I work for a major investment bank, one of the top 3 in the world, with tens of thousands of employees and a CEO who makes tens of millions of dollars a year. As a rank-and-file employee, I obviously have little dealings with the CEO; except he frequently sends emails to all employees asking them to donate money to charity through our corporate charity fund. This charity emails are the only time I ever hear from our CEO – he apparently doesn’t feel it’s important to explain his strategy to employees or to give pep talks, but he does feel it’s important to ask us for money. Apparently, this behavior is not unique to this CEO – the previous CEO did exactly the same thing, and the pattern seems to be the same for all our competitiors. Why?
One might assume giving to charity is a form of advertising for the firm, or a way of generating goodwill. But it seems unlikely that this could affect the firm’s bottom line – the vast majority of our profits are from trading activities, and people trade with whoever offers the best price (without even looking at whether that company engages in philantrophy.)
So why does our CEO spend so much work-time focused on charity then?
Note: I’m ignoring reasons like "maybe the CEO just wants to make the world a better place’. This may be true, but he specifically requests that all employees give money to charity through the corporate fund rather than just privately donating money. Several of those emails have emphazised that the goal is NOT to get a particular amount of money, but rather to get 100% of employees participating (even if each employee only gives $5).
So it seems like there’s some sort of business related reason that he spends so much time on this issue, but I can’t figure out what it is.
No, there’s more to it than that. This is a man who made $50 million last year alone, on top of the several hundred million dollars he already had. If he donated just 1% of his own salary to charity, it would dwarf what I could afford to give. If he were really so concerned about charity, he could just announce he was donating 100% of his own salary (he’s already so rich he’d barely miss the money) and thereby inspire lots of people. Hell, even if he announced he was donating only 25% of his salary, that would still make headlines.
But he hasn’t done that. Instead, he’s asked all his employees to donate $5. Why?
Can’t CEOs get into trouble with the SEC for doing anything detrimental to the company, including spending money that has no chance of profitable return?
They do have to justify those high compensations. Don’t they?
I may have gotten these crazy ideas from Michael Moore’s wonderful documentary Rodger and Me.
For many companies it is a form of public relations. If a company has a good track record of charitable giving, it may influence some people to want to do business with them or to want to work there. Your specific firm may be something of a special case regarding customers, but for many companies their customers are not deciding just based on price, but also image.
Companies that are significant donors to the United Way do get opportunities for their employees to be more involved in the United Way. Some of my former employer’s workers were always recruited to assist the audit team for local agencies that get funding. There are also opportunities to serve for a year as a United Way volunteer executive. This could be just the thing for someone who needs to fill some time gracefully before retirement. These aren’t huge perks, but they do increase employee visibility in the community and that can be a help to some businesses.
Also, I think just like employees often give to the campaigns due to peer pressure, CEOs run the campaigns due to peer pressure. If all the other banks are doing it, but yours isn’t, it won’t look good. Is CEO X even more greedy than the rest of 'em? Is their financial picture so bad they can’t bring themselves to ask their employees?
And do you really think your CEO is spending THAT much time on this ? He likely has someone else write the text of the email, and he only spends a minute or two proofreading it before it goes out.
And with the company getting good PR, and a dent in the tax bill, the board might just give the CEO a bigger raise. The charity the CEO seeks from their employees benefits the CEO personally.