The Community And The Corporation

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  • 1. The Community and the Corporation The Community and the Corporation Professor Hector R Rodriguez School of Business Mount Ida College Business, Society & Environment
  • 2.
    • Society
      • The Corporation and Its Stakeholders
      • People for the Ethical Treatment of Animals
      • Corporate Citizenship
      • The Social Responsibility of Business
      • The Shareholder Primacy Norm
      • CSR, Citizenship and Sustainability Reporting
      • Responsible Investing
      • The Community and the Corporation
      • Taxation and Corporate Citizenship
      • Corporate Philanthropy Programs
      • Employees and the Corporation
      • Managing a Diverse Workforce
    • Environment
      • A Balanced Look at Climate Change
      • Non-anthropogenic Causes of Climate Change
      • Sulfates, Urban Warming and Permafrost
      • Conventional Energy
      • The Kyoto Protocol
      • Green Building
      • Green Information Technology
      • Transportation, Electric Vehicles and the Environment
      • Geo-Engineering
      • Carbon Capture and Storage
      • Renewable Energy
      • Solid, Toxic and Hazardous Waste
      • Forests, Paper and Carbon Sinks
      • Life Cycle Analysis
      • Water Use and Management
      • Water Pollution
    Course Map – Topics Covered in Course
  • 3.
    • Defining a community, and understanding the interdependencies between companies and the communities in which they operate
    • Analyzing why is it in the interest of business to respond to community problems and needs
    • Examining how different forms of corporate engagement contribute to building strong relationships between businesses and communities
    • Evaluating how companies can direct their citizenship efforts strategically, to further their own business objectives
    Learning Objectives
  • 4. The Firm and its Communities
  • 5.
    • Relationship is one of mutual interdependence
    • There are expectations on both sides – what the business expects from the community and what the community expects from the business
      • List of common expectations shown on next slide
    • In best situations, community support of business and business support of community are in balance.
    Business – Community Relationship
  • 6. What They Want From Each Other This defines the community and its interdependency with business… let’s now discuss why is it in the interest of business to respond to community problems and needs.
  • 7.
    • Defining a community, and understanding the interdependencies between companies and the communities in which they operate
    • Analyzing why is it in the interest of business to respond to community problems and needs
    • Examining how different forms of corporate engagement contribute to building strong relationships between businesses and communities
    Learning Objectives
  • 8.
    • On June 10, 1995, Greenpeace activists in small boats circled around a Shell oil rig named the Brent Spar that was being towed out to be sunk 150 miles off the coast of Scotland. They claimed Shell was about to cause an environmental disaster.
    Why Respond to Community Problems and Needs
    • Researchers believed it was a sound environmental decision.
    • In the face of public and political opposition (including a widespread boycott, some physical attacks and an arson attack), Shell abandoned its plans.
    • Greenpeace later acknowledged that its assessment of the oil remaining in Brent Spar’s storage tanks had been grossly overestimated.
    Driver – Environment; Impacts – Costs, Public Relations
  • 9.
    • A local historical society, dedicated to the preservation of character and history, particularly the Civil War history, stops Disney from building a theme park in Northern Virginia.
    • The proposed park would have been built near Civil War battlefields, shattering the solemnity of the area and perhaps causing damage to the historical properties.
    • Controversy further arose as claims were charged that Disney was participating in "corporate history" by selling knowledge of past events that would deliberately be skewed and toned down for entertainment and not historical accuracy.
    Driver – Education; Impacts – Economic Growth (private and public?) Why Respond to Community Problems and Needs
  • 10.
    • Monsanto developed a genetically modified organism whose genetic material has been altered using genetic engineering techniques.
    • Some African nations refused emergency food aid from developed countries, fearing that the food is unsafe even while the UN encouraged the countries to accept the aid.
    • In response to negative public opinion, Monsanto announced its decision to remove their seed cereal business from Europe and stopped producing and marketing bio-engineered crop seed in Europe and Africa.
    Driver - Product Safety; Impacts – Growth, Public Health Why Respond to Community Problems and Needs
  • 11.
    • Threatened with a boycott, Toyota committed nearly $8 billion over ten years in 2001 to diversify its work force and reach out to more minority suppliers and customers. The boycott had been planned due to a perceived poor record with minority customers in Chicago and Detroit.
    • Toyota said that it would work to expand the number of minority dealerships, create new career training programs for minorities and invest capital with minority-owned asset management companies.
    • Toyota said its program was a reaffirmation of its goals to diversify and broaden its supplier network and that it would further increase company spending on minorities.
    Driver - Economic Development; Impacts – Public Relations Why Respond to Community Problems and Needs
  • 12.
    • According to the Urban Institute there are 1.5MM citizen organizations in the US including chapters of well known organizations such as Greenpeace, PETA and Committee for Responsive Philanthropy.
    • Other smaller organizations target McDonald’s, Wal-Mart, cell tower construction and more…
    • Conclusion? These organizations are unpredictable… and they cannot be ignored.
    • Reasons for community involvement
      • To win local support for business activity and be granted an informal “license to operate” in the community
      • To build “social capital,” the norms and networks that enable collective action
    The Business Case for Community Involvement PETA: A Case Study
  • 13.
    • Defining a community, and understanding the interdependencies between companies and the communities in which they operate
    • Analyzing why is it in the interest of business to respond to community problems and needs
    • Let’s now examine how different forms of corporate engagement contribute to building strong relationships between businesses and communities
    • Evaluating how companies can direct their citizenship efforts strategically, to further their own business objectives
    Learning Objectives We must first know what’s key to the community…
  • 14.
    • Top concerns identified in 2005 survey of community involvement managers:
      • Crime abatement,
      • Economic development,
      • Education,
      • Environmental issues,
      • Ethical treatment of animals,
      • Health care,
      • Housing,
      • Job training,
      • Literacy, and
      • Transportation
    Must Know What’s Key to the Community
  • 15.
    • Social issues areas where a number of corporations are now focusing their efforts:
        • Economic development
        • Crime abatement
        • Welfare-to-work job training
        • Aid to minority enterprises
        • Disaster, terrorism, and war relief
    • Following set of slides gives examples of these types of initiatives
    Corporate Involvement in the Community
  • 16.
    • Grameen Bank (meaning village bank ), based in Bangladesh, is an internationally recognized innovator in the field of economic development.
    • In 1974, Muhammad Yunus, an economics professor at Chattagong University, took his students on a field trip to a poor rural village. There, they interviewed a woman who supported herself by crafting bamboo stools.
    • The woman had to borrow money for raw materials at the outrageous interest rate of 10 percent a week, leaving a profit of only one penny per stool. The professor, shocked by what he saw, began lending his own money to villagers.
    Micro-Credit: A New Model of Economic Development
  • 17.
    • Finding that small loans helped many people pull themselves out of poverty, Yunus founded Grameen in 1983 to provide micro-credit to individual entrepreneurs who would not normally qualify for loans.
    • Today, Grameen has nearly two thousand branches and serves six million borrowers. “These millions of small people with their millions of small pursuits can add up to create the biggest development wonder,” Yunus has said.
    Micro-Credit: A New Model of Economic Development
  • 18.
    • Example of “Minnesota HEALS”
      • In the mid-1990s, the crime rate in the metropolitan area of St. Paul-Minneapolis, Minnesota, had become so bad that out-of-town newspapers called the city “Murderopolis”
      • Collaborative alliance formed by 60 companies, including Honeywell, General Mills and 3M, local and state law enforcement agencies, and civic groups to address public safety issues in the community
      • Among the initiatives were development of an integrated information system for law enforcement agencies, better housing, job training, and after school programs
      • Crime rates dropped sharply, and the overall climate for business in the city improved
    Crime Abatement
  • 19.
    • Example of work of Bank of America (BofA)
      • BofA has partnered with Women in Community Service (WICS), a nonprofit organization that provides job and life skills training to women who are on public assistance, in prison, or are homeless or living in public housing
      • Bank has contributed staff, products and services, internship opportunities, and money to WICS, and has hired thousands of new employees out of welfare-to-work programs
      • BofA has experienced many benefits: an improved reputation, tax credits, and recruitment of motivated workers
    Welfare to Work
  • 20.
    • Example of work of Microsoft:
      • Microsoft spends $10 billion annually on procuring supplies and services, 5 percent of this is directed to minority-owned businesses
      • Microsoft works closely with its minority suppliers to refine their business processes to make them more competitive
    Aid to Minority Enterprises
  • 21.
    • Example of corporate giving for Tsunami relief in December 2004:
      • Their donations, estimated to be around $2 billion, collectively exceeded those of most governments
      • Many companies drew on their own expertise to lend a hand:
        • United Parcel Service mobilized its planes to airlift disaster relief supplies to the region free of charge
        • Pfizer donated millions of dollars worth of medicines
        • GE sent power generators and mobile water treatment plants
        • British Airways, Intel, and Cisco collaborated to set up a high-speed wireless Internet network in Banda Aceh, Indonesia, to enable communications in and to one of the hardest-hit areas
    Disaster, Terrorism and War Relief
  • 22.
    • Defining a community, and understanding the interdependencies between companies and the communities in which they operate
    • Analyzing why is it in the interest of business to respond to community problems and needs
    • Examining how different forms of corporate engagement contribute to building strong relationships between businesses and communities
    • Evaluating how companies can direct their citizenship efforts strategically, to further their own business objectives
    Learning Objectives
  • 23.
    • The business vision includes statements on:
      • Why the company exists
      • The purpose it serves, and
      • How it should be positioned in the future
    • It provides direction, drives change, motivates and energizes employees, gives context to strategies, and influences managers in their decision-making.
    • It is also a public statement, a signal to shareholders, analysts, and business leaders that describes the prospects for growth and the viability of the company.
    • The social vision comments on the company’s core operating values and the benefits it wants to make to society as it goes about carrying out its business goals.
    Step One: The Vision Source: Managing a Company in an Activist World by Edmund M. Burke
  • 24.
    • Reassures stakeholders that the company intends to adhere to the new rules of corporate behavior:
      • Safeguard the environment,
      • Support human rights,
      • Eliminate child labor,
      • Adopt codes of ethics,
      • Enter into partnerships with NGO’s,
      • Displays transparency in its relationships with all stakeholders,
      • Promote diversity in the workplace,
      • Help communities solve their social problems, and
      • Pay their fair share of taxes
    • Gain favorable attitudes, and
    • It is a distinguishing mark of a world-class company, it shows the activity is not random… there’s a strategy behind it
    Why We Need a Social Vision Source: Managing a Company in an Activist World by Edmund M. Burke
  • 25. Johnson and Johnson’s Credo One Minute Video…
  • 26.
    • Ask managers, “do you need community buy-in for your company and its operations?” Inevitably the answer is “Yes.”
    • Ask why and they will say, “it’s a license to operate issue. You need the permission of the community to operate.”
    • If there is widespread agreement that companies need permission to operate then why do so many consistently run into protests and opposition?
      • They rely on a style of relationship with external stakeholders that no longer work.
      • They do not have a plan to obtain community buy-in.
      • They use the DAD Strategy
    Step 2: Adapting and Implementing the Vision
  • 27.
    • Stands for “Decide – Announce – Defend”
    • Some do it by design, others unconsciously
    • Problems with the DAD strategy
      • It assumes there is only one solution to the problem, people take sides and the search for solutions becomes complicated with stubbornness
      • The issue and process becomes personalized
      • Without a plan managers are constantly reacting to accusations and complaints
      • It alienates potential supporters
      • It is based on a strategy that no longer works: command and control
    The DAD Strategy Communities do not accept that approach…
  • 28.
    • Consult (go back to your stakeholder map)
    • Announce
    • Consult again (if necessary)
    • Decide
    • Implement, and
    • Compensate
    Better Use the CACDIC Strategy
  • 29.
    • A community has site, fence-line, cyber, stakeholders and employee elements to it.
      • Business and communities depend on each other
    • Reasons for community involvement
      • To win local support for business activity and be granted an informal “license to operate” in the community
      • To build “social capital,” the norms and networks that enable collective action
    • Social issues areas where a number of corporations are now focusing their efforts include economic development, crime abatement, welfare-to-work job training, aid to minority enterprises and disaster, terrorism, and war relief
    Summary