{"id":75519,"date":"2018-10-17T08:00:54","date_gmt":"2018-10-17T13:00:54","guid":{"rendered":"https:\/\/www.thechicagoschool.edu\/?post_type=insight_posts&p=75519"},"modified":"2024-03-28T15:49:47","modified_gmt":"2024-03-28T20:49:47","slug":"principled-profits","status":"publish","type":"post","link":"https:\/\/www.thechicagoschool.edu\/insight\/from-the-magazine\/principled-profits\/","title":{"rendered":"Principled profits"},"content":{"rendered":"

Sarah \u201cEcho\u201d Steiner was tired of the single life. So in January 2011, the 39-year-old resident of Lake Worth, Florida, made a strange, public declaration: She decided to get married. What made Steiner\u2019s announcement so peculiar, however, wasn\u2019t that she wanted to wed. Rather, it was who\u2014or what\u2014she wanted to wed. Instead of a man or a woman, she wanted to exchange vows with a corporation.<\/p>\n

\u201cI haven\u2019t found the right man, but there are plenty of corporations out there,\u201d Steiner told a local newspaper.<\/p>\n

Although it was an absurd stunt\u2014corporations can\u2019t love you, laugh at your jokes, hold your hand, or take out the garbage, to say nothing of kissing the bride\u2014it was conceived to make a very serious point. Steiner, a political activist and a member of the <\/span>Palm Beach County Green Party<\/span><\/a>, was protesting Citizens United v. FEC, a landmark U.S. Supreme Court case that a year earlier had granted corporations the right to spend money freely in support of political causes and candidates. In so doing, it answered a resounding \u201cyes\u201d to a very controversial question: Are corporations people?<\/span><\/p>\n

It may not be a new question, but it feels especially relevant in the context of modern consumerism, according to Jeremy Nicholson, Ph.D., an assistant professor of behavioral economics at The Chicago School\u2019s Online Campus<\/a>.<\/p>\n

\u201cCompanies\u2014as separate from the people who make them up\u2014do, indeed, have some of the same legal rights and responsibilities as actual people. This is known as corporate personhood, and it\u2019s a long-standing legal precedent,\u201d explains Dr. Nicholson, who says what began as a legal question now has social and psychological dimensions as well. \u201cConsumers are interacting and having \u2018relationships\u2019 with companies more now as if they were people.\u201d<\/p>\n

When it affords them legal rights and financial advantages, corporate personhood benefits companies. What can be an asset, however, can also be a liability. Case in point: Starbucks faced a national backlash in April 2018 when the manager of a Starbucks in Philadelphia asked two Black men to leave her store after they used the restroom without making a purchase. When they refused, she had them arrested for trespassing, catalyzing a maelstrom of controversy that climaxed on May 29, when Starbucks closed more than 8,000 company-owned stores in the U.S. to conduct a four-hour, racial-bias training for nearly 175,000 employees.<\/span><\/p>\n

If corporations are people, then their customers can hold them as accountable for principles as their shareholders do for profits. When that happens, companies have no choice but to recalibrate their moral compass. Those that do so successfully will navigate beyond their corporate quagmire while those that don\u2019t risk sinking inside it.”<\/p><\/blockquote>\n

The incident suggests an unforeseen consequence of corporate personhood: If corporations are people, then their customers can hold them as accountable for principles as their shareholders do for profits. When that happens, companies have no choice but to recalibrate their moral compass. Those that do so successfully will navigate beyond their corporate quagmire while those that don\u2019t risk sinking inside it.<\/p>\n

\n

Starbucks isn\u2019t the only company whose brand has recently faced public relations challenges. Last year, the hashtag #DeleteUber began trending on social media when a former employee accused Uber of supporting a sexist work culture. In February, gun-rights advocates urged a boycott of DICK\u2019S Sporting Goods over its decision to stop selling assault-style weapons after the mass shooting at Florida\u2019s Marjory Stoneman Douglas High School. And in May, television network ABC came under fire when one of its stars, Roseanne Barr, made a racially insensitive comment on Twitter.<\/span><\/p>\n

What\u2019s fueling these types of corporate crises isn\u2019t just controversial behavior by companies and their employees; according to Elizabeth Schwab, Psy.D., it\u2019s the emotional connections they have with consumers.<\/span><\/p>\n

\u201cThere is a concept within psychology called \u2018self-brand overlap,\u2019\u201d explains Dr. Schwab, associate chair of the Business Psychology Department<\/a> at The Chicago School\u2019s Online Campus. \u201cSelf-brand overlap refers to consumers\u2019 tendency to use brands as a way to help them manufacture, nurture, and display aspects of their self-identity. When a company fails to live up to our expectations, we might feel conflicted; because that brand has helped us generate an aspect of our self-identity, some consumers may feel that errors are an attack on their own identity.\u201d<\/p>\n

Echoes Dr. Nicholson, \u201cA company\u2019s public face, or brand image, is important because the consumer is often buying more than just a product or service. They are buying a feeling, a relationship, and a way of signaling their own identity.\u201d<\/p>\n

Self-brand overlap is what compels consumers to buy a $50 T-shirt over a $5 T-shirt. If utility were their only concern, consumers would buy the latter exclusively; because clothing labels broadcast messages about their style and status; however, millions of people buy the former.<\/span><\/p>\n

\u201cThe perceived value of a product or service is more important than its actual value,\u201d says Jay Finkelman, Ph.D., professor and chair of the Industrial and Organizational Psychology<\/a> Department at The Chicago School\u2019s Los Angeles Campus. \u201cThe problem for most organizations is that an image is crafted over an extended period of time but can be damaged quite quickly.\u201d<\/p>\n

It\u2019s a precarious position to be in. On one hand, acts of corporate citizenship can help companies accrue brand equity, which they need to outshine their competition. On the other hand, those same acts can leave them vulnerable to attack.<\/span><\/p>\n

This predicament is particularly evident in the perks and pitfalls of social media, the reach and immediacy of which is tinder for incendiary public controversies. \u201cSocial media and the rise of the internet has most definitely impacted our current environment,\u201d explains Dr. Schwab, who says social media has given consumers more opportunities to both interact with and learn about brands, which has simultaneously inundated companies with fans and critics alike. \u201cWe have more information at our fingertips, which means we can hold our favorites to a standard that perhaps we couldn\u2019t before.\u201d<\/span><\/p>\n

Furthermore, social media compounds what\u2019s known in psychology as \u201cattribution theory,\u201d which is the process by which people naturally seek internal causes for external events. In the case of corporate controversies, for instance, consumers naturally attribute the misdeeds of employees to their employers as a means of explaining inexplicable behavior.<\/p>\n

\u201cNegative employee behavior has always displeased customers,\u201d Dr. Nicholson explains. \u201cNevertheless, it used to be an isolated effect where only a limited number of customers knew about that specific employee\u2019s behavior at that specific store. Now, because more people can be made aware of it\u2014and make attributions\u2014there is a larger effect on the overall company.\u201d<\/p>\n

\n

If customer relationships are like marriages, then business psychologists, industrial and organizational (I\/O) psychologists, and behavioral economists\u2014psychologists whose specialties are corporate strategy, workplace analysis, and consumer behavior, respectively\u2014are like marriage counselors.”<\/p><\/blockquote>\n

There\u2019s no such thing as a bulletproof brand. But not all wounds are fatal.<\/p>\n

\u201cAll relationships change and evolve over time. Even married couples have to adapt to each other\u2019s changing needs and wants in order to remain satisfied,\u201d Dr. Nicholson says. \u201cCustomer relationships are the same way. Customers\u2019 tastes and needs change over time, and businesses have to adjust to stay connected to them. Companies who manage these relationships well can often be more profitable and stable in the long term\u2014with customers being quite satisfied, too.\u201d<\/p>\n

If customer relationships are like marriages, then business psychologists, industrial and organizational (I\/O) psychologists, and behavioral economists\u2014psychologists whose specialties are corporate strategy, workplace analysis, and consumer behavior, respectively\u2014are like marriage counselors. It\u2019s their job to mediate conflicts and nurture mutual satisfaction by way of offering new perspectives.<\/p>\n

\u201cPeople who are immersed in a business\u2014particularly management\u2014often can\u2019t see what they\u2019re not looking for,\u201d Dr. Nicholson says. \u201cHaving an outside perspective can show them how to do business better.\u201d<\/p>\n

If there\u2019s a silver lining to the new normal of constant corporate crises, that might be it: Although brands today face more challenges because of increased public scrutiny, the accelerated rate at which companies are strategically integrating psychology with business and economics means they also have more tools than ever with which to surmount them.<\/p>\n

Because they learn them in a hands-on environment that emphasizes applied practice alongside theory, students in The Chicago School\u2019s business psychology, I\/O psychology, and behavioral economics programs are at the forefront of executing, evolving, and evangelizing such tools. Examples include persuasive messaging, marketing, change management, and team development, which can help companies elude and overcome controversy by designing positive consumer experiences, developing passionate employees, and building resilient brand identities.<\/p>\n

\u201cWe try to teach our students how to anticipate business needs and market shifts so they can help answer consumer desires,\u201d Dr. Schwab explains.<\/p>\n

To onlookers, pleasing consumers seems an impossible task; like Sisyphus, embattled brands such as Starbucks appear destined to spend eternity moving public opinion up a large hill, only to have it roll back down again whenever they near the top. Looking through the lens of business and I\/O psychology, however, Dr. Finkelman sees things differently.<\/p>\n

\u201cIt is an ongoing process of continuous improvement that I\/O and business psychologists lead within organizations,\u201d he concludes. \u201cSo in that sense, it is not like pushing a boulder up the hill, only to see it fall down each time. Rather, our graduates create many steps up the hill and inevitably lead organizations to new heights.\u201d<\/p>\n

If you\u2019re interested in learning more about consumer psychology and behavior, The Chicago School offers many business psychology degree programs<\/a> online and one of our campuses that can facilitate your growth in the industrial organizational psychology career path.<\/span><\/p>\n