By: Michael Bzdak, PhD, Global Director, Employee Engagement for Johnson & Johnson;
The Collaboration Challenge: Global Partnerships to Achieve Global Goals
– As capitalism is being re-invented and the voices of multiple stakeholders are becoming more prevalent and demanding, it is the perfect time for the private sector to embrace large-scale collaboration and a shared sense of purpose. Since the explosive growth of Corporate Social Responsibility (CSR) in the 1990s, a new era of responsibility, purpose and a re-envisioned capitalism are dramatically apparent. Beyond financial support, business leaders have the opportunity to galvanize networks, advocate for regulation and policy change, and form supporting consortia to support global development. The role of the private sector in development has changed significantly from a model of benevolent contributor to a model of collaborator, investor, business partner and exponential value creator. The new era of collaboration should move beyond a shared value mindset to new models of partnership where each contributor plays an equal role in defining challenges and designing solutions with the greater goal of sustainable value creation. Non-Governmental Organizations (NGOs) have the unprecedented opportunity to take leadership roles in engaging the private sector in more game-changing collaborations.
Since the explosive growth of Corporate Social Responsibility (CSR) in the 1990s, a new era of responsibility, purpose and a re-envisioned capitalism are dramatically apparent. For many years, leading scholars at business schools throughout the world have argued that business has the unique opportunity to accelerate efforts to create a more sustainable world (Donaldson and Preston 1995; Handy 2003). CSR has grown to encompass what companies do with their profits as well as how they generate their profits. Going beyond philanthropy, the new CSR addresses how companies manage their economic, social and environmental effects on society. Most important, more attention is being paid to a company’s “relationships in all key spheres of influence: the workplace, the marketplace, the supply chain, the community, and the public policy realm” (Harvard Kennedy School 2012). Thus, companies are increasingly being asked by stakeholders to demonstrate and report on how business strategy and practice contribute to a more sustainable world (CECP 2010). The role of the private sector in development has changed significantly from a model of benevolent contributor to a model of collaborator, investor, business partner and exponential value creator. However, how to engage with the private sector, from a non-governmental organization (NGO) perspective, remains both complicated and mysterious.
In the wake of the Sustainable Development Goals (SDGs or Global Goals), industry, foundations, NGOs, governments, universities and multi-laterals are being challenged to make commitments to the 17 SDGs. The 17 Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development were adopted by world leaders in September 2015. All countries, with the support of business, foundations and other partners, are called upon “to end all forms of poverty, fight inequalities and tackle climate change, while ensuring that no one is left behind.” (United Nations 2017) The 17 SDGs are different from the eight Millennium Development Goals (MDGs) in that they are more comprehensive and aim to end poverty and include more focus and guidance on implementation and measurement. (United Nations 2017)
Development partnerships are moving more toward supporting national health and environmental priorities and building upon existing strategies of the collaborating partners. For example, Microsoft YouthSpark, in partnership with governments, nonprofit organizations and businesses has created educational, employment and entrepreneurial opportunities for more than 300 million youth around the world (Microsoft 2017). To reach the scale implied by the Global Goals, more and bigger collaborations involving the private sector will be required. The long-time horizons represented by the 2030 SDGs targets are more compatible with corporations seeking to demonstrate long-term shareholder value as companies increasingly realize that they can only thrive in a healthy and sustainable world. As a recent Brookings publication states, “As more large companies take such a long-term view, any gap between their activities and broader development impact becomes narrower” (Brookings Blum Roundtable 2014). In this early stage of SDG goal-setting, there is a strategic opportunity for NGOs to play the role of broker in developing partnerships and alliances aimed at the SDGs.
RE-DEFINING THE ROLE OF BUSINESS IN SOCIETY
Since CSR’s growth period in the 1990s, the world has witnessed increased globalization, growing social inequality, a rising population, development challenges and climate change. In moving the argument beyond social responsibility, advocates such as Stuart Hart have argued that companies possess assets such as technology, resources, capacity, global reach and employee social capital to help solve societal challenges (Hart 2010). In the business sector, leaders such as John Mackey of Whole Foods and Paul Polman of Unilever are helping to redefine capitalism in more humanistic terms through advocacy and business practices. The advent of terms like “conscious capitalism” (Mackey and Sisodia 2014) and the creation of Benefit Corporations signal a move away from traditional and shareholder-driven business practices to a view where business is seen as a positive force for society and sustainable development (Cho 2017). While CSR has been an effective tool for many companies to demonstrate their commitment to society, it is increasingly recognized that there are limits to CSR’s ability, in its traditional practice, to be the sole force for creating the type of systemic change required to make major shifts in society (Vogel 2007). For the private sector, the definition of value has moved well beyond profit and social responsibility has become a key consideration for all facets of a business.
Evidence of increased engagement by business with societal issues can be seen in the UN Global Compact (United Nations Global Compact 2017). The Global Compact, created in 1999, was an early effort to encourage businesses to adopt sustainable and socially responsible policies, and to report on their implementation. In the year 2000, there were 47 members; today there are more than 9,000. Although membership is voluntary, the Compact is one of the more mature efforts to create standards of behaviour to govern business in society. There is also a growing interest in responsible business practices from the financial markets, where the UN-backed Principles for Responsible Investment (PRI) lists more than 1,600 members (Kell 2017).
Among the many thought leaders seeking a new model of capitalism, Porter and Kramer (2011) argue that capitalism itself can be reinvented around the pursuit of shared value to advance the economic and social conditions where a company operates while enhancing the company’s competitiveness. The essence of shared value is that companies link competitive advantage with CSR by seeking the profitable points of intersection between business opportunity and social need. Shared value has gained momentum but is not without its critics (Aakhus and Bzdak 2012; Crane et al. 2014). Mainly, the shared value approach reveals a poor understanding of how many corporations work with stakeholders. In fact, many NGOs would be reluctant to work directly with business units seeking financial returns but have comfortably worked with corporate philanthropy, CSR and citizenship professionals. In general, the private sector’s profit motive is often a barrier, whether real or perceived, to enduring public-private partnerships.
While shared value was gaining momentum, legal scholar Lynn Stout challenged the prevailing wisdom of shareholder primacy in 2012 by offering compelling arguments around the absence of a legal basis for a company to be solely focused on profit.
Stout (2012) claims that the principal-agent reasoning underpinning shareholder primacy is fallacious and that, indeed, there is a deeper business-to-society relationship to be explored. In other words, maximizing share price is not a legal requirement of for-profit corporations. This makes it easier for companies to behave in a more prosocial manner as opposed to solely creating value for shareholders. More recently, Zingales and Hart (2017) have revealed that many shareholders care about broader social issues beyond profit and that companies should maximize shareholders’ “welfare.” This re-definition of the role of business in society is partially responsible for the increased visibility of the private sector in development efforts.
The transition from the MDGs to the SDGs has provided a rich opportunity for reflection on global goal setting and how to engage stakeholders in defining targets and indicators. The SDG consultation process, for example, was much more inclusive of a broad array of stakeholders which, in turn, enabled a much richer landscape for collaboration. A 2015 report “Transitioning from the MDGs to the SDGs” released in late 2016 and prepared jointly by the staff of the United Nations Development Programme (UNDP) and the World Bank Group (WBG) with input from the Secretariat of the UN System Chief Executives Board for Coordination (CEB) outlines a collaboration agenda for the next few decades (UNDP 2016). Although the report outlines a new vision for a “One UN,” it provides little in the way of defining a role for the private sector.
As Jeffrey Sachs advises, “Private-sector companies should support the SDGs in practical and measurable ways, in their policies, production processes, and engagement with stakeholders.” (Sachs 2012). Implicit in Sachs’ statement is a call for business to engage beyond philanthropy and traditional CSR. Companies are encouraged to bring all of their assets to the global table because, as Browne and Nuttal note, “The success of a business depends on its relationships with the external world – regulators, potential customers and staff, activists, and legislators. Decisions made at all levels of the business, from the boardroom to the shop floor, affect that relationship.” (Browne and Nuttal 2013). The key here is stakeholder engagement, internally and externally, as a key foundation for public-private partnerships on an unprecedented scale. Again, NGOs can play a critical role in linking private sector aspiration to engage in partnerships and alliances aimed at the SDGs and finding solutions to social challenges at the local, national and global levels.
A NEW ERA FOR COLLABORATION AND ENGAGEMENT
Because corporations are now answering to a diverse group of stakeholders, the ways that they engage with these stakeholders has changed dramatically. Over the course of the last twenty years, specific principles of engagement, especially in community health, have become more or less common in many communities (National Institutes of Health 2011). The basic premise is that those who are affected by a decision have a right to be involved in the decision-making process (The International Association for Public Participation 2017). The key element in these engagement efforts is the deliberate and deep involvement of community members. The recent literature on community empowerment strongly supports the idea that the community should define problems and potential solutions. Communities and individuals need to “own” the issues which includes: naming the problem, identifying action areas, planning and implementing strategies and evaluating outcomes (National Institutes of Health 2011). This applies also to a recent reframing of global development efforts in developing economies. Calton et al. (2013) offer a new model of creating value with (not at) the bottom of the pyramid. The model calls for multi-stakeholder, open-system interactions with business being recast as an equal stakeholder – taking on a co-participant role as opposed to a leadership role. For instance, the Johnson & Johnson Bridge to Employment program was founded on a partnership model involving multiple stakeholders in targeted communities to help youth succeed (Bzdak 2007). The model is based on the needs of a local community and is co-designed by local Johnson & Johnson operating company leaders, teachers and NGOs to leverage the assets in each community to support youth in preparing for further education and careers.
This type of engagement, especially for corporate funders, represents a shift away from noblesse oblige to a more inclusive model or, as Austin portrays the shift, “from benevolent donor and grateful recipient, toward deeper, more strategic alliances” (Austin 2000b). The new model focuses on long-term engagement and recognizes the need to build relationships and trust by moving from consultation and information sharing to shared responsibility. The concept of collaborative community engagement among corporate and private funders as well as academic institutions, NGOs and governments has become an increasingly common approach to tackling social issues. The most successful collaborations have been centered on solving a problem that is identified by a variety of stakeholders including those most affected at the community, regional and/or national level. Nestlé, for example, is integrating their sustainability goals with the 2030 United Nations SDGs. In fact, executives from Nestlé participated in developing the SDGs. The company has set ambitious goals including: “helping 50 million children lead healthier lives; improving 30 million livelihoods in communities directly connected to their business activities” (Nestlé 2017). Other consumer-facing corporations such as PepsiCo, Coca-Cola, SABMiller and Unilever have all mapped their sustainability targets against select SDGs (Edie.net 2017).
Increasingly, the private sector has become part of many coalitions involving NGOs, government and other funders to focus on making a measurable difference in solving one or more global issue. In these new models of engagement, NGOs and other civil society members are held accountable not only by the funder and/or regulator but also by those that they serve. In many cases, the metrics are developed to measure the social benefits for the common good rather than a particular business benefit. In the case of the MDGs, numerous multi-sectoral partnerships evolved to tackle the complexities of the problems behind the MDGs. However, the SDGs differ from the MDGs in at least two important ways: (1) the SDG process included many more stakeholders and resulted in broader goals; (2) the SDGs, for business, allow the latitude to integrate a company’s sustainability goals within the broader framework of the SDGs. Key to the new and evolving paradigm of public-private partnerships are transparency and multi-stakeholder engagement efforts. In addition, the increasing prevalence of pro-bono and skills-based volunteerism has expanded the private sector’s contributions to development efforts.
As public-private partnerships began to proliferate in the late 1990s, researchers increasingly developed theories and frameworks to explain the how and why of collaboration. In 2000, James Austin published a collaboration framework based on empirical examples comprising four elements (Austin, “Strategic Collaboration” 2000a). Austin proposes a “collaboration continuum” which is a categorization framework that identifies the various stages of a partnership and includes: philanthropic, transactional and integrative. A fourth category, transformational, was added in a subsequent article (Austin and Seitanidi 2012). This fourth element looks at “alliance enablers that contribute to the effective management of the relationship.” These conceptual and analytical frameworks comprise a holistic construct providing detailed guidance on all aspects of a multi-party collaboration. Its practical value is derived from the fact that it is based on several real-world examples of varying scale and therefore it can be useful for all stakeholders entering new collaborative ventures.
Among the pioneers in developing new models of public-private partnerships, leaders at Starbucks were truly progressive in its early collaborative efforts with NGOs such as CARE and Conservation International (CI). For example, Starbucks entered into a partnership with Conservation International (CI) in 1998 and in 1999 introduced a shade-grown coffee grown in Chiapas, Mexico as part of their partnership (Austin, J.E. and C. Reavis. 2002). In addition to buying the beans, Starbucks also provided financial support and technical assistance to the project. In 2001, Starbucks announced new purchasing guidelines co-developed with CI, which awarded points to suppliers based on specific sustainability indicators. Suppliers that scored high received preferential treatment from Starbucks, who also agreed to pay a premium to suppliers who met sustainability guidelines (Coffee and Conservation 2006). The collaboration between Starbucks and CI was complex and forged new ground in the global public-private partnership space.
In 2011, CI and Starbucks renewed their commitment to sustainable coffee production with a three-year agreement. This new model of stakeholder engagement between CI and Starbucks revealed three important attributes for engagement: (1) their relationship is long term and focused on issue of mutual importance; (2) the collaboration involved exposure to risk for both organizations; (3) the partnership engaged multiple stakeholder groups including the consumer. The collaboration was based on the shared belief that Starbucks and CI each had a “stake” in the future of coffee growing and the well-being of the coffee farmers. The collaboration (and the relationship) was also based on long-term horizons as opposed to short-term profitability.
Interest has grown in public-private partnerships and other forms of multi-stakeholder initiatives as ways to leverage resources and talents to address pressing social issues (Zadek 2005). Although collaborations between corporations and NGOs are not a new phenomenon, there is a call for both an increase in the number of collaborations as well as an increase in the scale of these efforts. The urgency around this call is intensified by the monumental change implied by the SDGs. The new model of collaboration also involves assessing all elements of value that the company can bring to a collaboration (Aakhus and Bzdak 2015). Taking a cue from Austin, there is an opportunity for NGOs to take the lead in creating a basic framework for all partnerships – a framework that meets the needs of communities, NGOs, government and the private sector.
For example, all collaborating partners should clearly articulate the anticipated value to be derived from a potential alliance. Recognizing that partners have varying motivations in joining a collaboration, candid conversations around expectations and perceived and anticipated value are critical. What should begin as a basis for dialogue and negotiation could then become the documentation of potential outcomes and impacts. Second, the collaborative could develop their own set of operating principles. For example, defining the partnerships’ relevance to national health or natural resources plans and further defining how the collaborative will advance local, regional or national goals. Finally, a metrics framework will ensure that agreed-upon outcomes are being delivered as projected and as intended.
Reflecting a new model of collaboration and alliance building, in 2011 Dow announced an innovative partnership with The Nature Conservancy (TNC) to explore water conservation (Environmental Leader 2011). Dow sought to name the “environment” as a key stakeholder and thoughtfully engaged an NGO to help. This collaborative approach was not new to TNC. In the early 1990s, they partnered with Georgia-Pacific on a unique land stewardship project in Virginia (Austin, Collaboration Challenge 2000b). The collaboration with Dow is investigating linkages between business operations and the environment, with the goal of making sure “that Dow can value nature and its services in everything the company does.” (Tercek 2013). TNC is providing counsel and technical support to Dow in developing assessment models quantifying its environmental footprint with the goal of fostering innovation in environmental performance. In addition, the partnership was projected to result in shared findings and publicly available research results. Similar to the Starbucks examples, the key attributes for engagement from this partnership include: (1) partnering with a potential adversary, (2) evidence-based practice and (3) putting an environmental value at the center of the network.
Starbucks, Dow and many other companies are shifting their stakeholder engagement efforts from a vertical orientation to a more horizontal inclusiveness and from the short term to the long term. Similarly, NGOs such as CI and the TNC were willing to the take the risk of working with for-profit entities to seek potential partnerships that could have mutual benefit. The companies leveraged their CSR practices and their reputations, allowing them to create credible engagement opportunities for them and their stakeholders.
STANDARDS OF ENGAGEMENT
Not surprisingly, some organizations have developed ground rules to govern these new collaborative efforts. Reminiscent of Austin’s framework, the Tropical Health & Education Trust (THET), a UK NGO, developed “Principles of Partnership” to offer guidance to their health partnerships, sending a clear message to all partners on shared responsibility and accountability (Figure 1). The eight principles provide thoughtful and in-depth direction on a number of key areas. One of the key principles is “Harmonized & Aligned” which includes the following “Hallmarks of good practice:” A. Partnership plans reflect national health priorities or are designed to influence national priorities; B. Partnerships’ plans build on an institution’s strategic health plan; C. Partnerships are supported by senior management and colleagues in each partner institution; D. Partnerships engage national regulatory, governance and research bodies with the potential to support and learn from their work more broadly or in the longer term; E. Partnerships collaborate where possible with other NGOs and INGOs to maximize effectiveness. While all of these are important, three of the hallmarks (A, B and C) are particularly critical because they reflect basic elements of long-term thinking and sustainable practices. For example, in Hallmark C, support from senior management and colleagues implies that the partnership is part of a larger strategic framework with implied targets and accountabilities.
Figure 1. Tropical Health & Education Trust (THET) “principles of partnership”
OPPORTUNITIES TO ACCELERATE CHANGE
While it is still early in terms of SDG goal-setting and commitment making, there is a sense of urgency to develop and design the new large-scale partnerships that will allow dramatic progress in reaching the 2030 targets. As Jorge Moreira da Silva, director of the Development Co-operation Directorate at the Organisation for Economic Co-operation (OECD), reminds us, “… meeting the Sustainable Development Goals in developing countries will require $3.3–4.5 trillion in additional investment. Without increased private sector involvement – including the growth of healthy and sustainable businesses in low-income countries – we will never make it” (da Silva 2017).
There are three immediate opportunities to accelerate SDG progress through partnerships. First, there is a clear need for agreed-upon principles of engagement for large-scale and formal collaborations. The Tropical Health and Education Trust has a practical model that could serve as a starting point for potential collaboratives. There is also an opportunity to build and scale existing collaborations. For example, the Frontline Health Workers Coalition has played a critical role as a convener and thought leader. The Coalition, including members of the private sector, provides an inclusive space for stakeholders to debate and advocate for health workers. A policy analysis released by the Coalition in November 2016 calls for governments and all stakeholders to collect and deliver critical data on health workers, including CHWs, that will address the most severe access gaps (Frontline Health Workers Coalition 2016).
The Coalition has an even greater opportunity to advocate for health workers given the recent work by the UN High-Level Commission on Health Employment and Economic Growth which argues, “This is a once-in-a-generation opportunity to build a sustainable health workforce in all countries by 2030, shaping the unprecedented demand for 40 million health workers, and addressing the needs-based shortfall of 18 million health workers.” (WHO 2016) There are many opportunities for business to engage with the Commission’s recommendations. One idea proposed is social business (also known as social enterprise) a hybrid approach and model straddling profit-seeking and social good. The many opportunities suggested by the Commission are built around an economic model proving the socioeconomic returns on investment in the health workforce, an argument that follows a business logic.
Second, assuming that each partnership has measurable goals, there is a critical opportunity to develop a tracking and reporting mechanism where all partners and partnerships can credibly report progress. The SDG Philanthropy Platform is one promising approach led by The Foundation Center, United Nations Development Programme (UNDP) and Rockefeller Philanthropy Advisors Advocate to advocate for the use of data as a driver for philanthropic investment and to promote accountability among funders (Cheney 2017). In addition, Unilever has developed a sophisticated measurement tool for reporting on environmental impact, social value and profit (Carroll et al. 2012). Also promising is the advent of the Gold Standard for the Global Goals, a certification body designed to quantify and certify projects related to climate security and sustainable development (Gold Standard 2017). Most important, the Gold Standard work was initiated by the World Wildlife Fund providing another example of an NGO-led attempt to standardize and quantify impact measures.
Third, and related to the previous opportunity, common terms and tools for measurement can provide a consistent method for all participants to report outputs, outcomes and impact. As an example of one promising development that points to progress on common monitoring and evaluation practices, the Global Reporting Initiative (GRI) has updated its Sustainability Disclosure Database to include SDG target 12.6. This move will help member states to encourage or require companies to report on their sustainability activities. The Target 12.6 – Live Tracker (https://database.globalreporting.org/SDG-12-6/) tracks the progress of sustainability reporting around the world. Although limited to one goal, this type of method to encourage progress and transparency is a potential model for reporting. Similarly, in the social investment domain, Clearly So announced a promising new impact measurement tool for private equity and venture capital funds (Thorpe 2016).
Finally, as capitalism is being re-invented and the voices of multiple stakeholders are becoming more prevalent and demanding, now is the perfect time for the private sector to embrace large-scale collaboration and a shared sense of purpose. The next 15 years will see more private sector leadership in developing commitments to address the SDGs, including new business models, new social investment models and new ways of measuring progress. Corporate Venture Capital Funds, for example, have been hailed as a new and effective way for both large and small companies to engage in social investment. John Elkington claims that a “better alignment between their venture capital operations and the ‘strong’ version of the sustainability agenda would produce benefits many orders of magnitude greater than anything they are likely to do under the citizenship, CSR or shared value banners alone” (Breakthrough Capitalism 2014). Similarly, Clearly So, a new breed of investment bank that helps to connect social enterprises to impact investors, advocates that the financial system can be a powerful force for good (Thorpe 2016). Beyond financial support, business leaders have the opportunity to galvanize networks, advocate for regulation and policy change and form supporting consortia and a host of other possible interventions, including the deployment of skilled employees.
In the past twenty years, corporations have developed several innovative practices to engage their employees in their social impact work. Recognizing the value of employee engagement, IMPACT 2030, a global, private sector-led collaboration to mobilize employee volunteers in support of the SDGs, was founded to advance this element of social responsibility. Their ambitious agenda, created in response to a UN Resolution, includes the development of open-source measurement frameworks, benchmarks and reports on how volunteer efforts impact the SDGs. (IMPACT 2030 2016.) As the practice of HR becomes more closely aligned to CSR in terms of recruitment, retention and professional development, there is tremendous opportunity for private sector employees to accelerate progress toward the Global Goals. Many companies have recognized the value of these human capital programs for professional development but the global health field also benefits from more cultural agile business leaders who are more poised for collaboration with NGOs and governments (White 2015).
It is also the perfect time to reflect upon the lesson learned from “pioneers in collaboration” such as Starbucks, Dow and many other documented cases of pioneering partnerships. There are also lessons to be learned by companies pursuing internal transformation around collaboration. IBM, for example, learned a great deal about trust and collaboration throughout the 1990s as they radically moved to another operating model (Heckscher 2015.) It is also an opportune moment to re-examine the important contributions to collaboration theory as advanced by scholars like James Austin. In the context of the SDGs, linking collaborative efforts to national health and environmental priorities is critical to achieving progress in any public health intervention. Second, any new efforts should build upon the existing strategies of the collaborating partners. The new efforts should reflect the missions and strategic intentions of the partners. The THET Principles provide a promising example of NGO leadership in defining the rules of engagement for public-private partnerships. The new era of collaboration should move beyond a shared value mindset to new models of partnership where each contributor plays an equal role in defining challenges and designing solutions with the greater goal of sustainable value creation. In the end, it is shared visions, respectful partnerships and bold goal-setting that will lead to creating transformative and lasting value for society. NGOs have the unprecedented opportunity to take leadership roles in engaging the private sector in more game-changing collaborations.
About the Author(s)
Michael Bzdak, PhD, Executive Director, Global Community Impact, Johnson & Johnson, New Brunswick, NJ
Correspondence may be directed to: Michael Bzdak, Johnson & Johnson Plaza, New Brunswick, NJ 08933, E-mail: [email protected]
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Michael Bzdak, PhD, Global Director, Employee Engagement for Johnson & Johnson
As the Global Director of Employee Engagement in the office of Global Community Impactat Johnson & Johnson, Michael Bzdak manages the corporation’s efforts to engage employees in social impact work. Michael serves on the New Jersey’s Governor’s Advisory Council on Volunteerism and Community Service and on the advisory board of Rutgers University’s Institute for Women’s Leadership. Additionally, he has served on the Council on Foundations Corporate Committee, the New Jersey AIDS Partnership Advisory Committee, the board of the Mid Atlantic Arts Foundation, and the New Jersey Council for the Humanities where he completed a term as chairman of the board of directors.