How can companies benefit from responsible operations?
Maximising financial profit is not in conflict with responsible operations. On the contrary: a company is in a better position to make profit when it has a comprehensive corporate responsibility strategy. The word ‘strategy’ implies that a set of conscious decisions has been made. Companies will gain from voluntarily exceeding the requirements of laws and decrees. In my view, there are three key reasons why responsible operations work in favour of a company’s results:
Risk and corporate reputation management
Even if mistakes can never be fully eliminated, they can be mitigated through responsible operations. It is extremely difficult to put a stop to general disapproval that is spreading like wildfire in the media. Companies can instantly be identified as environmental criminals or as gross violators of human rights. A good reputation can withstand blows better than a poor one. If a company’s long-term operations have been responsible, it is more likely that it can recover from such crises.
The longer a company’s chains of co-operation and subcontracting are, the harder it is for the company to monitor whether all the companies involved in deliveries, manufacture and sourcing act responsibly. If unified criteria, characterised by responsibility and transparency, are applied in subcontractor selection, internal efficiency increases and the risk to corporate reputation decreases. Recruitment could be another example of a situation where it is crucial to treat employees impartially – and responsibly. Here, too, processes that stand up to critical review, coupled with responsible ground rules, save time and diminish the risk to corporate reputation.
Dialogue with various stakeholders is an essential part of corporate responsibility. A company cannot implement a successful corporate responsibility strategy without targets that formulate a positive message for the company’s key stakeholders. We cannot always agree on everything, but dialogue increases understanding.
Doing the bare minimum is not enough. Interaction with a company’s traditional key stakeholders, such as owners and customers, does not of itself constitute corporate responsibility that genuinely aims at changing and renewing a company’s operations and atmosphere in a more responsible direction. Giving clear priority to new stakeholders or the weak and the underprivileged could, on the other hand, be such a step. Good, open and ‘to the point’ relationships with NGOs and the media could be of help in situations where the company finds itself in a crisis that involves social media, for example.
How can we make corporate responsibility work in real life?
Job satisfaction surveys often ask ‘would you recommend your employer to your friends’? A company that acts responsibly is beyond a doubt a more attractive employer. Corporate responsibility is directly connected to company values, to which the company owners and management must be fully committed. There are four requirements for implementing corporate social responsibility in real life:
- the company must have a strong and genuine desired state to act responsibly
- the company’s top management must be fully committed to corporate responsibility and be an example to others
- corporate responsibility must be integrated to the company’s business strategy – without this link, it cannot succeed
- corporate responsibility involves all employees, and through it, the company’s shared ethical and moral guidelines are implemented
What does corporate responsibility have to do with the Baltic Sea?
Our responsibility for our neighbouring regions covers projects that aim at having a positive impact on the well-being of the company’s area of operations and its inhabitants. This includes also the company’s reputation in a certain area.
There are companies that truly want to support activities that benefit society, and give donations without considering if the company itself will benefit in any way. There are companies that combine good deeds with sponsorships, and intertwine their involvement with their brand, advertising and the full spectrum of their other marketing communications activities.
It is normal for companies to seek benefit from marketing communications activities that improve the company’s reputation and, consequently, its results.
In my view, there is nothing to be worried about in the ‘productisation’ of charitable operations as long as companies choose their targets so that they can be certain that the donations truly reach the intended/promised causes. Good intentions do not guarantee good deeds. Personally, I prefer targets with understandable, open, concrete and efficient operations.
This is my checklist for companies scanning for corporate responsibility partners:
- Use common sense. Are the partner candidate’s operations in line with company strategy, and do the company stakeholders find the partner’s operations relevant?
- How will donations be used? Are they used for some general purpose, or for a specifically defined target?
- Are the supported operations in line with the principles of the company and the donor: for example, are they open and cost-efficient; are results measurable; are financial statements public; and how does the board of directors operate.
Successful responsible operations are based upon the company’s own features and qualities. Implementing corporate social responsibility on a wider scale is in the company’s interests, as these issues constitute increasingly important competitive factors. My recommendation to companies is to be a forerunner in this area.
Happy New Year 2012!(The blog contains selected excerpts from Veli Sundbäck’s speech at an event organised by Ekonomiska Samfundet i Finland on 8 November 2011)