, talk the same. Superficially, it feels like the more we have in common with those on our teams, the easier it is for everyone to feel included. The truth is, when you hire people who are different and have less in common with you, they will see things differently, including your blind spots. They will help you question why you do things the way you do and explore new approaches and ideas. Diversity alone is not enough, nor is inclusion. We focus on Diversity and Inclusion and Equity because they must be a package to be effective. The more diverse people we hire, the harder we must work to develop an inclusive workplace with a level playing field. (Watch for an article soon about Webcor's involvement in a project with an all-female leadership team!)
• Work/Life Flexibility -- Before March 2020, the idea of employees working from home some of the time was a non-starter. Thanks to the pandemic, that proverbial genie is out of the bottle. We have seen just how flexible people can be when they must. We have accomplished more than we ever dreamed possible with many of our people working from home. This means we actually can take into account individual needs and preferences. There is no going back. There are, of course, construction jobs that must be done on-site, like foremen and superintendents. But project managers, administrators, and some engineers can work from remote locations more often. We even have superintendents at Webcor who worked a few hours from home one or two days a week and found that just those few hours made them more productive while allowing them to miss heavy traffic. Whether they are wrapping up paperwork or coaching their kids' sports teams, even these employees can now have their personal priorities considered right alongside their work priorities.
• Recruiting and Retention -- I wrote about the labor issue in the first installment of this series. The idea of a higher calling is an important addition to that conversation. Across all layers of society, people want to work for companies that pursue higher callings, something bigger than themselves. By failing to focus on purposeful work, we will fail to attract and retain talent. We will lose customers. We will miss out on emerging opportunities and innovations. Talent is not limited to one gender, one race, one ethnicity, or any other demographic. When we provide opportunity and access, we get to see the talent.

Taking stands on issues that are tangential to our day-to-day work will not be easy. It will require thoughtful consideration, analysis of potential outcomes, and careful, strategic communication. There will be times when a decision will be supportive of one set of stakeholders, but opposed by a different set of stakeholders; and those decisions will need to look holistically at best addressing the needs of the business, which supports all of our stakeholders when it is successful. These are things we must do, though. Our industry must play an active role in solving our biggest shared challenges. The economy simply will not thrive long-term unless our people and our planet are thriving.

Here are links to the previous entries in this series:

• Introduction: The Biggest Risks Faced by the Construction Industry (by Webcor CEO Jes Pedersen)
• Construction Risks Part 1: People
• Construction Risks Part 2: Climate