Tax evasion part of corporate culture

Image representing Steve Jobs as depicted in C...

Image via CrunchBase

Most people would think that countries like Spain, Greece and Portugal would rank among the very top of countries for tax evasion schemes. But even though the US has a relative low tax rate the country tops the list of places where tax evasion seems to be part of corporate culture.

So how big a problem is tax evasion? Take a look at the table below from Tax Justice Network, a London-based watchdog that fights against tax havens and for more transparency.

America’s “black” or “shadow economy,” represents 8.6% of GDP, while the percentage is by far the smallest of any of the countries on the list it does represent a significant monetary post and represent roughly the GDP of Denmark the 32 biggest economy in the world according to the IMF.

How does the companies in the US manage to avoid tax? Well, one suggestion is that companies like Google, Apple and Amazon manage to cut their tax bill by one third through a series of moves that involves countries in Europe and in the Carrabin, a system is also used by big European companies to transfer funds to tax havens. My friend Sarah Wenger has created the infograph titled “The master of Tax Evasion” that explains how the system works.

Masters of Tax Evasion
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Storytelling at the core of corporate CSR branding

Miami Beach, Florida Hand made sign advocating...

Image via Wikipedia

The story corporate story should be at the core of any CSR effort. It is what I would call the cement that holds everything together inside the organisation and makes it possible to communicate with a degree of persuasion with its audience.

If one looks at storytelling as elements of branding one can distinguish three elements Culture, Identity and Image.

Culture being the stories that employees tell each other from the old t the new guy or among the old-timers or is the ones told in the employee magazine as examples of good cultural behaviour. It is also the informal stories that circulate among employees or close associates about how we saved the day by some act of heroism or how we beat the people from accounting at the annual summer go-card trip.  All these stories being told everyday at all levels of the organisations is building, reshaping and reinforcing corporate culture.

The Identity is what employees belie to be unique to being in just this organisation. One can call the corporate identity the reflection of the stories that is being told. One could say that they are the collective way of interpreting the stories we call our own which outsiders might not understand the fine details of. One cannot totally distinguish culture and identity from each other, as they are interlinked and always evolving. However, one can project or at least try to project ones identity on the surroundings as explicit examples of corporate culture.

This leads to Image, which are the pictures outsiders get of the organisation when it hears the corporate story being told. Stakeholders listen to the stories being told but are also taking part in its reproduction creating a mirror of the corporate image that the organisations identity can use as tool for affirming or renegotiating its culture and its feeling of being one.

In order to analyse and understand corporate storytelling one can use the actantial model developed by Greimas, which basically breaks down the story into six different but essential components.

The axis of desire, which refers to the subject or hero (who can be both good or bad) and the object, which is the thing he/she/it, desires. The axis of power that can be broken down into a helper or the person or thing that helps our hero and the opponent that is the person/thing trying to stop our hero from achieving his goal. The helper assists in achieving the desired junction between the subject and object; the opponent hinders the same.

Finally we have the axis of knowledge that is composed of the sender and the receiver. The sender is the person or thing that is requesting the establishment of the junction between our hero and the object he desires. The receiver is the element for which the quest is being undertaken.

Using this framework of understanding one could for example look at the most prominent CSR stories of 2010 the BP oil spill or the Google battle for free speech.

BP‘s oil spill in the Gulf of Mexico

Deepwater Horizon was one of the world’s largest ever oil spills, and understandably this story absolutely dominated 2010. Not only did it put a final nail in the coffin for BP’s once vaunted sustainability reputation, but it heralded a major rethink about the viability of deep sea drilling. BP didn’t cover itself in glory by failing to come up with a realistic remedy until far too late – and ended up picking up most of the tab, thereby putting paid to the usual assumption that pollution is simply an ‘externality’ of business.

Here the CSR policy of BP could be seen as a helper in telling the story that the company was trying to communicate. However, the hero or BP executive management was not able to use the help they were getting and ultimately failed to keep the BP CSR brand intact. That the power to decide if BP was allowed to win or fail in the efforts was given to the local fishermen by a combination the statements in the CSR policy and the medias efforts to find a compelling case to write about.

Google’s battle for free speech

Google’s withdrawal from China at the beginning of the year was a landmark decision in the battle for free speech on the web. A real clash of titans, no other story this year illustrated better the clash between government and big business around human rights issues.

In the Google example we have a case were the CSR policy was used successful even though the case did not come out as a commercial success for the company. When the company was challenged on its policy it stood by its values and identity and ultimately was able to prevail as a ethical brand taking a decision to withdraw from china rather than compromise its ethical standpoint. The winner becomes the Google identity and brand which is viewed its stakeholders as a company who puts people before profit.

These stories and many more show that CSR is an essential part of the corporate brand and that it is central in the story that we tell. Also that the policy is not something that corporate executive should take lightly but that it is actually a document which quite literally can help or break a company brand.

Companies roasted by the media reveal interesting insights into US companies

Getting negative press or getting roasted by the media can be a very unpleasant experience for any organisation. The Flame index is a, proprietary algorithm, which reviews more than 12,000 news sites and ranks fortune 500 companies on the amount of negative coverage, live and on the web.

At the site you will be able to review and evaluate on a quantitative basis the:

– Public perception against competitors
– Instantly measure the media effect of corporate news events
– How organisations manage their brand risk in the marketplace
– Correlate Flame Index position to changing stock price * The index bottom often indicates the best control of information and media spin

The flame index was started as a research tool in 2008 at NY Innovation Design Lab (nyidlab). It was used as a general metric to evaluate companies and their risk in the media. Publicly-traded Fortune 500 companies are used as a measure to calculate an overall market of negative news and the companies are ranked within that market.

It is interesting to see that both Freddie Mac and Fannie Mae are high on the list. After years of turmoil around the two mortgage companies the heat is coming back due to its high quarterly losses. Also Toyota seem to be in a continuous struggle over its recalls of cars ”The recent recall of another 2.1 million vehicles in addition to the 14 million recalled globally underscores the basis of our floor-mat defect claim in our case against Toyota.” (Hagen Berman: managing partner of Hagens Berman and co-lead counsel in the Toyota litigation.) a “This latest recall also substantiates the economic loss claims detailed in our suit. If you ask an average consumer whether a Toyota is worth more or less today, in light of these serial recalls, I would venture to say that the majority will say ‘less.’” Shich just underscores that the crisis of Toyota is far from over and there is more to come.

Google is on the top of the list because it has been unable to come up with anything innovative themselves but simply rely on buying other companies as the only strategy. This is of cause unsustainable in the long run and will eventually lead to that other companies will take over its place as “the biggest on the web”.

This is the score as of 10:20 28th of February

01 Google 33.643 up 9
02 Forest Laboratories 33.091 up 4
03 Freddie Mac 31.863 down 2
04 Helix Energy Solutions Group 30.406 up 15
05 Toyota Motor Corporation 29.424 up 7
06 Walt Disney 28.672 down 3
07 Fannie Mae 27.982 down 5
08 Holly 27.921 down 1
09 Itron 27.645 up 2
10 Wells Fargo 26.003 up 22

The Flame Index pulls in data every second, 24 hrs per day from over 12,000 news sources for the 1,000 companies on the index. The proprietary Flame Index engine evaluates, articles, news sources and analyzes negative coverage to create an overall score. Each company is ranked based on that score. This also results in an overall Flame Market of negative news. The speed of updating the index every hour enables the Flame Index to evaluate which companies are most “on fire” right now. To date over 1 million articles have been evaluated.