Salesforce

A. The main facts about the activities of the company.

Salesforce is the leading cloud computing company and customer relationship vendor. It distributes cloud computing software to businesses to streamline sales management. Founded in 1999, Salesforce has consistently been one of the fastest growing companies in the world with a market capitalization of $50B. Salesforce.com (SFDC) is a suite of CRM products that allows sales reps to work more efficiently in-office or remotely. Through SFDC’s subscription service, companies can easily record, store, analyze, and share clear and actionable business data, which ultimately helps businesses understand their customers better.

Salesforce Foundation – the social investment arm of Salesforce – engages in the 1-1-1 initiative which invests the company’s people, technology, and resources to make a positive social impact. On the people side, the company has put in a plan to get its employees out and working in the community. On the technology side, the company has discounted or given away salesforce technology to non-profit organizations. The company has given over $85 million in grants since 2000.

B. The Ethical challenges this company is addressing.

Salesforce addresses the following ethical challenges facing the technology industry and the global environment:

1. Gender Wage Gap – Upon learning that there was a pay discrepancy between male and female employees at Salesforce, CEO Marc Benioff is implementing a rigorous investigation going through all of its 10,000 employees’ profiles to ensure that male and female employees have equal pay. Benioff aims to eliminate the gender wage gap at Salesforce by the end of his time as CEO as well as influence the technology industry to follow suit.
2. Gender Diversity – Currently, Salesforce is male-dominated both at the executive and employee levels. In leadership, the company is 85:15 men-to-women and 71:29 overall. However, these numbers are not too different from statistics of other large technology companies, including Google. Benioff seeks to address the ethical challenge of gender diversity by first acknowledging the bias works on a subconscious level that helped lead to this unbalance. This effort is reinforced by tangible actions, including the Women Surge program that aims to improve the company’s executive diversity by identifying executive-potential women employees and mandating them to be including in all important company matters. Benioff’s goal is that meetings must include 30% to 50% women.
3. LGBT Equality – Salesforce addresses LGBT rights through its equal employment hiring philosophy. Recently, Benioff took a bold stand against LGBT discrimination. In fact, he cancelled all his company’s events in the state of Indiana after its governor signed into law a bill that makes it legal for individuals to use religious grounds as a defense when they are sued by people who are lesbian, gay, bisexual, or transgender. Through a public announcement via Twitter, this spurred 17 major corporations, including Apple and Walmart, to join alongside Salesforce in protesting the states’ new anti-gay laws, which ultimately helped in successfully repealing the bill. In addition, Benioff personally offered several employees from Indiana relocation packages worth up to $5,000.
4. Environmental Stewardship – Though the company has much area for improvement in this space, Salesforce has taken significant measures to become a more environmentally friendly company. For example, it has reduced its carbon footprint by streamlining their data centers, reducing office space energy usage per square foot by 9% in FY14, and increasing investment in renewable energy.

C. What makes you believe this company is really ethical and why you trust it?

We regard Salesforce as a highly ethical company because it has continuously demonstrated ethical decision-making since the company’s inception. Many companies will often invest just enough to improve the company’s public image as an ethical enterprise. However, Salesforce has exceeded minimum compliance levels with regard to social responsibility. In fact, Salesforce has been about leading and doing more than is required which can be seen through its 17 years of existence. They have also have leveraged their position of influence to inspire other larger technology companies to address ethical issues.

In assessing the ethicality of a business, we used the following criteria for each business we analyzed:

1. Is the company both a highly profitable business that invests significant resources toward creating social good?
2. Does the company have a significant positive impact on its community?
3. Is the company’s commitment to environmental sustainability consistent with its actions?
4. Are the company’s hiring practices equitable?

Though other factors could be added in our criteria, we collectively agreed that these four factors helped us best in gauging the ethicality of the business. In the case of Salesforce, we found that the company was both extremely successful in the business and ethical sense as it is one of the fastest growing companies that has continued to invest its resources in creating a better world. The company has also significantly impacted the community through Salesforce foundation’s 1-1-1 initiative. Furthermore, the company has made strides to reducing its carbon footprint. Lastly, the company has led the charge in closing the gender pay gap and in promoting diversity in the workplace.

We trust Salesforce to be an ethical company because our research and testimonials from friends who currently work at Salesforce attest to the firm’s ethical practices and philosophy. Since the beginning of this project, we knew we needed to approach company information, especially from the company website, with caution since there is a high likelihood for bias. Hence, this is why we tested information we found online against word-of-mouth from employees who are first-hand witnesses of the company’s practices. Though the company has both strengths and weaknesses from a social responsibility standpoint, Salesforce stands on the more ethical side of the gray zone as it demonstrates a willingness to make changes to promote healthier and more ethical practices.

D.The possible challenges facing the company in the future and how you think this company may improve.

Although the overall picture of Salesforce seems too good to be true, there are several challenges Salesforce will have to face in the future. First of all, its ethical business practices generate a very good reputation, which will help the company continue to attract young and motivated professionals. However, the constantly changing and volatile technology industry can quickly turn a partner into a major rival, and even make the entire business obsolete. With the increasing employee turnover rates in this industry, there is a certain amount of systemic risk inherent in the nature of the industry that Salesforce must face.

The cloud computing industry is currently booming and nobody knows when the industry life cycle will reach its climax. In order to tackle and prevent these problems, Salesforce may counteract this and improve its situation by diversifying into other industries, where it can apply its expertise while spreading the risk of default. Under the condition that the current ethical standards are still applied in future SBUs, Joint Ventures or whatsoever, there will probably be a strong organizational culture, which in turn maximizes efficiency and may result in a competitive advantage.

Additionally, there is a strong economic threat facing the future of Salesforce. According to many finance professionals, the company’s high stock price is largely driven by its rapid growth which makes Salesforce’s stock price one of the most overvalued in the financial market. A high cost of increasing revenue, which even lowers margins, combined with a declining demand from Asian-Pacific clients, will sooner or later result in an intense decline of the stock price. Just like it happened when the IT bubble in the 1990s blew up, Salesforce might be an example of a repetition of history in that case. To tackle the problem of declining margins, the company needs to improve its returns on revenue, which could again be done through diversification or an expansion to other countries. No matter how Salesforce decides to tackle these problems, one thing is certain: they should not lower costs by reducing 1-1-1 activities, since this is the core of the company’s culture and helped the organization to prosper and grow that quickly in the first place.