by Chris Jones, Vice President for Research, RPA
Review: "Corporate Citizenship and Urban Problem-Solving: The Changing Civic Role of Business Leaders in American Cities," by Royce Hanson, Hal Wolman, David Connolly and Katherine Pearson. Published by the George Washington Institute of Public Policy for the Brookings Institution, September 2006.
One of the most frequent laments in the civic world is the ever-shrinking role of powerful business leaders in their home city. Whatever the goal, there is nothing like the CEO of a major corporation calling the mayor, writing a check or rallying his colleagues to get something done. To be sure, senior executives in New York, Stamford, Newark and other cities continue to make critical contributions to the life of their cities, and not everyone misses the days when David Rockefeller could mobilize the business community to push through a project like the World Trade Center. But it has become an article of faith that the heads of major corporations are less willing to commit either their time or their company's money to solve hometown problems.
For those yearning for a renewed era of vigorous leadership from a few corporate titans, this recent report by the George Washington Institute of Public Policy for the Brookings Institution delivers a clear message: Get over it, and then look for a new model; there's little chance of the old model coming back. The trend is so pervasive that the 19 cities studied showed strikingly similar patterns of disengagement by major CEOs and their companies.
Why has this happened? Mergers and acquisitions, banking deregulation, the decline of large manufacturing companies, the movement of corporate headquarters to suburban locations and the increasing political and technical complexity of public issues have led to a pool of CEO civic leaders that is "shallower, more transient, and less influential."
The report underemphasizes certain factors, such as how the increasing global perspective of firms has weakened identification with physical location, and overemphasized others, such as the decline in manufacturing. While the latter had a great impact in places like Cleveland or Pittsburgh, there is no reason that a service company like Federal Express or Wal-Mart couldn't have just as much local clout. Also, the survey did not include the three largest cities - New York, Los Angeles and Chicago - which arguably have somewhat different issues as leading global centers.
Still, the overall analysis rings true, and contains some interesting findings. In nearly every city, both business and civic leaders cited the loss of major bank CEOs who were willing and able to shape deals and mobilize capital. This is a largely unrecognized consequence of the deregulation of the finance industry. The degree to which business organizations have adopted a regional, rather than central city agenda, is also striking. The regional focus reflects both the dispersion of corporate activity to the suburbs and an increasing recognition - a correct one - that economies operate on a metropolitan scale.
The most important contribution of the report is that it describes how business, civic and political players have at least partially filled the space left as corporate leadership has retreated. Non-profit institutions, such as universities, hospitals and foundations, have assumed more prominent roles in both financing and leading civic improvement efforts. While they have a different set of priorities, their financial resources have grown, and they often have deeper roots in the community than most businesses. The professional staff at business organizations has also grown and assumed more of the agenda-setting, membership mobilization and government relations roles formerly assumed by CEOs. The next rung of the corporate hierarchy, such as Executive VPs and other senior staff, are playing larger roles on the expanding boards of business and civic groups.
The authors emphasize the obvious downside of this alignment. An executive vice president cannot move as fast as a CEO. Larger and more diverse groups and alliances require more management of bureaucracies and reduce the chances for bold, decisive action. If the old system isn't coming back, however, it's essential to recognize and build on the advantages of this new environment. Involving more people at the outset can build a stronger, better grounded civic effort. A regional perspective can also potentially address many of the competitive and equity issues that a city focus cannot. The report recommends that mayors pursue both an "inside game" that nurtures alliances with both individual CEOs and civic organizations, and an "outside game" that makes connections with suburban and regional institutions to link the fate of the city and region.
While some projects and issues may be more difficult to address, those that resonate across business, civic and community interests may have a greater chance of success. Affordable housing is one example of this. In high-cost places such as the Tri-State region, business groups, who need lower cost housing for workers, have made unlikely alliances with housing advocates and environmental groups around concrete policy objectives such as inclusionary zoning programs and transit-oriented development projects.
Although the report doesn't say so, there is also a glimmer of hope for continued corporate leadership simply because smart corporate leaders recognize that place matters in the global economy. Despite or because of globalization, American business overall has became more dependent on the ability of U.S. cities and regions to provide the infrastructure, quality of life and business environment to attract labor, capital and markets in a competitive international economy.
Savvy business leaders understand this, and will find ways to act on it.
Review: "Corporate Citizenship and Urban Problem-Solving: The Changing Civic Role of Business Leaders in American Cities," by Royce Hanson, Hal Wolman, David Connolly and Katherine Pearson. Published by the George Washington Institute of Public Policy for the Brookings Institution, September 2006.
One of the most frequent laments in the civic world is the ever-shrinking role of powerful business leaders in their home city. Whatever the goal, there is nothing like the CEO of a major corporation calling the mayor, writing a check or rallying his colleagues to get something done. To be sure, senior executives in New York, Stamford, Newark and other cities continue to make critical contributions to the life of their cities, and not everyone misses the days when David Rockefeller could mobilize the business community to push through a project like the World Trade Center. But it has become an article of faith that the heads of major corporations are less willing to commit either their time or their company's money to solve hometown problems.
For those yearning for a renewed era of vigorous leadership from a few corporate titans, this recent report by the George Washington Institute of Public Policy for the Brookings Institution delivers a clear message: Get over it, and then look for a new model; there's little chance of the old model coming back. The trend is so pervasive that the 19 cities studied showed strikingly similar patterns of disengagement by major CEOs and their companies.
Why has this happened? Mergers and acquisitions, banking deregulation, the decline of large manufacturing companies, the movement of corporate headquarters to suburban locations and the increasing political and technical complexity of public issues have led to a pool of CEO civic leaders that is "shallower, more transient, and less influential."
The report underemphasizes certain factors, such as how the increasing global perspective of firms has weakened identification with physical location, and overemphasized others, such as the decline in manufacturing. While the latter had a great impact in places like Cleveland or Pittsburgh, there is no reason that a service company like Federal Express or Wal-Mart couldn't have just as much local clout. Also, the survey did not include the three largest cities - New York, Los Angeles and Chicago - which arguably have somewhat different issues as leading global centers.
Still, the overall analysis rings true, and contains some interesting findings. In nearly every city, both business and civic leaders cited the loss of major bank CEOs who were willing and able to shape deals and mobilize capital. This is a largely unrecognized consequence of the deregulation of the finance industry. The degree to which business organizations have adopted a regional, rather than central city agenda, is also striking. The regional focus reflects both the dispersion of corporate activity to the suburbs and an increasing recognition - a correct one - that economies operate on a metropolitan scale.
The most important contribution of the report is that it describes how business, civic and political players have at least partially filled the space left as corporate leadership has retreated. Non-profit institutions, such as universities, hospitals and foundations, have assumed more prominent roles in both financing and leading civic improvement efforts. While they have a different set of priorities, their financial resources have grown, and they often have deeper roots in the community than most businesses. The professional staff at business organizations has also grown and assumed more of the agenda-setting, membership mobilization and government relations roles formerly assumed by CEOs. The next rung of the corporate hierarchy, such as Executive VPs and other senior staff, are playing larger roles on the expanding boards of business and civic groups.
The authors emphasize the obvious downside of this alignment. An executive vice president cannot move as fast as a CEO. Larger and more diverse groups and alliances require more management of bureaucracies and reduce the chances for bold, decisive action. If the old system isn't coming back, however, it's essential to recognize and build on the advantages of this new environment. Involving more people at the outset can build a stronger, better grounded civic effort. A regional perspective can also potentially address many of the competitive and equity issues that a city focus cannot. The report recommends that mayors pursue both an "inside game" that nurtures alliances with both individual CEOs and civic organizations, and an "outside game" that makes connections with suburban and regional institutions to link the fate of the city and region.
While some projects and issues may be more difficult to address, those that resonate across business, civic and community interests may have a greater chance of success. Affordable housing is one example of this. In high-cost places such as the Tri-State region, business groups, who need lower cost housing for workers, have made unlikely alliances with housing advocates and environmental groups around concrete policy objectives such as inclusionary zoning programs and transit-oriented development projects.
Although the report doesn't say so, there is also a glimmer of hope for continued corporate leadership simply because smart corporate leaders recognize that place matters in the global economy. Despite or because of globalization, American business overall has became more dependent on the ability of U.S. cities and regions to provide the infrastructure, quality of life and business environment to attract labor, capital and markets in a competitive international economy.
Savvy business leaders understand this, and will find ways to act on it.
@RegionalPlan