Good works and goodwill add up to good business

A positive public profile is a valuable intangible asset, a British specialist tells DITA DE BONI.

Are large-scale mergers and globalisation distancing consumers from corporate behaviour, or are the same forces compelling multinational companies to be socially responsible?

A visiting British specialist on corporate responsibility, David Grayson OBE CBE, says results of recent surveys from both consumers and top chief executives point to an overwhelming recognition that public-private-community partnerships are increasingly important in the global free market.

Not because people are kinder, he says, but because corporate responsibility is reflected on a company's balance sheet through stakeholder and shareholder confidence, real competitive advantage, long-term customer loyalty and high staff morale.

A recent European survey of 750 leading chief executives found the issue of rising stakeholder expectations was one of the top two management challenges for 2000.

Mr Grayson points to globalisation as the main factor propelling companies to clean up their corporate image.

"There are many ways in which globalisation has forced companies to ensure they are good corporate citizens," he says. "For one thing, goodwill and brand values are increasingly reflected in balance sheets. These intangible assets require a good public profile to count," he says.

"There is also a global war for talent between companies, and I feel the top talent in each field would surely want to work in ethical, accountable environments."

Mr Grayson is a director of Business in the Community, an alliance of more than 400 national and international companies conducting business in Britain. The alliance boasts a membership of 75 per cent of theFinancial Times' Top 100 companies, including Coca-Cola, McDonald's, Shell and Ford.

He says that unlike in New Zealand, where Business in the Community aims to establish mentorships between large and small businesses, the British organisation is solely focused on inspiring businesses to adopt corporate responsibility as an "integral part of business promotion and business practice."

"But it's not about corporate philanthropy," he says.

"Philanthropy implies a company simply giving money in a disconnected way without thinking about how it may benefit them as well. There are other ways to be responsible - cash is an important element, but just one."

Business in the Community UK encourages members to improve their corporate profile in several ways, described by Mr Grayson as the "seven Ps."

Apart from cash (profits), businesses are also spurred on to donate products (old furniture, for example); premises (the recycling of buildings, says Mr Grayson); power, where the company uses its sway to convince other businesses to be involved in goodwill projects; purchasing, or using purchasing decisions to support companies that have adopted ethical practices; partnerships; promotions; and most importantly, people, he says.

"A company can encourage people to volunteer for good causes. In some cases, companies have started making volunteer work an integral part of their management training programmes, and believe they can identify management potential through candidates in the volunteer process."

British Airways has merged the "seven Ps" into one successful initiative which has led to similar campaigns in 14 other airlines around the world.

The airline's "change for good" campaign, where travellers put their spare change into specially marked envelopes, allowed the campaign to raise around 10 million for Unicef on top of volunteer work airline staff undertook for the same organisation.

But how is the real commercial success of such initiatives measured? While admitting the intangibles take time and commitment to become reflected in the company ledger, Mr Grayson says a global survey of 25,000 consumers across 23 countries last year found two out of three citizens want companies to go beyond their historical role of making a profit, paying taxes, employing people and obeying laws. They want companies to contribute to broader societal goals as well.

Though consumers are claiming to make more ethical purchases, is there a gulf between what consumers aspire to do and their actual buying behaviour? Mr Grayson concurs that there could be, and says companies need to "read [consumer] lips but watch their wallets.

"But even allowing for some disparity, the overwhelming finding is that people are actually aware these issues exist. One in five claimed they rewarded or punished companies depending on whether they approved or disapproved of their `behaviour'. Basically, people don't want clothes from sweatshops; they are looking for companies that have values that fit with [their own]."

Clearly, companies like Nike and Gap - a North American clothing store - have felt the full force of consumer distaste for under-regulated production lines. Mr Grayson says small companies should also ensure, despite their size, a consistent track record of community involvement.

Mr Grayson will not be drawn on sectors of the business community that are harder to involve in the "good corporate citizenship" loop than others.

He is also hard-pressed to explain why companies that have led the charge over a caring public profile - like Britain's Body Shop - will not join Business in the Community (BIC).

It could be that BIC is still, despite its philanthropic bent, unashamedly pro-business, a fact Mr Grayson is not shy in emphasising.

"The price of not working on a positive public profile may in the short term be small but for long-term survival of a company, for long-term added value, it is important that companies are seen to be both entrepreneurial and responsible - the two concepts are not mutually exclusive, unlike the message certain political factions of New Zealand have promoted over the past few years," he says.

"My message is that issues in the past that have been regarded as `soft' - like the environment, or a diverse workforce - are becoming `hard' for business.

"Businesses that take the time and trouble to understand these new issues, and do take a proactive approach, will keep onside with global consumers and be gaining a very tangible competitive edge."