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December 2007
"If you don't set the big hairy audacious goals, you aren't going to get anywhere."
This sentiment, expressed by a member of the Center's Executive Forum, reflected the mood of the group's members when they convened at Boston College in early November. As managers and directors of corporate citizenship in leading companies, these individuals are in a position to improve the social and environmental impact of their companies. They have high aspirations yet are pragmatic enough to realize that they can only achieve results through effective integration of corporate citizenship throughout their businesses.
Achieving integration with core business is sometimes a lofty goal for the corporate citizenship practitioner. The Executive Forum was formed to create a peer-learning network for sharing best practices and innovative ideas on the challenge of integration.
During their latest gathering, this intimate group of peer business leaders and champions of corporate citizenship launched into a serious discussion around the impediments that were tempering their high aspirations. The topic of the meeting, Corporate Citizenship in the C-Suite, invoked new thinking around the role of the board, senior management leadership, functional management and organization, and engaging employees for achieving effective integration of corporate citizenship, topics that were very much on the minds of these professionals. Some of their questions:
- How do I capture the CEO's and Directors' attention on corporate citizenship?
- Can my company transform the Board to enhance high level governance of these issues?
- How do I make sure my team is included in managing corporate citizenship-related risks before they become PR disasters?
- What is the appropriate functional department for the citizenship function and who should lead it?
- How can I make corporate citizenship more relevant for employees?
While there are no guidelines for how to meet these challenges, The Center's conversation with the practitioners in the Executive Forum revealed innovative approaches, from how to appeal to company leadership and employees, to what matters most in designing a successful structure that fully integrates corporate citizenship into the core of the business.
Role of the Board
Traditionally, corporate boards act as representatives of the shareholder community and focus on topics of greatest impact on shareholder value. Center research identifies that some corporate boards today are incorporating social and environmental management issues into their agendas, while a few companies are taking this a step further and creating dedicated board committees to focus on these issues.
Executive Forum practitioners agreed that corporate citizenship needs to be included in the Board's remit in some way. This could occur through the infusion of new perspectives on corporate boards such as representation from engaged NGOs or government sectors. An example is American Electric Power (AEP), whose Board includes a former president of Resources for the Future as well as the Chairman and CEO of the Chicago Climate Exchange.
Senior Management Buy-in
Management buy-in from the top is critical if a company is going to have a mandate to pursue corporate citizenship. Corporate citizenship practitioners don't just want their senior leaders to pay lip service to corporate citizenship; they need senior executives to validate goals and initiatives and to be active partners in developing strategy. Yet, not all CEOs have the interest or time to devote to corporate citizenship.
Executive Forum practitioners indicate the need to be pragmatic and patient. Participants suggested that "piggybacking" corporate citizenship issues onto other business agendas can help get attention. Others suggested that practitioners must enter the offices of their senior managers prepared with a clear business case for their corporate citizenship activities that is linked closely to the business value proposition, the brand, risk factors, and company values.
Mara Swan, Senior Vice President for Global Human Resources and corporate citizenship champion at Manpower, highlighted the business opportunities that can be created through corporate citizenship during the meeting. Manpower has acquired clients that value Manpower's explicit stand against unfair and abusive labor practices and has invested in market-building training centers in disaster-affected areas. Communicating these opportunities to management is critical and can be achieved in creative ways. Another participant described how she organized an executive symposium highlighting the linkages between the company's corporate responsibility goals and product innovation possibilities, which engaged and inspired managers throughout the company.
Functional Management and Organization
How corporate citizenship functions are organized typically depends on the company's unique structure. Manpower, which has highly decentralized regional offices, ensures that social responsibility leaders are present at each office. While integration is the goal, practitioners agree that an investment in a full-time staff person is also necessary to send the message that these issues are important to the company. This individual serves an important role as a knowledge broker and convener among departments on citizenship issues.
Several leading companies are elevating the position for corporate citizenship leader to the senior executive suite. Mattel, Dell and Sodexho are just some examples of companies that have this year announced new senior positions for corporate citizenship or corporate social responsibility. Whether it is necessary to add this role to the executive suite is debatable, and greatly hinges on the situation facing each company. In parallel, practitioners across the board emphasize the importance of cross-functional interaction. Senior-level executive committees in particular can serve as an influential voice and spur integration in the business.
Employee Engagement
Implementing a successful corporate citizenship strategy, particularly one that is integrated into the company, increasingly requires the support of employees. The current wave of data and news reports indicate that a company's social and environmental performance play an increasing role in the employment decisions of potential employees.
Corporate citizenship practitioners want to know how to leverage their function for the greatest impact on existing and potential employees. Some are using existing volunteer and giving programs as a jumping off point for greater employee participation in corporate citizenship. As one participant expressed, "We see it as caring about communities as they [employees] are passing through." Other companies are creating cross-functional leadership groups at a peer level to encourage initiative within business functions. Compensation incentives can also be leveraged, particularly around concrete and well-understood metrics such as safety performance, diversity goals, and corporate values statements. The practitioners emphasized that corporate citizenship missteps, such as the failure to obtain a license to operate in the community, could lead to bottom-line and traditional compensation-related impacts. Internal education and communication of these factors is critical.
Corporate Citizenship as an Element of Risk
As a guest speaker, Douglas Cogan, a climate change expert from the RiskMetrics group, encouraged Executive Forum members to include global warming in their companies' risk profiles. In fact, various risks, from legislation to compliance, are linked to corporate citizenship. Recognizing this relationship presents an opportunity to raise the perceived importance of corporate citizenship as a risk-mitigating factor within the company. As an example, one participant convinced her company to add the firm's "license to operate" to its top ten list of business risks.
While the direct profit benefit of some corporate citizenship activities can be elusive, savvy practitioners view their role as a preventative mechanism for the kind of cataclysmic events that have wreaked havoc on companies from Tyco to Wal-Mart, and more recently Mattel and the GAP. These companies let risks related to ethics, employee relations, product safety, and child labor fly under their radar and suffered as a result. A comprehensive corporate citizenship strategy can not only contribute to the clean-up and healing process in such events, it can often prevent the reputational and financial damage from ever occurring.
Corporate citizenship practitioners still face an uphill battle in many of today's companies. Tactics such as capitalizing on situational opportunities, piggy-backing on other corporate initiatives, couching their initiatives in terms of risk management, and continuously brainstorming innovative if not "radical" strategies bring them closer to achieving those audacious goals.
To learn more about The Center's Executive Forum or other Leadership Networks, contact Guy Morgan at 617.552.3746, email morgangu@bc.edu.
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