Opinion: Layoffs like Meta’s show corporate social responsibility is just flowery words and big talk

Paul Klein is founder of impakt and the Impakt Foundation for Social Change. He is also author of Change for Good: An Action-Oriented Approach for Businesses to Benefit from Solving the World’s Most Urgent Social Problems

Blackbaud is a U.S. company that provides software and support for the non-profit sector and corporate social responsibility space. Aligned with the social change priorities of its customers, it says its vision is to “power an ecosystem of good that builds a better world. One where everyone has meaningful opportunities to drive impact. One where we achieve more together than we can apart. One where good can take over.”

Blackbaud is also one of a growing number of public companies that prides itself on a compelling social purpose but has laid off people en masse despite earning record revenue.

In February, Blackbaud announced that over its past fiscal year, financial performance met or exceeded its guidance ranges and achieved a significant milestone: a 14-per-cent increase in year-over-year revenue that surpassed the US$1-billion mark for the first time in its 40-year history. It also announced it is reducing its work force and expects its total head count will be down by approximately 14 per cent in 2023.

In Blackbaud’s vision of an “ecosystem of good,” it seems its biggest priority as a company is to work more efficiently and effectively to be even more profitable.

Increasingly, there’s a new performative behaviour among companies regarding corporate social responsibility. Companies use flowery language and big words in their claims of solving societal challenges, yet are laying people off by the thousands despite being profitable. This paradox, where strong profitable companies are simultaneously harming society while claiming to benefit it, could be called corporate social responsibility zero or perhaps even corporate social responsibility fraud.

Blackbaud isn’t alone. On Tuesday, the Facebook parent Meta said it would cut 10,000 jobs, and its stock rose. Last year, Elon Musk cut staff at Tesla by 10 per cent during the company’s best year in its history. Oracle made cuts to employee ranks even after reporting that revenue was up 5 per cent and that the company “finds itself in position to deliver stellar revenue growth over the next several quarters.”

In July, 2022, Microsoft reported that profit rose 2 per cent – then it laid off around 1,000 people. Ford cut thousands of employees despite reporting last July that its net income rose 19 per cent and that consumers are buying products as quickly as the company can make them.

To be sure, public companies are always under pressure to cut costs when they don’t meet market expectations. It’s hardly a new thing. But every one of these companies that cut staff has prided itself on having a compelling social purpose that is above such concerns as making money.

Meta’s vision: “Giving people the power to build community and bring the world closer together.” Tesla’s mission is “to accelerate the world’s transition to sustainable energy. In pursuit of this goal, we build products that replace some of the planet’s biggest polluters – while trying to do the right thing along the way.”

“Technologically, we’re solving some of the world’s most challenging problems here at Oracle,” Oracle chief executive officer Safra Catz said. Microsoft says its mission is “to empower every person and every organization on the planet to achieve more.” At Ford, the company says its purpose is “to help build a better world, where every person is free to move and pursue their dreams.”

It’s good that these companies believe they should be helping to make the world better because the quality of life for many people has become considerably worse in recent years.

According to the Organization for Economic Co-operation and Development, while big swaths of the world are indeed better off than a generation ago, recent events have eroded a lot of that progress. The COVID-19 pandemic exacerbated social inequalities within our societies disproportionately affecting women, low-income households, children and young people, as well as low-skilled, part-time, temporary and self-employed workers. Russia’s war in Ukraine has created a humanitarian crisis along with an economic shock that may hinder the world’s recovery from the pandemic.

If the world is worse off, what is the responsibility of the private sector to turn things around?

The 2022 Edelman Trust Barometer reported that people around the world believe that societal leadership is now a core function of business and that business is not doing enough to address social problems. This finding reflects the paradox of layoffs – that most large corporations have become adept at positioning themselves as societal leaders but not actually walking the talk.

Corporate decision-making should – and can – be more responsible. Despite the challenges in the tech sector, Apple CEO Tim Cook asked for a 40-per-cent pay cut for 2023 and Apple has avoided layoffs. In 2020 many companies laid off workers but Palo Alto Networks CEO Nikesh Arora relinquished his salary to avoid layoffs. Interestingly neither company has a brand that is built on social impact.

I believe corporations that have built their reputation on contributing to social change have an imperative: Always make decisions that support your social purpose, even when doing so means that profit will be a little less than expected.