article reflection
500-750words base on my materials !
*https://www.youtube.com/watch?v=Hayf9Ob9fiQ&feature=youtu.be
Group 2 Learning Materials (Thurs. 3:30pm class)
Hello! Please complete the following materials before class time.
1. Take our survey linked here. This will take only a few minutes.
https://forms.gle/cQdMcVUF9Qtz9rR96
2. Go through our google slides presentation. Linked here!
https://docs.google.com/presentation/d/1zo7IIhNO7wsMAf nmcTDAd8xghU
-q7Y8AGGqFwFx6ELA/edit?usp=sharing
a. Make sure to listen to the audio! This can be done through viewing
in presenter mode, or clicking on the audio bubbles and selecting
the play button.
https://forms.gle/cQdMcVUF9Qtz9rR96
https://docs.google.com/presentation/d/1zo7IIhNO7wsMAfnmcTDAd8xghU-q7Y8AGGqFwFx6ELA/edit?usp=sharing
DEBORAH LEIPZIGER
REV: DECEMBER 1
8
,
2
01
3
LWW-03
GREYSTON BAKERY: COMBATTING POVERTY BY MAKING A PROFIT
Mike Brady entered the doors of the Greyston factory, the rich smell of chocolate filling the air around him. Sunlight
poured in through the building, designed by the world-renown architect Maya Lin. Brady has only recently become
CEO of Greyston, New York’s first Benefit Corporation. His dilemma is how to promote growth to support the
company’s social and environmental mission. This case study examines how CEO Mike Brady is addressing
strategic priorities such as promoting growth, enhancing supply chain sustainability, paying a living wage, and
working with other businesses to achieve Greyston’s founding mission. Greyston’s history provides a lens to examine
how a value chain can create social value. How does a values-based company influence its suppliers, customers,
and even competitors to become values-led companies?
Introduction
“We don’t hire people to bake brownies; we bake brownies to hire people.”
– Greyston’s Benefit Corporation Report (20
13
)
On this Monday morning, Mike Brady entered the doors of the Greyston factory, the rich
smell of chocolate filling the air around him. Sunlight poured in through the building, designed
by the world-renowned architect Maya Lin. Mike has only recently become CEO of Greyston,
New York’s first Benefit Corporation. His dilemma is how to promote expansion and growth to
support the company’s social and environmental mission.
Bernie Glassman, the founder of Greyston and a Buddhist leader, had stepped down as CEO
in early 2000. One of the core concepts Bernie infused in the company was the concept of
PathMaking. Inherent in this concept is that all people are on a path, moving forward with their
lives. Greyston was founded with an open hiring policy, anyone would be hired no matter what
Deborah Leipziger is an author and advisor on corporate responsibility and sustainability issues. She is the author of
several books in the field, including The Corporate Responsibility Code Book, now in its second edition. She played
a key role in the development of several social standards, including Social Accountability 8000. She is a Senior
Fellow in Social Innovation at the Lewis Institute at Babson College.
Cases are developed solely as the basis for class discussion and are not intended to serve as endorsements, sources
of primary data, or illustrations of effective or ineffective management. Copyright © 2013 The Aspen Institute
Business and Society Program. This publication may be used in its entirety for classroom instruction. This
publication may not be altered, digitized, posted or transmitted without permission. To request permission to
reproduce materials, please contact info@aspenbsp.org.
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
their background. Recent immigrants, the disabled, people fighting addiction, or those who had
been incarcerated, all were welcome to put their name on a list and would be called to start work
when a position became available. Greyston trains people to work hard, makes them
“employable” and then facilitates their advancement to other companies.
Mike’s arrival signaled a new era for Greyston (see Appendix 1: Greyston Timeline for a
timeline of the business). He had worked at Price Waterhouse Coopers after graduating from
Wharton. From day one at Greyston, Mike was keenly aware of the importance of maintaining a
profitable business to support its founding mission. He inherited an organization rich in history
and purpose, but the factory was not reaching its full capacity.
The new CEO also faced a number of questions critical to the success of the company.
Should their product line be diversified in order to tap new market opportunities such as gluten-
free and healthier products?1 Further, running the business in ways consistent with the company’s
founding values created unique challenges for Greyston. Sourcing responsibly was one such
challenge. As a B Corp, Greyston is required to engage with its suppliers with a view to making
the supply chain more sustainable. Were the flour, cocoa, sugar, butter, and eggs used to make
Greyston’s signature brownies ethically sourced? Did Greyston know how fairly suppliers
treated their workers? Was there a way to seek out suppliers who were also B Corps, such as
King Arthur Flour? What were the costs associated with sustainable sourcing? How would
Greyston prepare for disruptions in production if suppliers did not conform with ethical
practices? Would Greyston incur additional costs to train suppliers on good social and
environmental practices?
Other business challenges directly impacted Greyston’s ability to carry out their mission. For
example, how best to continue the commitment to PathMaking while addressing the company’s
debt overhang? Greyston had also pledged to make progress towards paying its employees a
living wage. For decades, Greyston workers have been unionized through the Local Bakers
5
3,
which is part of the Bakers, Confectionery, Tobacco and Grain Millers International Union.
Could Greyston afford to pay a living wage? Could the company become a strong advocate for
paying a living wage in the community?
Greyston’s product line was also at issue. Should Greyston stay true to its core business,
brownies, or branch out? The equipment at the Bakery was designed to make brownies, and
creating other products such as granola bars would require new machinery.
Finally, there was the question of how to tell the Greyston story. Despite publicity on
6
0
Minutes,2 there was little awareness about the company outside of Yonkers and the corporate
social responsibility (CSR) community. Although data tracking on the success of Greyston’s
social programs (such as child care) would be useful, they had only limited information on the
social metrics of the business. Understanding the impact of high-quality child care and its long-
term effects on later educational success is a marketing issue as well as a question of the
company’s social impact.
1 Dr. Alessio Fasano of the University of Maryland estimates that
18
million Americans are sensitive to gluten. The
market for gluten-free products continues to grow and is estimated at $6.3 billion, with 33 percent growth between
200
9
and 20
11
. For more on this topic, see O’Brien, Keith, “Should We All Go Gluten-Free?” New York Times,
November 25, 2011.
2 http://www.cbsnews.com/stories/200
4
/01/09/60minutes/main592382.shtml
2
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
The face of Greyston was changing as well. In the first few decades of the company’s history
the employees were mainly male and African-American. As the population of Yonkers grew
more Hispanic, this was reflected in a workforce that was increasingly Hispanic and also more
female. What changes might be necessary to accommodate these shifting demographics?
Background
When Greyston was established in
19
82 its goal was to end poverty in Southwest Yonkers.
Now, some 30 years later, poverty still exists in the community but what Greyston has done is
nothing short of revolutionary – it has addressed the root causes of poverty and provided its
employees with pathways to a different future.
Employing the Chronically Unemployed
Greyston employs many people who have never worked before, including people who have
been incarcerated or those leaving drug rehabilitation programs. Greyston keeps a list of
individuals looking for a job and when an opening becomes available, the company hires people
without a thorough review of their record. By law Greyston is required to check if the candidates
are US citizens, but otherwise no background checks are made. Greyston managers teach
apprentices how to work – with an emphasis on punctuality and the need to respect authority.
Approximately 60 percent of the apprentices do not remain at Greyston, but those who do stay
go on to earn highly-prized jobs with benefits, a rarity in Southwest Yonkers.
The company is committed to PathMaking, creating opportunities for its employees to find
other opportunities once they learn how to hold a job. Each employee at Greyston makes a life
plan. The company provides assistance in helping employees achieve their plans, whether it
involves working towards a GED diploma or getting health care. Greyston is a stepping stone
and employees are encouraged to go on to higher-paying jobs, such as repairing air-conditioning
units. Rodney, an employee who began at Greyston, now runs the production line for a Dunkin’
Donuts.
Delaney Philogene is another good example of PathMaking at Greyston. After fleeing her
native Haiti she lived on her own from the age of fourteen. She left school after becoming
pregnant. She went to Greyston each day to see if there was an opening. After starting on the
assembly line, she secured a full-time position in accounting at Greyston. She has since moved
into an accounting position at another company and is raising her two children.
The Greyston Mandala
Greyston’s founder, Bernie Glassman, was a former NASA aerospace engineer who became
a Buddhist monk and infused the company with a Buddhist perspective. To Bernie, everything is
highly interconnected, and this understanding of connection is central to the company’s success
and to its strategy. Bernie began by establishing a deep knowledge of the community he was
trying to serve. He and other members of the original Greyston team volunteered at a local soup
kitchen, becoming familiar with the world of the homeless. By volunteering, Bernie made an
important discovery: many of the homeless people in Yonkers were single parents. Without
access to child care these homeless parents could not find work and were unable to break out of a
3
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
life of poverty. Without access to work they could not attain housing. It was a vicious cycle that
lasted for generations, and the challenges surrounding this cycle often lead to drug addiction,
which also required access to help. Bernie understood that it would be difficult to foster job
creation without addressing the broader lack of quality child care, housing, and training. Those
suffering from HIV/AIDS were in need of additional services. The inter-relatedness of these
problems led Bernie to develop the Greyston Mandala, a network of services provided by the
Greyston Foundation to holistically and systematically address poverty in the community.
Bernie also created the Greyston Family Inn, which gave residents of the community access
to permanent housing for the first time. The Inn relied on assistance from wealthy patrons in
Westchester County until Greyston received a grant from the NY State Housing Assistance
Program to buy and refurbish a deserted building a few blocks from the Bakery. Typically, an
outside contractor would have been hired for construction, but with so many unemployed people
willing to work Bernie hired locals to refurbish the complex. By being involved in the
construction of the edifice, local people took pride in their work and were given valuable job
training skills.
Connecting with Ben & Jerry’s
In the first few years of its existence, the bakery grew steadily making hand-made cakes for
restaurants in New York City. One of the defining moments was founder Bernie Glassman’s
introduction to Ben Cohen of Ben & Jerry’s at a conference convened by Social Venture
Network. The ice cream maker decided to purchase brownies from Greyston to make ice cream
sandwiches. The contract from Ben & Jerry’s allowed Greyston to grow and to support its
investment in housing and social infrastructure. It was one thing to hire people, but another to be
able to offer steady employment and opportunities for advancement over time. Historically,
Greyston has sought out business partners with which it shares values. This alignment of values
is a hallmark of Greyston and serves to inform its supply chain work going forward.
When Ben Cohen received the first shipment of brownies from Greyston, the brownies had
all stuck together into giant 50 pound rocks.3 The ice cream company tried to create ice-cream
sandwiches and ended up with tiny brownie pieces. What could be done with tiny brownie
pieces? From this fiasco, came a new flavor: Chocolate Fudge Brownie, with pieces of Greyston
brownies. Chocolate Fudge Brownie is now a best-selling flavor.
The partnership with Ben & Jerry’s allowed Greyston to transition from a small local
business to a supplier for a well-known company. As a result, Greyston matured into a more
structured company. The transition required Greyston to purchase machinery and to seek funding
to finance this growth.
Ben & Jerry’s is a values-led business, taking a stand on a wide range of issues from
supporting dairy farmers to promoting fair trade, climate justice, and peace-building. Ben &
Jerry’s long-term partnership with Greyston has thrived, in part, because both companies are
values-led companies. Having a primary customer also poses both advantages and challenges.
How might Greyston develop other partnerships like the successful one forged with Ben &
Jerry’s?
3 Lecture by Ariel Hauptman, Business Development Manager at Greyston Bakery, on “Social Enterprise and
Benefit Corporations.” Simmons School of Management (Boston, MA), April 4th, 2013.
4
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
Benefit Corporation and B Corporation
On February
12
, 2012, Greyston registered as New York State’s first Benefit Corporation. A
Benefit Corporation is a new type of business structure, a legal entity that is required by law to
generate social value. Benefit Corporations have a fiduciary duty to address non-financial
interests such as the needs of employees, the community, and the environment. CEO Mike Brady
also saw an advantage in being the first Benefit Corporation in the state of New York. It
positioned Greyston to be a leader and work with prestigious organizations, including the Clinton
Global Initiative and the American Sustainable Business Council.
In addition to being a Benefit Corporation, Greyston Bakery is also certified as a B
Corporation, or B Corp. To become certified as a B Corp, companies need to meet social and
environmental standards, and commit to accountability and transparency. As of late 2013, there
are 865 B Corps in existence in 29 countries and in 60 sectors.4 B Corps are certified by B Lab, a
non-profit organization, working to build a community of certified B Corps and also to promote
legislation allowing B Corps to come into existence in locales where such legislation does not
exist. B Lab has been a key part of Greyston’s process of becoming a B Corp. An audit from B
Lab provides a tangible tool for Greyston, and the company has completed three such audits.
Ariel Hauptman, Greyston’s Business Development Manager, confesses that the first two audits
were hard, reflecting that it was tough to get everyone at Greyston on board: “We did not
anticipate how much work was involved.” However, she continued, leadership “knew we had to
become a B Corp and to hold ourselves accountable.”5
The company set a wide range of environmental targets as part of the process of becoming a
B Corp. Greyston initiated a recycling program, made changes in lighting to increase efficiency,
and installed solar panels. While they had set targets in the past, working with B Lab helped
Greyston think about sustainable manufacturing and share best practices with co-manufacturers.
Greyston chose to become a B Corp for a variety of reasons. Becoming a B Corp provided
Greyston with additional mechanisms for accountability and transparency. In addition, becoming
a B Corp gave Greyston recognition for the work they had done for decades, using business to
address social and environmental concerns. According to Ariel Hauptman, B Corp status has
increased Greyston’s visibility, generating more requests from companies to work with
Greyston.6 In this way, Greyston is able to help shape policy going forward and practice thought
leadership.
4 http://www.bcorporation.net/
5 Lecture by Ariel Hauptman, Business Development Manager at Greyston Bakery, on “Social Enterprise and
Benefit Corporations.” Simmons School of Management (Boston, MA), April 4th, 2013.
6 Lecture by Ariel Hauptman, Business Development Manager at Greyston Bakery, on “Social Enterprise and
Benefit Corporations.” Simmons School of Management (Boston, MA), April 4th, 2013.
5
http://www.bcorporation.net/
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
Balancing Issues as a Benefit Corporation
“A strategy is a coordinated and integrated set of five choices: a winning aspiration,
where to play, how to win, core capabilities, and management systems.”
7
As Greyston’s Business Development Manager, Ariel Hauptman created a Benefit
Corporation Committee to drive Greyston’s efforts to implement its social and environmental
agenda. Ariel brought together logistics, accounting, sanitation and other key parts of the
company to create the Committee.
“Benefit Corporations are not a trend, but it is one of the directions in which business is
moving,” says Ariel Hauptman.8 Greyston’s Benefit Corporation Committee decided to address
some of the challenges facing the company by considering how Greyston’s strategy might inform
their priorities. Greyston’s Strategic Plan9 includes the following components:
Execution: Increase quality and improve efficiency:
• Improve throughput with more advanced equipment;
• Reduce waste with larger deposit, better cooling and better cutting;
• Build upon our best-in-class supervisor and apprentice training;
• Achieve SQF (Safe Quality Food Institute) certification.
Pipeline: Develop a pipeline of other potential “major” partners.
Value-led Businesses: Limit work with businesses not aligned with the Greyston mission.
They also aim to build the Greyston brand based on the attributes of social enterprise
leadership, local business, and premium quality. As an example, in order to promote social
enterprise leadership, Greyston will do the following:
I. Define and document the Greyston Way
10
II. Measure value
a. Measure, improve, innovate, and measure again
III. Communicate, educate and collaborate
a. Lead the Benefit Corporation movement
b. Participate in Unilever’s Sustainable Living Plan Programs
7 Lafley. A. G. and Roger Martin, Playing to Win: How Strategy Really Works, Harvard Business Review Press,
2013.
8 Lecture by Ariel Hauptman, Business Development Manager at Greyston Bakery, on “Social Enterprise and
Benefit Corporations.” Simmons School of Management (Boston, MA), April 4th, 2013.
9 Internal company document, shared with the author by Mike Brady, CEO of Greyston.
10 The target is for the company’s approach to business, known as the Greyston Way, to become a model for the
creation of a social enterprise.
6
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
As Greyston moves forward, the key challenges facing Mike Brady are daunting. The issues
he needs to balance include:
• How to become more profitable;
• How to ensure suppliers are ethical and socially responsible;
• How to move towards paying a living wage;
• How to address the changing demographics of the workforce;
• How to capture data on the social impact of the company;
• How to use social media to promote the company and its social objectives.
The Greyston Value Chain
Greyston is part of a value chain that includes its suppliers and its main customer, Unilever,
and their subsidiary Ben & Jerry’s. (Unilever acquired Ben and Jerry’s in 2000, at which time
Ben and Jerry’s became a wholly owned subsidiary with its own board of directors.) Over the
course of many years, Greyston, Ben & Jerry’s and Unilever have developed “layers of
alignment”11 with a shared commitment to social and environmental goals.
Ariel Hauptman is responsible for the ongoing relationship with Unilever and Ben & Jerry’s.
According to Ariel, “at first Greyston did not hear much from Unilever’s US office, located right
nearby in Englewood Cliffs, NJ. Our direct relationship had been with Ben & Jerry’s. It has
taken time to build a relationship with Unilever – and now the companies have a strong working
relationship. It is convenient for Greyston that Unilever’s VP for Sustainability is located in
Englewood Cliffs.”12
Unilever is unique in that it has created a ten-year Sustainable Living Plan.13 Mike Brady,
Greyston’s CEO, calls the plan a “bold and global initiative.”
14
According to Brady, Unilever’s
CEO Paul Polman sees sustainability as a mechanism to differentiate the company.
15
Unilever’s
plan provides a useful framework for Greyston, including the following goals around “enhancing
livelihood” and “reducing environmental impact.”
Enhancing Livelihood
This area focuses on sustainable sourcing and improving the lives of farmers and distributors
in Unilever’s supply network. Between 2010 and 2011, sustainably-sourced raw materials
increased from 14 to 24 percent and the company has the goal of engaging with 500,000
small-scale farmers and 75,000 small-scale distributors by 2020. Ultimately, Unilever plans
to sustainably source all of the company’s raw agricultural materials.
11 Term introduced by Miguel Padro, The Aspen Institute, in discussion with the author, April 2, 2013.
12 Lecture by Ariel Hauptman, Business Development Manager at Greyston Bakery, on “Social Enterprise and
Benefit Corporations.” Simmons School of Management (Boston, MA), April 4th, 2013.
13 http://www.unilever.com/images/UnileverSustainableLivingPlan_tcm13-284876
14 Interview with Mike Brady, CEO of Greyston, September 9, 2013, by the author.
15 Ibid.
7
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
Reducing Environmental Impact
Unilever is also focused on the reduction of greenhouse gases, improvements in water quality
and efficiency, and a lower waste footprint. Although to date Unilever’s environmental
impact has largely remained stable, their programming goals are for the most part on target.
They plan to halve the environmental footprint of their products.
In Greyston’s 2012 Annual Report, specific mention is made of Unilever’s Sustainable
Living Plan and Ben & Jerry’s linked prosperity vision as two key influencers in the company’s
vision for creating social value. Unilever has the goal of sourcing only fair trade ingredients in
Ben & Jerry’s ice cream by 2013. In 2005, the ice cream manufacturer became the first of its
kind to use fair trade-certified ingredients.
Becoming a Values-led Supplier
Greyston spends millions of dollars each year sourcing raw materials such as flour, sugar,
eggs, butter, and cocoa.
16
The company has 20 key suppliers, each providing over $10,000 per
year in product. Sourcing for these products has recently been brought under Unilever contract.
By sourcing with Unilever, Greyston has increased its leverage and the coherence of the process.
One challenge for Greyston’s B Corporation Committee was to design and institute a supplier
code of conduct. At first, Greyston CFO Jennifer Solomon expressed concern that suppliers
would sever their ties with Greyston rather than commit to a code of conduct. In 2013, Ariel
designed a Questionnaire for Suppliers to gain a better understanding of what suppliers were
doing around social and environmental issues. What were the areas in which suppliers needed to
improve? How could Greyston work with these suppliers to drive better social and
environmental performance? The process of developing a code of conduct required Greyston to
assess what key values the company embraces. For example, Greyston is committed to
supporting women-owned businesses, as well as organic and fair trade. In Spring 2013, Greyston
engaged a group of MBA students at the Simmons School of Management to help develop the
Supplier Code of Conduct.
17
Partnerships for Growth
Greyston has grown over the past years and the rate of growth has also increased. In the past
few years, revenues have grown as follows:
Table 1: Greyston Revenues
2008 $7,022,631 2011 $8,435,004
2009 $7,104,411 2012 $10,116,556
2010 $7,857,671
Source: Correspondence between Ariel Hauptman and the author, June 10, 2013.
Greyston has excess capacity. Mike Brady and the Greyston team need to find another set of
partners to ensure that the Bakery is running at full capacity. Volume ensures that Greyston can
keep hiring workers and to provide consistent employment for its workers over time. The
16 Lecture by Ariel Hauptman, Business Development Manager at Greyston Bakery, on “Social Enterprise and
Benefit Corporations.” Simmons School of Management (Boston, MA), April 4th, 2013.
17 This is an ongoing process. As of publication, the Code is still being finalized.
8
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
company can accommodate several production lines but it needs to ensure that it provides its
workers with consistency. Growth – within the parameters of Greyston’s mission and values – is
a key priority.
Toward these ends, Greyston has partnered with Whole Foods to create the Whole Planet
Brownie. The companies have partnered to combat poverty by selling brownies. Greyston
Bakery provides brownies to Whole Foods stores in over ten states, including New York,
Connecticut, and New Jersey. The sale of brownies and blondies helps to fund entrepreneurial
endeavors of people who are seeking to lift themselves out of poverty. Two percent of these sales
go to the Whole Planet Foundation.
The Whole Planet Foundation supports entrepreneurs in the communities from which it
sources products. The initiative operates in over 50 countries, and eighty-nine percent of the
entrepreneurs it serves are women.18 For example, Whole Foods sources cashews from Kerala in
India. The result is that it helps alleviate poverty in the Kerala community. By partnering with
the local Microcredit Institute of Grameen, the Whole Planet Foundation is able to fund women
like Nagamma, who has now received two loans from the Foundation.19 The first loan of $100
helped her to build a tea shop. The second loan of $160 helped her start raising goats and
chickens.
In the few months after its start the partnership between Greyston and the Whole Planet
Foundation had generated $6,500 for micro loans, and $4,500 in just over a month as additional
funds. As a result, the partnership has been able to supply a loan every three days to
entrepreneurs in developing countries.20 The initiative is scheduled to grow to include Whole
Foods Markets in California, Florida, and the Midwest. In 2012, the Whole Planet Brownie
Project raised $121,154 and projections for 2013 are $355,000.21
Living Wage
Employees at Greyston work 12 hour shifts, from 7:00 a.m. to 7:00 p.m., often working in
90°F temperatures, in conditions typical of large production facilities. When they graduate from
their apprenticeship employees make $10.50 per hour, plus health benefits, life insurance,
disability, and an annual share of the Bakery’s revenue. Apprentices are also eligible for a bonus
of $600 and other incentives.
Paying a living wage in the New York City metropolitan area is not easy, as the cost of living
is very high. Greyston is committed to making progress towards paying a living wage and to
working to promote the issue of living wage with other businesses. Ariel Hauptman recognizes
that paying a living wage is a “creative challenge.”
Greyston’s Guiding Principles (see Appendix 2) state:
The bakery will empower its employees by compensating them fairly for their efforts and
move towards a living wage. The bakery will pay employees fair wages for their skills.
While for some employees this salary may not currently constitute a “living wage,” the
18 http://www.wholeplanetfoundation.org/
19 http://www.wholeplanetfoundation.org/partners/microentrepreneurs/
20 “Greyston Bakery: Baked with a Fresh Start,” Whole Foods Blog, May 26, 2010.
21 Correspondence between Ariel Hauptman and the author, June 10, 2013.
9
http://www.wholefoodsmarket.com/blog/greyston-bakery-baked-fresh-start
http://www.wholeplanetfoundation.org/partners/microentrepreneurs/
http://www.wholeplanetfoundation.org/
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
bakery is committed to working with these individuals to improve their skill set and
value. To this end, the bakery will provide training opportunities so that employees may
increase their earning power. In addition, the bakery will promote from within thereby
providing opportunities for higher earnings. The bakery will also encourage and support
employees who seek outside vocational training, academic advancement, and
professional non-bakery-related enrichment. Finally, the bakery will also support
employees who seek greater self-sufficiency through employment elsewhere.
Calculating a living wage (see Appendix 3: Fair Wage Chart) is a challenge for many
reasons. One of the challenges is that such calculations depend upon family size. A living wage
calculator for Yonkers suggests that Greyston’s hourly wage rate of $10.50 per hour is not a
living wage for one adult (see Table 2). On the other hand, Greyston’s wage rate is higher than
the local average of $9.61 for food preparation and serving.22 It is also highly unusual for
frontline workers in the food sector to receive benefits such as low-cost housing, child care, and
health care, as Greyston offers its full-time employees.
Table 2: Living Wage Calculator, Yonkers, NY
Hourly Wages 1 Adult
1 Adult, 1
Child
1 Adult, 2
Children
1 Adult, 3
Children 2 Adults
2 Adults, 1
Child
2 Adults, 2
Children
2 Adults, 3
Children
Living Wage $13.05 $26.64 $34.25 $44.01 $19.03 $22.89 $24.26 $28.22
Poverty Wage $5.21 $7.00 $8.80 $10.60 $7.00 $8.80 $10.60 $12.40
Minimum Wage $7.25 $7.25 $7.25 $7.25 $7.25 $7.25 $7.25 $7.25
Source: MIT, “Poverty in America: Living Wage Calculator,” data for Yonkers, NY,
http://livingwage.mit.edu/places/3611984000.
Telling the Greyston Story
How does a brownie tell its story? Through outlets such as Instagram, Twitter, Facebook, and
Pinterest, among other methods. With people obsessed with food on social media, there are many
opportunities to engage consumers and other companies. Greyston, like Ben and Jerry’s, has
been very creative in using social media to communicate with stakeholders.23 Greyston is
working to promote other companies and products with whom its values are aligned, such as Ben
& Jerry’s and Toyota’s Prius.
What’s Next at Greyston?
Greyston’s founder Bernie Glassman has been clear about the role he would like the
company to play: “we want other people to copy us and replicate our models.”24 Current CEO
Mike Brady is also passionate about “Social Enterprise Leadership,” a term he uses to describe
22 http://metrojustice.org/2012/08/building-the-movement-labor-in-the-northeast-food-system/
23 Greyston is active on Facebook, Twitter and LinkedIn.
24 Bernie Glassman and Rick Fields, Instructions to the Cook: A Zen Master’s Lessons in Living a Life That Matters.
Bell Tower, NY, 1996, p. 127.
10
http://us.linkedin.com/company/greyston-bakery
https://www.facebook.com/GreystonBakery
http://livingwage.mit.edu/places/3611984000
http://metrojustice.org/2012/08/building-the-movement-labor-in-the-northeast-food-system/
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
Greyston’s efforts to promote the wider growth of social enterprise. Mike and Business
Development Manager Ariel Hauptman devote a portion of their time to working with other
companies, both large and small, and sharing what Greyston has learned. One way in which
Greyston can partner with companies is to bring executives from other organizations to Greyston
to work in the community gardens and bake brownies, giving them a flavor for the many ways in
which the Greyston adds value.
Greyston has set the following long-term goals:25
• Ten percent of Greyston employees “moving on” from the Bakery to higher-wage
positions, thereby creating openings for new apprentices;
• Greyston Baked Goods growing at 200% annually from online sales and corporate
gifts, generating increasing interest in “community-based” social enterprises; and
• Multiple studies taking place in Southwest Yonkers as it becomes globally known as the
best location for assessing social enterprise impact on a community.
What path should Mike and the rest of Greyston’s leadership take as they contemplate the
future? In the words of Ariel Hauptman: “What can Greyston teach American Express?”26
25 Email correspondence between Mike Brady and the author, September 26th, 2013.
26 Lecture by Ariel Hauptman, Business Development Manager at Greyston Bakery, on “Social Enterprise and
Benefit Corporations.” Simmons School of Management (Boston, MA), April 4th, 2013.
11
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
Questions for Discussion
1. What are Greyston’s strengths and are they being used to full advantage? What are the
company’s weaknesses and how can leadership compensate for them?
2. Which issues should Mike Brady target? Why? How do these issues reinforce or contradict
each other?
3. What tools does Mike Brady have to help prioritize the challenges facing Greyston?
4. How might Mike Brady leverage the excellent relationship with Ben & Jerry’s and Unilever
to address some of these challenges?
5. Who are the stakeholders of the company? How might they be part of the process of
addressing and balancing priorities?
6. What risks does Greyston face? Discuss the opportunities contained in those risks.
7. What incentives can be offered to suppliers to adopt better social and environmental policies?
8. If suppliers are unwilling to make social improvements, should Greyston replace them with
more socially responsible companies? If yes, should Greyston insist that suppliers be social
enterprises or registered Benefit Corporations?
9. Using the language of Playing to Win, what is Greyston’s winning aspiration? What kinds of
internal capacities do they need to “win”?
10. Greyston is considering expansion to Israel to help support the Muslim community there. In
this way, Greyston wants to translate the Greyston Way for companies operating in other
cultural and geographical contexts. In your view, is this a good next step? Why or why not?
Where else might the Bakery expand?
11. What are the competitive advantages for Greyston of taking a socially-responsible approach
to human resource management?
12. In the long term, how might Greyston gain or lose from their emphasis on living-wage jobs?
How could the company help spread their approach more widely?
13. After hearing a talk by Mike Brady you are convinced that elements of the Greyston
approach have the potential to help your community. As a budding social entrepreneur what
steps would you take to turn these ideas into reality?
14. Adopt the role of a manager tasked with establishing a Corporate Social Responsibility
strategy. How could the Greyston approach help make such CSR efforts more effective? Your
CEO asks you to make your case; what do you say?
15. Thinking about the challenges facing Greyston, how would you improve their bottom line
while retaining a commitment to social impact?
12
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
Appendix 1: Greyston Timeline
1982 Greyston bakery is founded in the Bronx by Bernie Glassman
1987 The bakery is relocated to Southwest Yonkers
Bernie Glassman meets Ben and Jerry in Colorado
1988 Greyston begins to produce inclusions for Ben & Jerry’s
1987–1992 Greyston develops social programs
1992 Greyston Foundation is created
1998 Greyston and Ben & Jerry’s celebrate 10th anniversary, selling over 300,000
pints of ice-cream
2000 Unilever acquires Ben & Jerry’s
2004 New bakery is completed and wins award as AIA Top Ten Green Projects
2005 Ben & Jerry’s becomes the first ice cream manufacturer to use fair trade-
certified ingredients (including its brownie inclusions from Greyston)
2009 Greyston launches a new training program which include both hard and soft
skills
2012 Mike Brady becomes CEO
Greyston registers as first Benefit Corporation in New York
13
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
Appendix 2: The Greyston Bakery’s Guiding Principles27
“We don’t hire people to bake brownies; we bake brownies to hire people.”
Greyston Bakery operates with a triple bottom line. We prioritize both profits and our social
contributions. We strive to be a sustainable model for inner-city business development. Our open
hiring policy and apprenticeship program provide both jobs and training for individuals who
have struggled to find employment in the past. When we generate profits, we use them to fund
the community development programs of Greyston Foundation. In order to operate effectively,
the bakery’s leadership commits itself to the following explicit principles. These principles all
flow from Greyston’s overall mission.
• The bakery will strive to be a model for inner-city business development committed to
Southwest Yonkers. The bakery will remain at the forefront of the field of inner-city
business development, continuing its unique success, and actively disseminating
information about the model. It will do this in southwest Yonkers, the inner-city
community where it was created and has grown, and where there is a high concentration
of hard-to-employ individuals. Any expansion elsewhere will only be undertaken if the
Yonkers base of operation remains strong.
• The bakery should consistently achieve an operating profit. Achieving operating profit is
the best route to long-term survival of the organization, and the best inducement for
others to follow the bakery’s model. Furthermore, because they are subject to the
discipline of market competition, bakery employees, unlike participants in many well-
intentioned job-training programs, develop skills that are genuinely valuable.
• The bakery will maintain an open-hiring policy. The bakery will continue its open-hiring
policy, and the associated apprenticeship program, in order to provide opportunity to
Yonkers’ hard-to-employ population. Providing jobs, and training for those jobs, to
individuals who would otherwise likely be unemployed is one of the greatest benefits that
the bakery provides to the community.
• The bakery will actively integrate itself into the Greyston Mandala. Bakery management
will work with the Greyston Foundation to give factory employees opportunities to take
advantage of the Pathmaker, childcare, housing, and other services. In addition, the
bakery will attempt to provide professional opportunities for individuals who enter
Greyston through other parts of the Mandala.
• A central purpose of the Greyston Bakery is to generate profits that can help sustain the
work of the Greyston Mandala. The Bakery’s net profits will support the various non-
profit projects of the Foundation, the bakery’s sole shareholder. The amount will be
balanced against the need to reinvest in the business to remain competitive and the need
to maintain a certain level of available working capital at all times.
27 http://www.greystonbakery.com/wp-content/uploads/pdf/greyston-bakery-guiding-principles
14
http://www.greystonbakery.com/wp-content/uploads/pdf/greyston-bakery-guiding-principles
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
• The bakery will rigorously measure, document, and monitor its progress toward all non-
financial goals. The bakery will monitor the success of its open-hiring policy, skill
building efforts, employee turnover, and other social goals.
• The bakery will empower its employees by compensating them fairly for their efforts and
move towards a living wage. The bakery will pay employees fair wages for their skills.
While for some employees this salary may not currently constitute a “living wage,” the
bakery is committed to working with these individuals to improve their skill set and
value. To this end, the bakery will provide training opportunities so that employees may
increase their earning power. In addition, the bakery will promote from within thereby
providing opportunities for higher earnings. The bakery will also encourage and support
employees who seek outside vocational training, academic advancement, and
professional non-bakery-related enrichment.
• Finally, the bakery will also support employees who seek greater self-sufficiency through
employment elsewhere.
• The bakery will strive for stable employee turnover rates for post-apprenticeship
employees. The bakery will not attempt to achieve artificially high employee turnover in
order to free up staff positions for new employees, as maintaining a profit under this
constraint is not possible. However, because of the bakery’s open-hiring policy, the
turnover rate of the newest employees may exceed the norm.
• The bakery will automate its production whenever such changes are fiscally appropriate.
In order to maintain a profit and to assure that bakery employees are developing skills
valuable in the modern marketplace, the bakery will automate its production when
fiscally appropriate. The bakery management will monitor applicable technological
trends in the baking industry in order to inform automation decisions. The bakery will
strive to maintain and increase employment levels, despite increased automation, through
improved marketing efforts and sales growth.
• The Bakery will support the individual growth of its employees through its PathMaking
Program. PathMaking is built on a holistic concept, provides individuals within the
Greyston community with a personalized support to a more successful life as defined by
the individual. With the support of a counselor and life skills training in areas such as
money management, nutrition, and parenting, each person will develop their own Path to
self-sufficiency.
15
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
Appendix 3: Fair Wage Chart
1. Payment of wages A wage which is regularly and formally paid in full to the workers.
2. Living wage A wage that ensures minimum acceptable living standards.
3. Minimum wage A wage which respects the minimum wage regulations.
4. Prevailing wage A wage which is comparable to wages in similar enterprises in the same sector.
5. Payment of working
hours
A wage that does not generate excessive working hours and properly rewards normal working hours and overtime.
6. Pay systems A wage that leads to a balanced wage structure/composition between the basic wage and additional bonuses and benefits.
A wage that reflects different levels of education, skills and professional experience, as well as rewarding individual and
collective performance.
A wage that complies with regulations on social insurance payments and paid holidays and is not dominated by
disciplinary wage sanctions.
7. Communication and
social dialogue
A wage on which workers receive sufficient information in advance (through an individual work contract), in the course of
the production process (through regular communication channels) and at the time of the wage payment (with a detailed
pay slip).
A wage that is negotiated individually (with individual employers) and collectively – notably through collective bargaining
– between the employer and the workers’ representatives who are freely accepted in the company.
8. Wage discrimination and
wage disparity
A system of equal wages for equal work that does not lead to wage discrimination and does not generate unjustified, too
high and too rapidly growing wage differentials within the company.
9. Real wages A wage that progresses at least in proportion to price increases.
10. Wage share A wage that progresses proportionally along with enterprise sales and profit growth and which does not lead to a fall in the
wage share in enterprise performance growth.
11. Wage costs A wage whose progression does not lead to a dramatic reduction in wage costs within total production costs and as a
percentage of employment.
12. Work intensity,
technology and up-skilling
A wage that progresses along with changes in intensity at work, technological contents and the evolving skills and tasks of
the labour force.
Source: Fair Wage Network, http://www.fair-wage.com/
16
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
Appendix 4: Greyston Images
Images courtesy of and © Greyston.
17
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
Bibliography
Bakers on a Mission: Benefit Corporation Report, Greyston Bakery, 2012.
Glassman, Bernie and Rick Fields, Instructions to the Cook: A Zen Master’s Lessons in
Living a Life that Matters, Bell Tower, NY, 1996.
A. G. Lafley and Roger Martin, Playing to Win: How Strategy Really Works, Harvard
Business Review Press, Boston, MA, 2013.
18
LWW-03 Greyston Bakery: Combatting Poverty by Making a Profit
Acknowledgements
The author is grateful to the following people for their support:
Mike Brady, CEO, Greyston
Ariel Hauptman, Business Development Manager, Greyston
Jennifer Solomon, CFO, Greyston
Miguel Padro, The Aspen Institute
Jennifer Johnson, The Aspen Institute
19
REPRINT H02Y9O
PUBLISHED ON HBR.ORG
JUNE 17, 2016
ARTICLE
SOCIAL RESPONSIBILITY
Why Companies Are
Becoming B
Corporations
by Suntae Kim, Matthew J. Karlesky, Christopher G. Myers
and Todd Schifeling
SOCIAL RESPONSIBILITY
Why Companies Are
Becoming B Corporations
by Suntae Kim, Matthew J. Karlesky, Christopher G. Myers and Todd Schifeling
JUNE 17, 2016
From the New York Public Library
The landscape of American corporations is changing. Since the financialization of the economy in the
late 1970s, corporate governance practices have tightly linked the purpose of business with
maximizing shareholder value. However, as the 21st century pushes on, there has been an increased
emphasis on other stakeholder values, particularly social and environmental concerns. This trend in
corporate governance – which has led to the growth in “triple-bottom line” thinking – has fueled the
emergence of a new organizational form: the Certified B Corporation.
2COPYRIGHT © 2016 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
Certified B Corporations are social enterprises verified by B Lab, a nonprofit organization. B Lab
certifies companies based on how they create value for non-shareholding stakeholders, such as their
employees, the local community, and the environment. Once a firm crosses a certain performance
threshold on these dimensions, it makes amendments to its corporate charter to incorporate the
interests of all stakeholders into the fiduciary duties of directors and officers. These steps
demonstrate that a firm is following a fundamentally different governance philosophy than a
traditional shareholder-centered corporation.
The first generation of B Corporations was certified in 2007, and the number of firms earning
certification has grown exponentially ever since. Today, there are more than 1,700 B Corporations in
50 countries. Although any company, regardless of its size, legal structure, or industry, can become a
B Corporation, currently most B Corporations are privately-held small and medium-sized businesses.
Identifying as a B corporation is a way to publicly claim an identity as an organization interested in
both shareholder and stakeholder success. Having a clear identity can help firms communicate their
values to customers, which is particularly beneficial when they are claiming an identity different
from the industry norm. For instance, a study by Kellogg Professor Ned Smith reveals how a clear
“nonconforming” identity among hedge funds beneficially influences investors’ capital allocation
decisions—investors rewarded nonconforming funds (defined as hedge funds with atypical trading
strategies, relative to the norm, for their overall fund style classification) with greater investment
after short-term success and penalized them less after poor performance.
Indeed, as highlighted in ongoing research by one of us (Matt Karlesky), the individuals who make up
a firm’s audience (including potential investors, customers, or partners) cognitively categorize
businesses according to their similarities and differences. An unconventional identity – such as a B
Corporation – helps individuals clearly distinguish between traditional firms and those that are
committed to a broader set of stakeholder values.
So why do certain firms (and not others) choose to identify as B Corporations? Individual leaders are
partly why some organizations broaden their purpose beyond maximizing shareholder value. We
might look to Sir Richard Branson, who in 2013 co-launched the “B Team,” publicly decrying
corporations’ sole focus on short-term profits and calling for a reprioritization of people- and planet-
focused performance. We might also consider leaders of firms like Ben & Jerry’s or Patagonia (both B
Corporations) that have prioritized societal and environmental agendas.
Clearly, such leaders can be important catalysts of social change. However, the explosive growth of B
Corporations seems also to be driven by broader trends and changes in the corporate landscape that
cannot be explained by individuals’ actions alone.
Two of us (Suntae Kim and Todd Schifeling) conducted research to build a more robust
understanding of the rise of B corporations. By qualitatively examining the internal motives of firms
in the process of becoming a B corporation, and quantitatively testing key factors in these firms’
3COPYRIGHT © 2016 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
https://www.bcorporation.net/
http://asq.sagepub.com/content/56/1/61.abstract
http://ssrn.com/abstract=2794335
external industry environment – including the shareholder- and stakeholder-focused behaviors of
their corporate competitors – we found that there are at least two major underlying reasons why
firms choose to seek B Corporation certification.
First, as large established firms have ramped up their corporate social responsibility efforts, small
businesses that have long been committed to social and environmental causes want to prove that
they are more genuine, authentic advocates of stakeholder benefits. For instance, certifying firms
often highlighted how B corporation certification would help them stand out “in the midst of a
‘greenwash’ revolution” among large companies, and “help consumers sort through the marketing
hype to find businesses and products that are truly socially and environmentally responsible.”
This suggests that one key driver of the emergence of B Corporations was the increasing efforts of
more conventional profit-driven companies to be seen as ‘green’ and ‘good’. To test this theory, Kim
and Schifeling measured the mainstreaming of corporate sustainability and social responsibility
efforts in a given industry (e.g., sustainability-related terms in the trademarks of large public firms
and acquisitions of sustainability-focused small businesses), and found that the prevalence of these
broader, generic CSR efforts in an industry positively predicted the number of new B Corporations
emerging in that industry.
At the same time, the data highlighted a second reason driving B Corporations’ rise. The qualitative
evidence, gathered from firms’ B corporation application materials, revealed that certifying firms
believed “the major crises of our time are a result of the way we conduct business,” and they became
a B Corporation to “join the movement of creating a new economy with a new set of rules” and
“redefine the way people perceive success in the business world.”
This social movement-like motive suggested another important predictor of a firm’s likelihood to
certify as a B Corporation: large competitors’ persistent use of practices that maximize profits.
Correspondingly, the quantitative analysis revealed a positive relationship between the number of
“hostile” shareholder-centric activities in an industry – such as mass layoffs and high levels of
income inequality between top executives and average workers – and the emergence of B
Corporations in that industry.
These findings suggest that B Corporations are not just a function of a leader’s will – they are also
responses to the common “way” business is conducted in an industry. In other words, we can better
understand the recent proliferation of B Corporations, as well as other social entrepreneurship and
mission-driven businesses, by carefully examining the environment in which these organizations are
embedded. The evidence suggests that key elements of the industry environment—ranging from CSR
initiatives and sustainability trademark applications to layoffs and growing income inequality—
provide fertile soil for the growth of alternative organizational forms.
Increasingly, corporations are donning the persona of a responsible citizen, while continuously
performing practices to maximize profit. These contradictory tendencies motivate traditionally
4COPYRIGHT © 2016 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
“green” and ethical businesses to unite and stake a claim to their authentic difference, fueling the
growth of B corporations and other new types of organizations. For mission-driven businesses, these
alternative forms of organizing provide an opportunity to better communicate their commitment to
society and to the natural environment in a world where everybody claims to be “green” and “good.”
For corporate society, this steady but solid growth of alternatives represents an emerging challenge
to the historic dominance of the shareholder-centered incorporated entity. If the public corporation
is no longer the default organizational form for businesses, but rather one of many alternatives, how
can managers be prepared to ensure long-term competitiveness? How might leaders think about their
fundamental organizational structure when they seek to communicate their values in a noisy
marketplace of more conventional companies? As the rise of B Corporations among pioneering firms
demonstrates, efforts to reform and evolve industry standards increasingly require changes to the
fundamental purpose and legal form of an organization.
The traditional corporate form has in many ways monopolized our understanding of how we think
and talk about “business.” The rise of new forms of organization will require re-imagining what (and
who) are the fundamental building blocks of business. Indeed, the advance of new forms such as B
Corps may herald the advent of what sociologist Jerry Davis has called the “tectonic shift” to an era
where “local and democratic forms of organization could address the needs formerly met by the
corporation.”
Suntae Kim is an assistant professor at Boston College’s Carroll School of Management. His research focuses on
alternative ways of organizing business in our times when shareholder-centered corporations increasingly fail to align
organizational growth and societal well-being.
Matthew J. Karlesky is an assistant professor of management and entrepreneurship at Suffolk University’s Sawyer
Business School. His research explores social cognition, creativity and innovation.
Christopher G. Myers is an assistant professor at the Johns Hopkins University Carey Business School and Armstrong
Institute for Patient Safety & Quality. His research explores organizing processes that support individual learning,
development, and innovation in dynamic work environments.
Todd Schifeling is a post-doctoral fellow with the Erb Institute at the University of Michigan. He conducts research on
the organizational and political contexts that shape the incorporation of environmental values into markets.
5COPYRIGHT © 2016 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
http://vanishingcorporation.com