Transparency

Transparency is important and becoming increasingly so. I am a big champion of transparency, but then I work for an NGO, so I would be!

I was wondering, in the context of the previous post about the 'invisible line', about how transparent a business could be. Nothing is simple. I looked before at why businesses are not responsible, since no-one seems to focus on this as much! Likewise, why is the 'publish what you pay' coalition (seemingly) such a failure? Why are companies not telling everyone how much taxes they are paying? Why in their Annual Report do they not geographically break down their payments? I think there are some unforeseen consequences. These could be positive but they could be (almost) revolutionary (sounds so dramatic). Let me introduce some scenarios:

-Shell says how much it pays the Nigerian government in taxes; the local people try to find out where it is getting spent and then civil unrest starts. This forces Shell to stop producing and to leave the country -for how long? Alternatively say Chevron pays less taxes and everyone tries to work out if this is justified or not (maybe from less income) -since tax regimes are so complicated that unfair comparisons are likely to be made and little achieved.

-If Wal-mart declared part of internal financial statements then competitors can work out their margins. Suppliers will realise the actually costs or sales of their products and renogotiate. Maybe this is stupid: but this is transaprency. Imagine that the current trend of supply-chain management develops so that customers demand more. Not just wanting to know if the company supports illegal forests, but wants to know if they use any of this or that chemical, they want to know how many products are bought locally (to support the local economy) and they want to know which ones. This could be fantastic: a concerted drive to source locally since customers might pay more for locally sourced goods it if keeps their neighbours in business, and so Walmart buys more locally... One way or another Wal-mart is forced, or voluntarily, reveals all this kind of information.

-If the terms of a contract were made public, how would this impact future competitiors wishing to bid for the contract? Granted if this was unusual, there would be (presumably) inequality in bargaining power, in knowledge disclosure and so on.

What I am really getting at, is that transaprency could work. But if it is to work, it needs a totally new paradigm: a new society with a new perspective on transparency with consequences that would (if transparency were the 'norm' -ie. legally enforced, and so everyone had the same access to the same knowledge) completely revolutionise how business is done. Would business be able to survive in this environment? I wonder if anyone has thought about any modelling of how it might, or how business could compete with total transaprency?

If we presume, that this would not be possible, then we have to work out where the line is between no transparency to total transaprency. Then we need to establish the motivations behind increasing transparency: legal or just self-interest? Transparency will increase when organisations think it is in their own benefit. Otherwise it would not be sustainable. No wonder 'publish what you pay' is destined to fail. NGOs might wield power of a sort, but its influence is limited when its demands unreasonable and when the impact of its activities (even if successful) may be limited: the unintended consequences could be graver. I'm a believer that someone will do something if they think its right. Telling them its right is not as effective as showing them.

Back onto the topic, what if transparency was not total: but more complicated (even those complexity usually makes things worse, in my opinion). What if different disclosures were made to different groups at different times (or when asked) and what those groups did with information did not affect the company's competitiveness or comparative advantage? Well, lets see if this will work. It seems this is the way the World is going... I can imagine in the near future that Transparency International will get certain information, create a report and say 'trust me' without revealing all the details. But what makes this interesting, is that companies are now refusing to trust governments with their details (ID cards in UK, google in the US), so why should we trust NGOs, or any other organisation for that matter?

I'm looking forward to how the current experiment in transparency works out and would be much more interested to look further into a concept of a world with total transparency: what would the ramifications be for salaries, costs, negotiations....?Why, we might end up in a world totally different -would it be a world that works better than the current one? Maybe, but will it be better for those who control the world now -no. So how likely is it to happen? So, going backwards somewhat (to reality), how likely is transparency as a concept to develop anyway? It is a concept that SEEMS to only have negative effects to those benefitting from an untransparent World. What is the future of transparency?

The invisible line

Assumption:
-Partnership between sectors and organisations are good. eg. government and business collaborating on new laws that businesses could abide by and benefit from or companies in the same sector creating a voluntary code that they will agree to (such as not advertising chocolate to shildren)
-Corruption is bad. eg. business paying government to make, or not make, a certain law or businesses working together as cartels to create artificial price fixes

You'll see what I am leading to... where is the line between partnership and corruption? That the line can be greay and not black/white means it is harder to define the boundary, but more importantly, it is harder to interpret. So a company may quite happily have 2 principles: 1 of partnering to achieve more and 1 of refusing to be involved in corruption. It may strive to work closely with its suppliers and customers so it can better service them, it may give preferential treatment to preferred suppliers. But when does this preferential treatment become bribery?

Consider the case of treating a customer to dinner, or the case of a business partner also being a friend. When does the dinner become a bibe and when does a social conversation about their sector end up as a tacit agreement to collude or lead to sepcial favours? When recruiting someone, it is sensible to take into account personal experience or recommendations, but how valid is this, and does this not lead to discrimination against those who you did not know before?

Thinking about this more and more show that there are so many more examples -how do you draw the line? Presuming you do not intend to break the law then the line is very subjective. It is defined in reference to the 'norm' (ie. the normal circumstances that you think everyone does all of the time as part and parcel of the job). This creates a problem if there is no established 'norm' or if you do not know what the 'norm' is. In the case of China, where everything changes so fast (including the legal framework) and where most foreigners enter the market without understanding the culture or even being able to communicate effectively these issues might become especially valid.

On a slight tangent, this question leads me to think of the separate role of government and business. Is there a separate role? In every country the role is different. In some cases governments provide training, healthcare, utilities, salaries (pensions, unemployment benefit) etc etc. In others it is different. On a micro level in China you will find the British Embassy offering some free advice to British companies wishing to set up here, since the government wants to encourage business success, yet the company could also pay a special consultant for more in-depth advice. In fact often the government might subsidise this kind of advice directly.


What do companies do? Provide services in return for money? well governments do the same: you pay in your taxes and receive benefits. Governments tend to then themselves pay another company to do some of those services (outsourcing) and then it can all get complicated and confusing. I think the concept of CSR is struggling somewhat since it is trying to establish the rold of business in society: in reducing poverty, in creating a successful, sustainable society and so on. But this is also the role of national, local or international governments. Then there are NGOs: many bigger and with more influence than business or governments. Many performing services that are effectively government services outsourced.. but to an NGO not to a company. No difference, except in name.

All types of organisations have the ability to accrue debt or make profit. It could be possible to argue that governments are elected, other organisations are not: but this has nothing related to role of the organisation itself: maybe in the future, since stakeholders are becoming so important in business, that business will not just hold itself accountable to its stakeholders, but will go even further and hold itself electable to stakeholders. It will certainly gain legitimacy and trust! Though this may seem pointless since many countries struggle to have high turn-out in their governmental elections anyway!

So, the invisible line: macro and micro level discussions. Impact on individual level? How the individual defines their own lines, in the context of how the individual believes others see the line, and how the individual thinks others expect the individual to draw the line. Its all to subjective... no wonder corruption is a problem!

Why do companies behave irresponsibly? -2

So how is the internal environment of an organisation influencing CSR? First I'll convince you that it is important. Look at Shell and BP: 2 of the best companies in the World for CSR (apparently); Shell had to revalue its oil reserves 2 years ago in a transparency disaster and this year BP has had an oil spill in Alaska from pipes that used to be inspected by 4 people but now only by 2 (to cut costs) .

Its clear that many of the best run global companies still have not mastered CSR by integrating it into their culture, despite valient attempts to. It seems that I should try to remember something about the module on 'OB' -Organisational Behaviour that I sudied at University, but I cannot! Anyway once again it shows that if you learn something in real life you'll remember much more. So what have I learnt? (and lets hope I'll remember!)

detachment. I have mentioned this before, and it is hugely important that you see the impacts from your actions. So many people don't even know what their impacts are, let alone try to ackowledge what those impacts might mean if they were aware of them. Will the BP person who originally decided to cut the oil pipe inspectors from 4 to 2 realise what has happened? Or was (s)he sitting in a head office, has now switched jobs or (if (s)he read the news) is (s)he blaming the accident on something else?

individualism. People tend to have individual targets and goals, and this is what they focus on. This detracts from seeing the bigger picture or caring about what other people are doing... or even thinking if what you are doing is related to someone else or not. As long as you do what your job is properly, then that's ok? Probably not, since it won't leverage any synergies in the company, it won't create the best solution for larger problems and it will only create a sense of responsibility to yourself, not to the organisation or to society.

reward and punishment. Punishment is always used too much, and is rarely effective. Reward is a better motivator, yet is rarely motivating anyone towards sustainability or responsible actions. You reward a sales person for increasing sales this year, you don't care whether those sales will be re-sold next year. Similarly you'll reward someone for a project completed on time, but won't think that they should write a report on how they did that which could help someone else repeat that accomplishment or consider the impacts of the project 5 years down the line (by requiring a post-project completion impact report or something). Companies need to reward in the right way in order to create the culture they want, and if they are serious about creating a sustainable, successful, organisation, their reward should support this.

misalignment. I find is fantastic that organsiations have values, goals, strategies and plans. Yet are they aligned? Are you rewarding employees for exhibiting the values you want to encourage? Are the goals sustainable and related to a long-term plan -what is their impact? Its fine to increase sales by 20%, but what will that do? Make people 20% fatter? Make employees work 15% more overtime? Reduce costs by 25% from your supplier who then goes bankrupt or pays their employees 25% less and so reducing product quality or requiring you to change supplier the following year, incurring the necessary switching costs? Will this growth generate bigger bonuses to employees who might then get poached by another company due to their success? All kinds of issues should be considered. I don't know if a framework exists in order to consider these -but maybe one should be! Life and Business is complicated -but it should be possible to make it simple: align, motivate and achieve.

decision-making. Also mentioned before but something i am becoming more intrigued in. What are the improtant factors when making a decision? Why will someone 'take short-cuts' or cheat? Who needs to be consulted for a decision to be made, and if everyone involved all has different motives might the outcome be a compromise for everyone and unsatisfactory for everyone at the same time? Is a decision based on the past, present or future, and how can you measure either: is a projection reasonable or is it biased?

I am sure these kinds of issues play a very important role in an organisation -i guess they are not very well understood. I think they need to be better understood for each of us to be responsible leaders, and for our organsiations to be responsible leaders.

Why do companies behave irresponsibly? -1

It just dawned on me that instead of sitting in these conferences, always talking over and over again about why CSR is so good and why everyone should do it; it might be better to question first why are companies NOT doing it, since it is good business.

Is it a case that these people are stupid? or bad businessmen? Maybe it is. But also maybe it is much more complicated. I really do not think that the managers of mining companies in China want to kill their workers, but many of them end up hurt. Why?

It seems there are 2 main areas for discussion here: the external framework (that is often location specific) and the internal environment of a company/organisation.

At one event I went to recently, the GM of a state-owned railway company, spoke about the pressures he faces: he says a project will take 4 years, the government says to do it in 2 years! How can you implement a prject sustainably when you have to do it in half the time you expected it to take? The private companies also said that when they bid for a project they expect it to cost a certain amount. Then they are told that if they want the project they will have to do it for 25% less. How can they do that? If they do not accept then they have no business -if they do accept they will have to make some short-cuts to save on costs!

It is no wonder that there are health and safety problems: pressures to use cheaper materials, pressure to do things quicker and take less safety precautions. In this short-term situation it is hard to use the normal CSR lines to convince the company. On one hand there will be extra costs if there are injuries or problems with a bridge collapsing for example, but maybe you can complete the project without any of these problems.. and so the company tries to do this. In this case the solution seems to be about the development of the external framework to be more ameniable for CSR.

Thus, NGOs or government will pressurise the organisation awarding the contract, so make sure that all the companies that bid must meet certain minimum requirements. This means there will be a certain cost that no-one can go below, and the awarding body will have to accept that it cannot continue to force down the cost. Alternatively customers will actually start to care about CSR: so they will choose the best company for the project, not the cheapest. Right now costs is always the most important factor. I believe some companies like Shell take other factors into account to some extent, but when you make billions in profits you can afford some luxuries like this!

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.

CSR at Board Level

Where does CSR sit at Board Level? Well probably under the External Affairs team, or maybe there is a specific person responsible for CSR. If there is, what are they called?

A survey of 100 fortune 500 companies could reveal some interesting results. In the meantime I'd like to propose whether the title means a lot or not. Personally I don't think the title means all that much. What is most important is the job description and the responsibility/respect the person has. However the job title might imply these. Thus there may not be much difference between CSR or CR but there is for Community Affairs and Legal (which may also be responsible for CSR).

A few leading companies have redefined 'CSR' as CR or R or many others (some including ethics which is to be aplauded). One that I like is CSO: Corporate Social Opportunity, thus someone's 'CSR' report was titled CSO: Turning Corporate Social Responsibility into Corporate Social Opportunity (it may have been P&G I am not sure). Although this may work for some, for others they may not have the ability to capitalise on CSR as core to their strategy and a source fo comparative advantage or innovation.

What I would encourage for companies not yet at the CSO level is another title; one that is more short term focused, more financiall and legally focused -and thus easier to define a short-term business case: Risk Management. Whilst investigating our own CSR report, we've realised there will be a number of various focuses. 1 is what we are doing badly, not as well as we want to, or can do better and achieve more. Another 1 is what risks we face now that we are not addressing and what ones we should be anticipating in the future.

Risk Management is a really great way of defining the most pressing aspect of CSR: the one with the most examples, and the one that can most easily be understood by other Board level Directors.

Organisational Culture

Since CSR is an attitude, it must start with a personal attitude (which each organisation could help develop) but of course, it must also be the organisational attitude.

I say attitude which of course means 'culture' but is more than that. Organisational Attitude is how the oganisation approaches decisions and stakeholders. Decisions should be approached with a view to be fair, to be balanced, to look for the best (long-term) answer. Decision-making processes need to consider so many factors I can hardly list them here, but if employees are aware of the concept of considering the impacts of their decisions on them, on other employees, on other decisions then they might just make better decisions. And these decisions could also be more responsible on a personal, and organisational, level. A good start for decision making could be to look at consequences from a few different models: Triple Bottom Line (Social, Environmental and Economic), Stakeholder (Employee, Customer, Supplier, Shareholder, Community and others), Time (Past, Present, Future) or more 'academic' ones such as the 3 lenses framework* (Contribution to Purpose, Consistency with Principles, Inmpact on People).

According to the World Bank online course on CSR and Sustainable Competitiveness, there are a few other interesting considerations such as Why do 'good' Managers make bad choices? Apparently because they believe the decision is ethical, or it's in the indivudal/organisation's best interests or no-one will discover its impact. An organisation needs to consider issues like these in light of how the people it recruits makes decisions, how it encourages or rewards certain types of decisions and how it creates the frameworks for company decisions as well as personal decisions.

Then there is how an organisation approaches its stakeholders. Does it communicate, and is the communication effective? Does it appreciate or respect them? Are stakeholders able to impact each other (and therefore provide a motivation to manage each other)? How much control can one have over stakeholder's actions (like media, government etc which are not equal to the organisation)?

Crucially with the issue of organisational culture is to start with the most important thing in the organisation: its people, and this is what the term commonly refers to. Some leading organisations tie culture in with branding, since culture is normally internal, and branding normally external. Realising that the 2 are actually the same ensures a cohesive message is portrayed to all stakeholders. Entire courses are written on both branding and culture, so what could I write in 1 paragraph or even claim to know (having not read many of those books)?

Well, as always, I like to focus on the important things: having a culture defined, communicating it to others ALL the time and not just tangibly, but also intangibly. Intangible company culture -hmm, not the easiest of topics -but one that I truly believe is what defined an organisation. Its what you feel when you walk into the organisation's building, its how people talk about their organisation (with love or hate!) and its what keeps employees, keeps customers and creates a team spirit -an attitude of working together towards common goals, or doing so responsibly!

The problem with CSR is that how many organisations have the ability or the time to consider issues like these? Not many -and this typicalises why CSR is currently still dirven by large organisations; those with smart people and the money to pay for people to spend their time on these issues. These are crucial issues. Surely the businesses that can consider them will be more successful than those that cannot, thus ensuring larger businesses go from strength-to-strength but smaller ones might find it much tougher to grow or compete! There are of course many cases of how this cycle is broken (every large company was once a small company!), it would be interesting to find out how?

There is also the problem of outsourcing. Where are the limits of the organisation and how much control does an organisation have? Does it force new employees to change their values? The perils of outsourcing are that you lose control over creating a culture, and this is the reason behind outsourcing failing: conflicting objectives, lack of team spirit towards common goals or passion towards the organisation, no feeling of belonging, trust or respect. In fact, the reason why so many SMEs are so successful and have no 'obvious' CSR' is because they are small, often dominated by the personality of their leader and work closely in a team with a great culture. They don't need to have to analyse so many issues related to decision making or creating and communicating a culture since it happens naturally. But when they start transitioning to becoming larger companies then they face these problems. In fact when any organisation goes through change it faces problems, and this is a topic for a later post.

*For more information on this framework, refer to Lynn S. Payne, Three Lenses for Decision Making, Harvard Business School, August 7, 1996, 2-396-200.

CSR is PSR

What is CSR? CSR is an attitude.

This has been one of the key learning points personally over the last year or two and one that others seem to share. It is also what I try to convey to others. Thus CSR is a personal attitude and very much related to how you live your live and what you care about: PSR -personal social responsbility. PSR is mostly about a) awareness and b) action (or laziness to be more pessimistic). There is a continuing need for more awareness around how you can be more personally socially responsible; not because the 'how' is so complex, but because no-one spends 5 minutes to sit down and think about it.

What should you do? Sit down and think a bit about your appartment, your office and what you do in them and in between them (and what you do elsewhere of course too). Do you re-use your cup, turn the lights off in the toilet or your office/room (even if you just leave for 5 minutes), leave your computer on overnight, or whilst you pop out to lunch? How are you travelling, how are you treating people? It would be great to come up with some brief structured list of questions that each person could use to sort of do a PSR report (like a company's CSR report). Maybe this already exists? I am sure there could be some basic award or something that a school could give to the most PSR schoolkid (or most improved!).

Actually, the best thing to do might be to team up with someone else and take it in turns to spend a day monitoring the other person and what they do. It can be a competition to see who can list the most things the other person could do to improve their PSR, since it is hard to recognise your own actions but easier to observe someone else's. It is with great joy I discovered the 'We are what we do' website yesterday (www.wearewhatwedo.com/).

It lists 50 things each person can do at work, at home, at school and 'out and about' (and have received a further 5,000 suggested actions!!). Have a look, and maybe they could develop their concept further. So think about your PSR today!

The multiplier effect

This is something that is often mentioned in my posts, but here I want to take the multiplier effect on a bit of a tangent and see where it goes. I first really encountered this 'Multiplier Effect' in an employment concept: Shell, for example, talk about 100,00 directly employed, 500,000 indirectly employed and many more receiving benefits from their operations (and I suppose also encountering the opposite too!). I next encountered it in an excellent report by SustainAbility (I highly recommend everything they have written) who commented on the fact that of the 3 aspects of the Triple Bottom Line, the Economic one was the one least understood, least measured and least reported.

So this post is not rocket science but it is written to emphasis the importance the multiplier effect has. From the oft-quoted 'giving the fisherman a fishing rod is better than giving the fisherman a fish' type of quote that appears often in poverty-reduction papers, to the 'shall i work for a small NGO and change a few lives lots or work for a Multinational and change more lives, but probably less'. As these examples highlight the multiplier effect is not just about a company's supply chain or employment chain, although these are the most obvious consequences of a business's activity.

On the topic of responsible leadership, I feel the need to stress how the consequences of an organisation are normally so poorly understood. In fact impact is a better word. What is the impact of an organisation and how can this be effectively utlilised? The stakeholder mapping technique is a good start, but normally these stakeholders are engaged with on a quantitative level -by this they are asked questions about the current impacts the organisation has and then asked to quantify them (good, bad etc). What would be interesting is to ask a bunch of people "What impact am I having on you?". Maybe you randomly saw a quote from my CEO who inspired you, maybe your school got a computer from my company, maybe because you eat my chocolate, you have to empty the litter bin more often -extreme examples as they may be, but I find it intriguing to think of all the small consequences that occur, all the time, from so many small, minor actions that each individual makes.

Some practical examples: how Coca-cola cans were used to create art or to create practical objects..how some are reused for years... these cans have probably helped some of the poorest people in the world carry their water around, make things to keep themselves entertained (or even to sell) and so on. Or how the company that wrapped their sweets individulally for hygiene purposes (and to make it last longer) then realised that someone was able to buy the whole pack and then sell each individually wrapped sweet in order to make money and sustain an income for them!

On a more extreme note...Maybe paying the fees of my company's service meant you could not afford medical care for your child or you could not take a holiday. A massive undertaking it would be, to interview so many people, but with such a simple question. It would of course be hard to get the answers needed -most people don't think very creatively any more! And i doubt the results of the survey would matter that much, but there could be some interesting clusters that are new, some impacts that no-one realised; these impacts could create business opportunities or minimise business risk. So please do create as many jobs as you can, please do spread your values to your suppliers, distributers, manufacturers, staff and so on. Please ensure your staff recycle at work, and encourage them to do so at home. But please also be more creative, more innovative, more open to really understanding what impact you are making on this World. Leading is about making an impact -the question is how responsible is the impact you are having?

CSR -who is responsible?

Not a particularly new or insightful topic but still one without an answer: In a company do you have someone specifically responsible for CSR or not? And if you do, how much of 'CSR' are they responsible for?

In theory CSR would be so well integrated into the company that you would not need someone responsible for it. If you do then it means that everyone else ignores CSR and lets that person deal with it -an impossible task. From my experience of contacting companies here in China and finding out who is responsible for CSR; it generally falls to the corporate affairs team and for them their main priorities tend to be around philanthropy, branding and environment. I am not sure how much they play a role in the many HR aspects of CSR or governance, amongst others.

This question opens up a wider one of how to integrate anything really. I suppose my solution is that you always need a champion, even after the initial introduction of an idea or activity; but the key is to try to integrate the idea into a reward system, into every day life and into the values of an organisation. The general consensus tends to be that initiatives need to have top level support -which they do AND most initiatives tend to come from the top. This is something I disagree with. For sure if the initiative is driven by external needs or is based on solid stakeholder engagement and feedback then this is ok, but (and I have limited experience); most initatives are driven from the top with only minimal support from the bottom. By this I mean that one department or other has suggested something, the Execs have done their research and decided to implement it. This will work for most initatives; but for big things -things that affect the culture of the organisation, such as CSR, this is wrong.

I am not saying all organisations do this wrong, but I bet some do. What is the right way? I am a big supporter of faclitated discussion -of coaching. Coaching is, in my definition, where the coach never gives the 'coachee' the answer or tells them anything, they just ask the right questions, listen and guide the coachee to come up with their own answers. This is how organisations should run -I have read many CEOs say the hardest thing they have had to do is change the culture of an organisation -it takes years. I am not saying its simple -the organisation might have the wrong people in it; it may have systemic problems. But what I am saying is that those at the bottom need to realise that the organisation's current culture is not right and they need to work out what the culture should be. They need to be the ones who suggest how to get there too, and then they can give this remit to the team tasked with driving this change: thus the team knows the whole organisation supports it, and the organisation will change much quicker.

With CSR, this is about the values of an organisation and then how these values are translated into process and then what actions result from these processes. Ideally everyone should be recruited based on these values AS WELL as their abilities. And I highly recommend this for any values (CSR) driven organisation. However what do you do with those already in the organisation? Well you may have to lose some of them -you may have to change some, but most I expect you just need to make them realise what their values are... and they should align with the organisation (them already working in the organisation). I am amazed at how much effort companies place on internal values education programmes and handbooks. I am amazed in a good way -it is very impressive, but I must also wonder if they ever question their employee's values? Do they do personal value alignment exercises....if you don't there's little point in changing the organisation's culture!

So who is responsible -everyone should be responsible for CSR; adhering to an organisation's principles (values) should be in every employee's annual assessment -and this can partly be a self-assessed exercise. For some of the more concrete outputs of 'CSR' (and the term is being used loosely here) then that needs to be delegated out. If you have to choose a department 'responsible' then for me it is the 'branding department'. Most business gurus will express how important a brand is - it is the essence of an organisation. In fact a branding department rarely exists (if i create an organisation i think I will call it an 'identity' department -my organisations will wear their identity and their values on their sleeves). Nowadays it ends up in communications department -fair enough I suppose. I am hoping to get a deeper insight into how different communications departments work, what they prioritise and what they achieve in different companies, sectors etc. It would be very interesting research. So responsible leaders? Do what's right -for everyone. Find out what everyone thinks is right; do it; tell others about it; judge people on it; walk the talk. Lead.

CSR in China -chinese giving

A few things recently happened:

1) I came into contact with a minute chinese NGO -well actually just 2 ladies with an idea for asking some volunteers to help them with something. But they required each volunteer to get 5 hrs training for doing 2 hrs work and after 2 hours of trying to help them with their idea, they said they had no location and no funding -yet the event was in 4 days. This is, unfortunately, typical of Chinese NGOs. Not legal, just run by a few people with no money, but who care a lot abotu society and are doing something about it. Its a shame, but its true. There are a lot of organisations helping with NGO capacity building in China - I wish them luck.

2) ACNielsen (a market research company) produced a report of Chinese consumers' attitudes. Lots of the donate and more want to, if they could trust NGOs more.

3) I spoke to someone else who told me that companies he knows have money to donate to NGOs, but cannot find any worthy to give to -they want to give to local NGOs, but none are professional enough.

4) I met a group of women working in good companies in Beijing who got together to donate money to a school in South China to pay for some children's education. They didn't want to go through some big organisation, but wanted to go directly. So they are doing that. I am inspired that they go to the trouble to organise this.

The conclusion. The chinese like to give, they want to help. But right now the environment in China is not helping them. What is needed are more credible NGOs, easier ways for them to get in touch with the right (corporate or personal) donors and trust in the system.

China has lots of responsible citizens. It needs some responsible leaders to help those citizens exercise their feelings of responsibility. Who else will step up to the plate and help solve these market inbalances?

CSR in China -western philanthropy

So many western companies have a great reputation for CSR, but I'll lift the lid on a few things:

1) even those who are the best, globally, will find their chinese branches not having much of a clue. There is a global CSR strategy and the chinese office will do the big of the global strategy relevant to them. They won't look at the global strategy and create a relevant national strategy under that, but they should. This means CSR has a muddle understanding by many Multinationals here. Obviously many HQs still have some way to go, but the chinese branches have even further

2) most companies donate money. some based on their company priorities, or because its linked to their core strategy... more people alive are able to buy more of your products, for example! But it seems, many -especially the medium-large ones, just find a project that the local government supports and fund that one, in order to get local government support. Its a shame, but I guess its a good reason to donate, and irrelevant of the reason, the outcome is still beneficial. I was just shocked that for many, that is how it is.

CSR in China -chinese philanthropy

So some Chinese companies do CSR, not many, in the modern concept of CSR though.

Quite a lot do philanthropy; but it seems 1 of 2 things. Rich people with a kind heart donating, or the government telling companies to donate.

We spoke to some companies who are in the media for CSR reasons, and after struggling to reach the right people, they said, though they have a good reputation for CSR, in reality, they don't do CSR by western standards. They just do what the government tells them to do. And they don't really understand CSR.

I respect that their CSR is still developing and they do not want to pretend to be CSR experts, but its frustrating they do not understand the concept of CSR -even the concept of philanthropy. CSR has a long way to go in China. From the poor turnout at last week's Global Compact Summit, I am even more convinced of this. There is a lot of talk, especially in the last 12 months. I am not best placed to judge how much action, or whether the mindset has changed -I think it has in some private, more dynamic companies, but otherwise... I am not so sure

I look forward to learning more and being proved wrong...

CR or CSR?

Corporate Responsibility or Corporate Social Responsibility?

I touched on this briefly in my introduction post and wish to explain my thoughts behind this right now. Looking at the triple bottom line (economic, social, environmental impacts) no business can survive without being sustainable across all 3 fronts, however since we are people and no business can survive without people to buy from, sell to, or to employ; personally my take is that the social aspect is the most crucial and the most important.

The Economic impact is important because it provides income to people, who can continue to work for the business, or impact on other stakeholders who are also people. The environmental impact is important because without it, many of the inputs required for business (water, electricity, air) would not be there, and people would not be able to survive. Its all about people.

Thus I prefer to keep the term CSR, to make sure that every business is specifically focused on the people around them. I also want to mention the term social entrepreneur: the idea of creating a business that explicitly has social and financial benefits. This business aims to solve a social issue, but without needing to be a charity, and as it makes money, it can scale-up its business much easier than a charity.

I am aware of the controversial nature of this CSR stand-point, since the trend seems to be towards Corporate Responsibility, Corporate Citizenship, Business Responsibility and so forth. In many cases the term is not important, it's what you actually do as part of this work that is important, however in other cases the term is important since it defines what is done. Personally I don't believe many businesses do accurately explain what they mean by CC or CR or CSR -I think its important, since it means stakeholders have a better understanding of the motivation behind the work, the intended consequences and so forth. In a World where trust is so lacking and transparency and dialogue so crucial to success, explaining crucial differences in terminology (maybe crucial is too harsh a word, but in come circumstances it can be a crucial difference) can make a difference to how successful the business's CSR, and indeed the entire busienss is.

Thus my standpoint is for responsible leaders to recognise the impact of decisions they make on definitions early on; justify those decisions and thus not be surprised by the impacts. If a company think CSR is philanthropy its because there is a mis-understanding of what CSR is, that's because no-one ever explained what it actually is to the company. I don't believe there is a universal definition of CSR. Every business must interpret it in its own way -but not enough businesses are going through this important process of interpretation.

CSR is about strategy

Although you could look at CSR as common sense (and justifiably so), I prefer to look at it from a strategic perspective. From most of the people I have spoken to they can grasp what CSR is, but they still cannot quite grasp how it can be implemented strategically to the company's advantage.

Actually I find that most people have different definitions of strategies anyway, and unless you are at the head of an organisation, you never really get to really think about 'what a strategy is'. I believe a strategy is an idea of how to take the organisation forward. Normally I find that a strategy is just the detailed description of achieving a goal. This is important for sure, and maybe can be called a strategy -in which case my definition of a strategy can be looked at as a strategic strategy.

A Strategic strategy is thus a strategy that is often new, most definitely long-term thinking, definitely involves some kind of changes and should be related to the nature of comparative advantage. Comparative advantage is the notion of how your organisation can be better than the competition. This requires identifying what the company has that others don't (it could be a certain patent, it could be a certain person, specific resource, or just an idea) and then exploiting that advantage to push the organisation ahead (it thus also requires an alaysis of who the competition are and what they are doing, as well as a similar internal analysis). A Strategic strategy is a strategy that specifically aims to ensure the company's growth and sustainability long-term, it looks to exploit an opportunity.

I think you'll understand what I mean if i continue with how I see CSR as a strategic strategy. A bad understanding of CSR is the notion of CSR as charity. A better understanding of CSR is the notion of CSR as new market opportunities or as comparative advantage. An excellent example of the former is GE's ecomagination initiative and of the latter is the Co-operative Bank. Briefly explained, GE wants to make more money whilst making the World a better place and the Co-operative Bank attracts more customers because it refuses to invest in certain companies, sell its products to certain customers and does a lot of other ethical/enviro-friendly initiatives in order to build its brand as distinct from its competition.

However, this is still not how I see CSR as about strategy (although both companies may actually see it my way, I don't know). I see CSR starting from the question how a company can be more responsible; and realising that a company must operate responsibly. But ideally if the company has positive impacts on society then it must ensure that the company continues to have that positive impact and thus continues to exist and increase that impact. Thus CSR is about the future, about building a sustainable business. From this premise the company needs to look at how it can survive and how it can grow and how it can continue to do this responsibly. This is the ultimate aim of CSR.

Below this the focus can be on the company's triple bottom line impacts, on its processes and operations, on its stakeholder engagement and so on. First companies must see CSR as a top line strategic strategy, then they can see how their processes can support this. Then they can look at what else is needed -such as how can we distinguish ourselves, how can we be more flexible, opportunist and creative. These ideas need to be thought through because they support the ultimate strategy of creating a lasting, responsible enterprise. Certainly these aspects are the core of CSR, but until the employees view these aspects as part of the broader, ultimate strategy, they will never quite understand CSR. They will continue to see just one of these aspects (Health and Safety for example) and most unfortunately they will fail to recognise that their HR activities, their reporting/accountability processes and more are a crucial part of CSR.

Since CSR is about doing good business, responsible leaders should understand this concept -of strategy and how CSR is related to that. Most importantly leaders should ensure those they are leading understand this. CSR should be used as a fad, as an excuse to drive an organisation forward, as a focus for generating ideas and improvements to the company: Ultimately as a way of bringing diverse ideas and components of an organisation together with the goal of making the organisation more sustainable.

responsible companies with irresponsible products

No company or organisation does no harm at all. every time we use up energy for example, we are harming the environment to some extent. The world is so complex that supply chains are enormous, and no organisation can operate without using paper, electricity etc.

All of these products somewhere along the line are harming the environment, but yes, some products are more harmful than others -arms and cigarettes some of the worst, but then many arms are used for peaceful means (well, some are, not that i am defending the industry!)

the way business works is complex -for example Altria makes cheese as well as cigarettes... so what do you say about that company? BAT employs over 100,000 people providing them and their families with livelihoods for example, so there is no easy solution.

what do i think? i think organisations exist because there is a demand for them. what they should do is behave ethically as they meet that demand. in extremes that often means reducing demand (eg. not advertising for cigarettes), but it needn't be. Governments can create the framework defining ethics (it could ban arms, but does not).... when society deems a company unethical then eventually the government (in a functioning society) will act (maybe cigarettes will be banned at some point). The good thing is that it will take a long time for the governments to act, depending on corporate lobbying, sufficient public pressure and evidence... thus during this time the corporation will either die or diversify and hopefully those beneficiaries will find other work etc.

Leaders in these controversial organisations (like any other organisation) should strive to behave ethically, but this will always be within boundaries -human defined boundaries, boundaries that move, boundaries that vary per person. Those boundaries will differ individually and define what is and is not a good product or company. Leaders should strive to consider the impacts of their organisations and maximise the benefit to society and their organisation at the same time. Its not easy -being a leader is not. Ethics is not black and white. Pick a shade of grey. Pick the shade that you are comfortable with. How do you define responsible?

The media

The media is something I read a lot and think about a lot. Ever since I studied 1 module on the history and role of the mass media in society (and wrote two 5,000+ word essays on it) I have been intrigued in the linkages between various aspects: ownership, power, influence, politics, education, democracy and so on.

Some people have huge amounts of power and one hopes the more power one has, the more responsibly that power is used. Actually one of my text books during my course was titled "Power without Responsibility" (Another one was "Get me a murder a day") and there was good reason for it. The history of the mass media, especially in Western countries (although i have mostly studied the UK and some US) is so interesting I'll briefly explain some of the key highlights which i remember from my course.

First there was the scribes and bibles and so on -creating and distributing media was expensive thus was ostensibly used by the rich (often related to the church) -since most people could not read, those that could had power, and would read aloud to the listeners. The Church had a great way of controlling people, giving them orders and so on (this was 17th century or so). Next the printing press came a long providing cheap technology to the common man. Journals, periodicals and more all sprung up and literacy grew, intellectualism grew and there was a lack of control.

Next the governments tried to limit this growth since it eroded their control -they taxed paper and other resources. It was quite effective, but underground media prospered and 1 newspaper was often seen by 10-15 people in pubs or households. But then market took over, with popular media making money and gaining in reach and quality. Drowning out the smaller ones. Rich people realised they could subtly control the messages of these media so bought them and invested more money in them.

With the beginning of the radio and TV, a new era dawned -these were controlled by governments (who governed the spectrum) and the technology needed to produce was high -plus its effect was greater than print media. Although a labour union could save up money to print (and distribute) its own newspaper, it certainly could not afford a mass audience radio or TV station.

And now, now we have global conglomerates, achieving cost efficiencies, owning magazines, tv, radio, internet, advertising boards, local and national evening papers and so on. The little man with little resources has no chance. The market of advertising has reinforced this -advertisers pay more for greater distribution, this will come from greater success (quality), which comes from investing more money in the media.

My essays focused on the role of the internet changing all of this (or not?); has it given the little man a way back to influence: where money does not matter. Well weblogs certainly have made a small impact and there are some web-based media that is successful. It seems that there will be a need for mass media that is respected for integrity and that might not be the internet, but there is a place for it somewhere. Without going on much more I hope this serves as an introduction -and I won't even touch the other aspects that are involved (for example how the mass media also tend to be the mainstream media and might serve to narrow the spectrum of political thought...)

I write this post because there is a lack of responsibility in the media. I recently re-watched 'Elephant' and read a review of it which I want to copy here. For those who do not know 'The Columbine Massacre' was when some school kids caused chaos in their school shooting randomly and killing/injuring many people for no real reason.

The day after Columbine, I was interviewed for the Tom Brokaw news program. The reporter had been assigned a theory and was seeking sound bites to support it. "Wouldn't you say," she asked, "that killings like this are influenced by violent movies?" No, I said, I wouldn't say that.".......

......"Events like this," I said, "if they are influenced by anything, are influenced by news programs like your own. When an unbalanced kid walks into a school and starts shooting, it becomes a major media event. Cable news drops ordinary programming and goes around the clock with it. The story is assigned a logo and a theme song; these two kids were packaged as the Trench Coat Mafia. The message is clear to other disturbed kids around the country: If I shoot up my school, I can be famous. The TV will talk about nothing else but me. Experts will try to figure out what I was thinking. The kids and teachers at school will see they shouldn't have messed with me. I'll go out in a blaze of glory." In short, I said, events like Columbine are influenced far less by violent movies than by CNN, the NBC Nightly News and all the other news media, who glorify the killers in the guise of "explaining" them. Roger Ebert

It provides a good example of the power of the media. Personally when money is involved (and it is for most private media) responsibility is rarely a priority. Responsible leaders in this case must treat their business as more of a business -since its a social organisation, it has social responsibilities. Maybe the media is aware of things like this (if not, they should do some research!) -if they are, why do they choose to continue? So responsible leaders in these organisations need to know the consequences of their actions -many unintended, and understand the greater role they play in society. For an IT company, this might be less than a media company, so media companies need to be even more responsible, for their power is great. How great is their responsibility? In fact the problem is that they maybe do not feel responsible to society, but to someone else (shareholders?). This seems to be the case for those who own the media (even if those in it, like reporters, are the opposite).

My advice: try to understand who you should be responsible to, try to understand how you affect them, and try to ensure those affects are positive.

I want to end with two of my favourite websites: Asia Times and Open Democracy. A great example of interesting media. The second specifically questions the role of the media and provides interesting debate as well as information. Highly recommended.

ethical dilemnas

Drinking games are taking off in the USA leading to drinks companies, retailers, distributors and so on to cash in through innovative new ways of getting young people to drink more alcohol, more often.

Is this right? Diageo, the global beverage company (owners of Smirnoff, Guiness and more) recently announced a 5 year plan to put warning labels (and nutritional information) on all of its products -as did the rest of the UK drinks' industry. This on one hand is a good thing. The way this is happening (as with the banning of cigarettes) seems to be a balance between government legislation/threat and voluntary/market opportunity means.

I think most people will agree with these steps despite the interesting discussions about free will that this leads to. For example, banning advertising of cigarettes might seem to make sense (especially since they are so effective in attracting new, young smokers) but who will ban smoking in films (by the way, pressure groups publish a list each year of those films that most endorse the iconic image of smoking)? Who has the right to set an age for buying products or refusing you access to them? Well I think the discussion is really interesting (especially when leading onto drugs or prostitution -regulate or drive underground?)

In the area of CSR one big issue is about partnering or accepting sponsorship from a bad company -are you using 'blood money' for example? Is it ok to use money these companies make in order to put them for a good cause? But, is your use of the money strengthening their brand and therefore supporting the company? This is never easy -policies and clear statements would be great, but when push comes to shove, will you take the money? Hopefully there is a solution -you can take their money and spend it without giving them any credit for it, for example (although you may still decide this is not good enough). Maybe through engaging with the (bad) company you can make a bigger difference than by tackling them?

Another big issue on this topic is about working for (or purchasing from) a company that makes bad products -cigarettes, arms etc. But then it gets complicated.... you might make innocent little buttons for car handles, and realise they are also used on airplane, or microchips for radios that are also used in missiles..! And when you look at the case of CISCO who make filtering technology for the internet, are they responsible for how their technology is used (by the Chinese government for censorship), or in fact, should they care how it is used? How can they even control their product's use?

All of this makes for tough, complicated, choices. What should a responsible person do? Well it all depends on your priorities and what the options are. At the least an analysis of the options should be done, and if possible the ethical choice should be made (in terms of the last example). For the responsible leader, running a company (like the first example) there is not much of an excuse for looking for such a quick-win if it leads to harm. Of course, its hard to define harm, and hard to work out the difference these drinking games are having -but paying for some research to be done would be a good start. And for a global company (such as Anheuser-Busch who are behind Bud-pong -but claim the instructions say to use water) they might consider whether the profits they will make will make up for the potential loss in brand value (from supporting this product, although of course they value this as adding in brand value through greater sales and marketing) or law suits or negative media etc. I would be interested in seeing if they did such an analysis.

In any of these situations, the best thing to do is to undertake the relevant research on the issues, see what the options are, see what your priorities are and then proceed. The key aspect of ethical dilemmas is that once you make one mistake, it could cost you -big. So be careful and don't make that mistake. If you are really comfortable working for a cigarette company then so be in. Personally I wouldn't -but ethics is a personal thing. What are your ethics, and how far would you go to support them?

Responding to emergencies

The Tsunami at the end of last year provided an opportunity for CSR to show itself. Hurricane Katrina provided a second opportunity and unfortunately it seems Hurricane Rita wil provide a third.

There will surely be more, and if business can continue to develop plans and strategies as to how they can most effectively contribute this will be CSR at its best. It will evidently depend on leadership: from those who can advise businesses, those who can guide them and those within the businesses.

After the Tsunami the IBLF launched a guide for what business should do and then set up the Tsunami Business Task Force to review what ways are most effective for business support and business skills, to provide timely advice to companies and tourism industry on future spending and engagement and to ensure that valuable lessons are learned for the future. US based Business for Social Responsibility has also provided guidance as a response to hurricane Katrina. Other organisations are encouraging similar responses (eg. US Chamber of Commerce).

They focus on the 3 stages of the recovery: Short-term/Rescue (mostly requiring money for immediate short-term medical care), Medium-term/Relief (helping with coordination and distribution of aid collected) and Longer-term/Recovery (creating employment, rebuilding).

Business Roundtable is a similar US organisation and their website provides an interesting read. In particular their page lists all the contributions of their member businesses after hurricane Katrina. As well as the financial contributions it also shows you which companies donated their own products/services.

Evidently one role of business is to do what it does best: thus logistics companies provide logistics advice or transportation for free, medical companies provide free health care equipment, water companies provide drinks etc. The other role is much more complex and that depends on what operations and influence the business has in the affected area. A hotel chain for example will need to look after its employees and their families (and if they lived at the hotel, they may now be homeless if it was destroyed).

This internal analysis also requires a risk assessment: how will the business be affected and how can in continue to operate and then how can the business provide help (can employees be given paid leave to volunteer -is this in the company's best interests short or long-term?)

There requires strong leadership to provide a suitable response and the willingness to change and try new things; to be brave and have a belief in what can be done. At the same time the company must not overreach itself. The job of a business is to do business -going out of business will help nobody! The responsible leader will need to give the occasion due attention, support and resources. They should inspire their business to do what is right and understand the huge impact they can have.

Now through learning lessons, business can be prepared for the future and so they can not only most benefit those in need, but they can benefit as well; be it from employee motivation or pride, employee development from direct involvement, increased sales from branding or so on. The responsible leader thinks about others, but never forgets to think about themselves too. As always, its a matter of balance and choices. What is the right balance and what are the right choices?

challenges for the foreign company

CSR Asia's Weekly journal (www.csr-asia.com) is a fascinating read, and I highly recommend it (even if you are not in Asia). Although some of the news may not be that interesting many of the analysis and articles are. Recently there was a piece about South Korean businesses operating in a special industrial zone just across the border into North Korea.

Although the examples are quite extreme they do show many of the typical problems companies have when operating in another country. In these cases they found they had to have 2 security guards, since it was normal practice to need 1 to check up on the other. They found the employees don't like training videos, but since they read the newspapers on walls, the company puts the training in newspapers and puts them on the wall! These are 'cultural issues'.

There are also extreme examples of choosing between local and imported materials/people. In this case there is no water or electricity (it all comes from South Korea) and very little food. Thus the companies have to import goods, whereas traditionally foreign companies find it cheaper to buy goods locally, and it also helps stimulate the local economy -there is not much choice in North Korea though.

Companies are setting up there because there are so many unemployed workers that salaries are low and taxes and land even cheaper; is this exploitation? Are companies able to help the economy through their investments, by creating jobs and brining in health resources (for example) for the workers? Normally its good CSR to pay taxes and this is of huge benefit to local economies (benefit of globalisation), but what about in this case, where the government of North Korea is so bad, most of the country survives on food handouts from the UN, where China and South Korea provide almost all the utilities and where the few state owned companies that are operating do so by using forced workers (prison populations). North Korea is interesting since so little is known of it. Although people might argue that a lack of freedom in the press in China is hindering its development (in terms of CSR, having NGOs or media criticising companies), in North Korea there is total censorship... in fact noone will ever know what most of the foreign companies setting up there are doing with their labour practices etc. (maybe thats a reason to set up there, since foreign NGOs cannot get in to criticise them?)

This throws up many conundrums for the 'responsible leader' -aiming to contribute towards the local economy of one of the world's poorest countries is admirable; although indirectly supporting such an oppressive regime is normally not supported by Multinationals (for example, most of them have withdrawn from Myanmar/Burma because of this). Where there are such extreme cultural differences, how can you manage your company with the same values and policies as elsewhere? How much do you adapt to local conditions (how much will that cost)?