Management problems

When writing my ideas for submitting an essay to the China CSR Map's essay competition I started thinking about CSR in China from an objective, long-term perspective: trying to think about why CSR is growing, is it growing and where is it going...

One of the issues I draw upon is related to the State Owned Enterprises (SOEs) in China. The largest national ones have all been put under the control of SASAC (State-owned Assets Supervision and Administration Commission of the State Council) in order to reform and restructure the SOEs. The question I posed was oringnally just about CSR: If the government wants to encourage CSR then it should tell the SOEs and they will do it, or not?

Now ignoring the issue of CSR and just looking at the issue of owners telling the managers to do something, you come to several problems. Key, for me (especially in a CSR context) is that it is likely that some of the instructions will be beneficial to the SOE, but not to the manager. If we presume that implementing CSR has negative short-term implications (financial and human investment required) but positive long-term implications, then the Manager might not care about the long-term. In addition, they might not want to accept more responsibilities or more targets, or anything that makes their life harder, more complicated or more difficult. How much power does the owner wield? For non SOEs, the bigger issue is that short-term investments often lead to lower profits and lower stock (share) prices; both of which managers are measured against to judge their success.

Presuming that current governance models, therefore (either government owned or publicly owned) have these inherent problems (and many more, that I will not delve into right now), what can be done?

There are 2 focus areas. The first is to try to create an organisation that acts responsibly, which can mostly be done through creating such an organsiational culture (as mentioned many times before on this blog), but this is not easy -especially if you have to change the current culture of a large organisation. It would be easier to try to create the necessary processes that create a responsible organisation. This could be creating a reward system that rewards the kind of beahviours or results that you want, or it could be from the 'stick' approach: through governance and reporting systems.

The second is to create individuals who act responsibly which is also tough. Responsible leadership is important: since setting an example and acting as a role model can really make a difference. You need to create people who see what is best for the company, and do that -even if it is not best for them. Create the culture of 'what is best for the company is best for me'. This is not easy though... so there are some little tricks that can be employed.. For example, try creating buy-in from the individual by tapping into their loyalty to the organisations or by instilling a little fear.

At the end of the day, this problem is one that is inherent and wide-spread, with no simple solution. The solution is tough and demanding: the solution is to recruit and employ individuals with an ethical stance, with the sense of responsible leadership. Create the framework and the system for this attitude to thrive and this should mitigate the ownership-manager conundrum.