Women on boards study from Cranfield School of Management

It is always a pleasure to post good news especially when it is on an area that I think is important. Women in top management and on boards have a significant positive impact on corporate governance, financial performance and stakeholder engagement.

I would like to see a gendered approach to HRM and recruitment policies being implemented as part of a strategic effort to strengthen the corporate backbone. Some of the research I have done in the area on how this can be done could actually be made to work if companies believed that corporate executives have to grown using the corporate pipeline.

Enjoy

Women on Boards six month review

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Getting to the context of CSR – Letting mentally handicapped people contribute

I think that we are becoming to preoccupied with communicating about CSR, on the business case and on showing the value of CSR on the balance sheet, when it is really about business doing a difference in society. We think that when one lives in a welfare state like Denmark, where the government will tender to all your needs there wouldn’t be any need for locally context based CSR activities other than sponsoring the local football club. But the thing is that there are plenty of opportunities for companies to make a real difference to people who really appreciate the effort.

As one of the many activities I engage in is my work with the Danish association LEV. LEV is a private national association for retarded people, relatives and others that were formed in 1952. Basically covering handicapped people ranging from Asperger and ADHD to people with Downs and other relative heavy diagnosis. People, who can function in society, but need varying degrees of support and structure in order to do so.

One of the biggest issues that these handicapped people have is that they are being shoved away in state sponsored initiatives and offers, where they are isolated from the rest of society. One could call it that the “blanket of the welfare state” has covered them protecting people from harm, but making them unable to move. This is of cause done with the best of intentions shielding the weak in society from all the bad things that could happen (and maybe also shielding society from them). But an unfortunate side effect is that these people become isolated, their personal development stagnates and they feel that they are not offered the opportunity to contribute to society like everybody else.

However, I’m sure that there is room for one or two people in every workplace that is not exactly fitting into our perception of normality. I am also sure that many institutions have tasks that are waiting for employees, who will take pride in doing the tasks that we normally never get done, because they are routine and mundane. It may well be that an employee who is disabled does not have the same skills and resources as the rest of us, but they have something to contribute that we all can benefit from.

Some companies have already discovered that working in close corporation with local NGO like LEV on specific areas can actually make CSR very real to employees and customers alike. Even though they have not framed the initiatives as CSR in their own communication their activities are testimonials to some of the values that guide them.

To many companies CSR have become something that is detached from the day-to-day operations. Initiatives that are within communicated as CSR are more or less reduced to CO2 emissions, Codes of Conducts, Signing charters and different forms of philanthropy. But it does not have to be like that. CSR can actually be much more concrete, down to earth and close to the employees. By inviting a handicapped person into the organisation one gets a real idea about the values and ethical outlook of the company one is part of. The handicapped that are willing and able are more than happy to be invited into companies, where they can earn their own money and contribute on an equal basis with other employees.

I’m not saying that it is easy and it does require that the people who are involved also knows what they are going into, but the organisational benefits are huge. Not only to the individual handicapped person, but also to the employees that work with them and to the company as a whole.

Back to the Why of CSR – Its the story that matters

From time to time it can be difficult to establish what it is all good for why is it that we are so focused on the business case, brand value, if we are listed on the FTSE4Good or not etc. We tend to be preoccupied with the technicalities or the How of CSR and not as much on the Why. The Why tend to be taken for granted because there is so much pressure on showing that we can be transparent, accountable or that we have a effective plan for our work. But when we are forced to think about and explain why corporations are engaging actively in CSR and goes beyond the mere management of stakeholders we come back to the basics of telling the story of doing good.

I have never met manager or business leaders who have not taken a stand on their business impact on the society they are part of. Some would claim that paying tax would be sufficient others have a broader perspective on the thinking, but common for them all is that they have taken a stand and that they have a personal story to tell that explain that standpoint. They like all of us have focused on the Why while we might disagree or agree on the standpoint they do have a personal story to tell that have shaped their opinion and convinced them why their standpoint is the best solution to business role in society.

Now I could leap into a greater discussion on the different discourses of CSR explaining the pros and cons of Friedman or Porter and Kramers standpoints or maybe explain why Ruggie is such a proponent of political CR. But I will refrain from this discussion and just conclude that we have different perspective on the role of business and even though one manager might be reluctant and sceptical towards CSR in general, most large business are in some way engaged in the subject anyway. So even though management might be pretending not to be religious about CSR when they fold their hands they are still praying.

So back to the first question and the Why of CSR. In my opinion it is all about the story about the journey the corporation describes and the willingness to share this with the rest of the world. Basically explaining to the world about your individual Why. At the Global Compact website there are hundreds of stories about the Why of CSR some from companies that have integrated CSR in all parts and corners of their business others have only focused on a very narrow part of the CSR spectrum.

One of the places were one can find stories about the corporate CSR journey is in the Global Compact (GC) case story archive. The story being told are of cause about the ten focus areas of the GC and how different organisations work with each of these elements individually. The idea is that best practice can be shared among the participants and beyond. But the story behind the story is about how some stories are told better or have a greater appeal than others. For example have most of the storytellers a real and definite focus on environmental issues and especially their carbon footprint, but almost no one have a story to tell about their anti-corruption work. This differences in corporate attention gives a real picture of the Why organisation engage in CSR activities.

The same picture is evident when one examines the Communication on Progress, which is a precondition for continued membership of the GC. Corporation just seems to focus more on the areas were their most salient stakeholders have their main attention. In research done by Ralf Barkemeyer on CSR in the context of international development he found that the main focus was on environmental issues followed Human rights and Labour rights and last to come was anti-corruption. Another interesting thing that came out of the survey was that a very large proportion of the issues addressed by EU companies were directed at the home country and not as one might think at the countries were the corporation was most active.

This tells us that the Why of CSR should be found not in the effort top do well by doing good but rather as a way for companies to confront some of the issues that their most salient stakeholders have with the company. These can be customers who demand specific actions, but more likely it is home country media who highlight specific issues, which have the possibility of threatening to companies’ ability to operate efficiently. In resent years the majority of this pressure have been channelled through institutional investors who have a increased stake in ethical investments. While individual shareholders might not be influenced by corporate decisions the case is not the same for larger investors such as pension funds or large unions.  The reason why we make this distinction is based on some of the characteristics of these two investor groups.

Individual investors tend not to know their investments portfolio ethical performance. While they might know a great deal about the economic performance they have little or no knowledge or for that matter interest in the CSR work that the company is involved in. The reason is that most investors (excluding shareholder activists) have a very limited view on corporate performance stretching for a short period of time where they expect their stock to perform. This strategy encourages companies to focus on indicators, which they can influence with relative ease compared with larger problems one can find with the area of ethics and culture.

Institutional investors have a clear interest in long-term engagement meaning more than five years. First of all because institutional investors are normally able to invest relative large sums of money in a company and by that have a opportunity to influence its strategic development. Second, as a institutional investor you are under constant scrutiny by the press and other media on how you put together your investment portfolio. There have been several instances were investors have been forced first by the press and later one by their own stakeholders to change their investment strategy. Just take the Norwegian oil-fund, which I have blogged about some months ago and their engagement in Burma.

The lesson is that the Why of CSR is about the tory one tells or let other tell about the organisation. That organisations ethical performance is much more normative that we would like to think and that if we like stories about Ecology or Human rights there will also build a pressure for corporation to act within these areas. And that if we are enough that think the same way about a issue we will change corporate behaviour even though it is against the monetary logic of the moment.

A shark by any other name…The Corporation

The Corporation

Image via Wikipedia

I begin my lesson in organizational communication by asking. Now that you are going to be experts in organizational communication and guide business managers in how to effectively communicate you will have no problem in answering this simple question. What is a Corporation?

….

Silence

….

One hand appear. It is an economic entity (according to Wikipedia). Another says it is a more of a legal thing like a person (I think they got deeper into the googeling)

Being a teacher at a relative big business school I sometimes wonder if we really know the answer to this very obvious and straight forward question.

But when does a business then become a corporation well according to Joal Bakan, and others might agree, it is when it loses it soul. One can say that a business has lost it soul when decision are being taken not because they are right or wrong but when they are based on rational and logical explanations. This might sound weird but it does make sense when you see what corporate managers are doing out there in the “real” world.

The corporation is an externalizing machine, in the same way a shark is a killing machine … There isn’t any question of malevolence or of will; the enterprise has within it, and the shark has within it, those characteristics that enable it to do that for which it was designed.” (Bakan, 2004:70). So basically the corporation is a feeling less “monster” we let loose and of which we have been convinced it is the best of possible solutions to our need for prospering and happy society. (les affairs capitalism and Milton Friedman and Freidrich Hayek ring a bell)

But as people have found out that just letting the monster go did have some side effect they put pressure on companies to change their behavior. Just think of BP, Wall-mart, Nike, Apple, A.P. Moller-Maersk. When looking up Sweatshops, Nike even have their own entry on the web being synonymous with the concept.

So corporations invented Corporate Social Responsibility (CSR) in order to counter some of these attacks on their ability to make a profit. Some would say that it is against the nature of the beast or even unethical to have the corporation imitating human feelings in this way. But the result has been that companies have implemented systems that enable them to immolate to a certain degree human feelings. Corporation basically show that they care by donating their hard earned money to different causes or venture into different “feel good” programs like the UN Global Compact (UN GC) or UN principles for Responsible Investments (UN PRI) tapping into the goodness discourse. One company (Novo Nordisk) even had to explicitly say that they were a business and not a NGO-of-sort as their communication was so effective that some people had come to confuse the two when they debated intellectual property rights.

If CSR is a way for companies to emulate human feelings on a grand scale how come that they continue to make the same mistakes. If one goes back to the quote above it is because even though the corporation is painted in a different “color” it remains the shark it was from the starting point and that, I think, is the lesson to be learned.

The individual and the Corporation

A few years ago a group of Harvard MBA students pledged to, on a voluntary basis of cause and under the banner of Responsible value Creation, that they as business leaders would recognize their role in society. A MBA that signed the oath recognized that his or her purpose is to lead people and manage resources to create value that no single individual can create alone. And that the MBAs decisions affect the well-being of individuals inside and outside my enterprise, today and tomorrow.

Therefore, a MBA promise that:

  • I will manage my enterprise with loyalty and care, and will not advance my personal interests at the expense of my enterprise or society.
  • I will understand and uphold, in letter and spirit, the laws and contracts governing my conduct and that of my enterprise.
  • I will refrain from corruption, unfair competition, or business practices harmful to society.
  • I will protect the human rights and dignity of all people affected by my enterprise, and I will oppose discrimination and exploitation.
  • I will protect the right of future generations to advance their standard of living and enjoy a healthy planet.
  • I will report the performance and risks of my enterprise accurately and honestly.
  • I will invest in developing myself and others, helping the management profession continue to advance and create sustainable and inclusive prosperity.

But to what extend is this oath really valid and worth the paper it is written on. One of the central questions that members of organizations and corporations alike are faced with is if their personal conviction could be in contrast to the business decisions and actions they are taking. As part of a machine bureaucracy the individual means less and less, they are just part of a system which in the end only have one aim and that is to ensure its own survival.

One might argue that even though the individual wants to do what is right and fair, he or she will always be under and held accountable to the overall purpose of business and that is to create and accumulate wealth. If we started to define the purpose of the corporation in any other way it would no longer be the same institution.

One might ask. What role does the individual really have in the machine room of corporate enterprise? And the answer might not be what we want it to be.

First of all an individual that wants to be part of any organization needs to accept and play by the rules that are embedded in its DNA. If one is unable to do so he or she will be expelled from the organization or leave on their own account. So if one does not accept that creating wealth is the purpose of business, it is very hard to stay within an organization which has this very purpose. This does not mean that it will be the only value or norm that guide corporate decision-making it just means that when corporate individuals does something it will always be with this rational as a guiding factor.

So for example when companies goes into partnership with NGOs there might on the surface be ethical reasons why such as reducing child labor or remedy some of the impacts of pollution has on the environment. But, there will also be an economic rationale behind the partnership. This could for instance be that it will hurt the company financially, if it receives negative exposure in the media or risks being a target of consumer boycott. It is not that the individual manager taking the decision about a potential partnership is not a good person or has genuine feelings about child labor or the environment, it is just that he or she will not be able to free themselves from the underlying rational of profitability.

Second, if individuals want to change an organization it needs to be done in accordance with the profitability rational in mind. In short it means that they will have to implement change that is systematic in nature, and which can be linked to the economic performance of the organization. There have been plenty of examples were corporations have been able to say one thing and do another just think of Enron and BP to name just two. So instead of pretending not to be greedy companies need to accept that it is in there nature and that it is part of “who” they are. Just like the crocodile can’t pretend not to be what it is, basically an eating machine, corporations need to accept that the accumulation of funds is central to their identity. And just like the crocodile, not because they are evil or are out to “get” somebody, but because it is so deeply rooted that it defines them.

So as an individual one have to accept that if you are part of a corporation you will also be tempted and influenced by the beast. It is not because you are a bad person, and in your private life you might be the best friend, father, mother, husband, wife etc. around, but when you take on that suit the very nature of your judgment and decision-making paradigm changes. The very nature of your existence change from being a friend, father, mother etc you become the manager, the CEO, the Supervisor, the controller and that is what guides your actions.

And when you pledge that you “will not advance my personal interests at the expense of my enterprise or society” or engage in “business practices harmful to society” you will always put your enterprise before society not because it is wrong or right but because you can’t do anything else.