In 1914, Henry Ford shocked the business world by announcing that he was increasing the daily wages of his employees on the line to $5 per day, doubling the previous amount. At the same time, he would reduce the workday to eight hours, allowing him to add a third shift in the process.
Ford famously justified this action by stating that it was in the best interest of his company if his employees could afford to buy the cars they made. And while newspapers publicized this as an incredible gesture of goodwill, there were legitimate business reasons for the move—including trying to stem labor turnover that was proving very costly to his business.
Regardless of motivation, it was hard to argue with the results. Workers made more and lived better lives. Both Ford and its hometown, Detroit, prospered.
Flash forward 100 years. While Ford is expecting to have one of its best years ever, Detroit, undoubtedly is heading for one of its worst. This is not to say that Ford is responsible for Detroit’s rise and fall but what used to be a symbiotic relationship between a company and its hometown is no longer.
Which begs this question. In the age of increased emphasis and sophistication in corporate social responsibility programs, what is a company’s responsibility in its own backyard and how does the condition of a company’s backyard impact its business?
Increasingly we see dichotomies popping up in cities like Detroit, where in the shadow of large corporate headquarters, towns are increasingly left in the cold.
In Cincinnati, Procter & Gamble employs thousands of people, generously supports community events, and has an active CSR platform that is saving millions of lives in developing countries through its extraordinary efforts to provide clean drinking water. Yet in its own backyard, 50% of Cincinnati’s children are living in poverty.
In Silicon Valley, companies like Apple and Facebook are creating not only jobs but whole industries for others to prosper in. And there is no doubt this has spurred incredible acts of philanthropy, including Mark Zuckerberg’s famous donation of $100 million to help Cory Booker jumpstart Newark schools. Yet at East Palo Alto High, the dropout rate is 65%.
There is no shortage of reasons as to why the chasm between company and community grows. In a global economy, the idea of a "company town" seems quaint. When corporations have stakeholders across the world, it tries to maximize impact in different ways that logically take it outside of its headquarter's more immediate footprint. Even in the world of CSR, there is a tendency to view "community relations" as little more than opportunities to generate goodwill through employee volunteering. As a result they are perceived as less strategically valuable to core business than say other CSR activities.
Clearly, there are companies who are making significant investments in their own backyards, or who establish foundations that serve as their proxy for doing incredibly important work there. Individual lives are being improved, just not enough of them
It seems as if we are ripe for the creation of a new type of corporate NIMBYism. Child poverty? Not in my backyard. High dropout rates? Not in my backyard. Our town going bankrupt? Not in my backyard.
Are there more opportunities for the win/wins of Ford’s act in 1914? Or are we destined to see our companies do great things for the world, but less for their neighbors?
What if more companies developed a backyard strategy that resulted a similarly virtuous circle to what Ford created in 1914. Could P&G end childhood poverty in Cincinnati? Or Facebook and Apple drive up graduation rates in East Palo Alto? Can Ford save Detroit?
Maybe, maybe not. But these are resourceful organizations with incredibly talented people who strive to make a difference. And it sure would be exciting to watch.