In a recent Harvard Business Review article, UPS CFO Kurt Kuehn makes the case that social purpose and financial returns are not intrinsically at odds. In fact, they are intertwined in the creation of value over the long term:
“My approach is rooted in two beliefs: that companies have a responsibility to contribute to society and the environment, and that every investment a company makes should return value to the business.
These beliefs don’t have to be at odds—although they often mean that sustainability programs must be subjected to alternative financial evaluation models. In fact, the programs with the greatest impact not only align with companies’ strategies but move in tandem with their activities.“
UPS has been at this for some time and Kuehn is not a newcomer to this perspective (full disclosure: I worked with Kuehn and the senior team at UPS in a prior role at Harvard Business Publishing). UPS is among those companies that understand that the investments that generate the greatest value for customers and, ultimately, shareholders sometimes require ignoring the short-term focus of the financial markets.
The UPS model also emphasizes using the company’s distinct expertise and talent to address social needs in addition to making financial contributions. In the article, Kuehn relates the story of UPS’ assistance in the aftermath of the devastating earthquake in Haiti in 2009:
When Haiti was struck by a devastating earthquake in 2009, UPS responded as it usually does—delivering food and other necessities to the site. But one of our managers, Craig Arnold, soon spotted another way to make a difference. While volunteering at a Salvation Army center in Port-au-Prince, he heard reports of fraud. With more than 10,000 victims lining up every day for food, medicine, and hygiene supplies, aid workers had set up a system whereby each family could get its share—but the system consisted simply of paper index cards on which were handwritten the names of eligible families. Some people would arrive at the front of the line after a long wait only to discover that their cards had already been marked. Apparently, others claiming to be them had taken their supplies, perhaps to sell on the black market.
At a time when aid was still just trickling in and supplies were short, the problem really bothered Arnold. So he and some UPS colleagues went to work on a low-tech solution. Over a weekend, they cobbled together an automated system using a laptop computer, bar-coded identity cards, and a proprietary tool called UPS Trackpad, originally designed to track packages inside office buildings. The following week each family had an identity card. With the possibility of theft virtually eliminated, emotions calmed in the waiting lines. A big source of stress was removed for Salvation Army workers, too. That Trackpad system is still in place in Haiti and has been adopted at other disaster sites.
This is a striking example of what you might wish would happen with every socially minded project you undertake. Arnold’s solution cost UPS a few thousand dollars but probably had as great an impact as the $1 million contribution we made to relief organizations in Haiti. The key was that momentum already existed on both sides: The Salvation Army’s solid infrastructure, personnel, and humanitarian mission were on the ground, and UPS had useful existing strengths—technology, specialized knowledge, business acumen, and a habit of speedy problem resolution. The right combination of our organizations’ capabilities gave the relief effort a healthy push forward.
Kuehn reports that the employee engagement benefits of such efforts are significant — yet not included in ROI calculations by many companies. The full article, co-authored with Lynnette Mcintire, is available for purchase from HBR.