Stakeholder relations

06 June 2006

Business does not exist in a vacuum

In 1963, the free-market philosopher Milton Friedman described corporate social responsibility as "fundamentally subversive", writing that corporate responsibility is the pursuit of individual interest in an unrestrained market.

As organisations have grown, community standards have risen, and the Social Responsibility Study by AMP Capital Investors demonstrates that companies are beginning to recognise that they don’t exist in a vacuum. Stakeholders are increasingly demanding information regarding an organisation’s environmental, social and economic impact on society.

Michael Anderson, Head of Sustainable Funds at AMP Capital Investors, writes in The Age that we can trace the trend towards Corporate Social Responsibility (CSR) to changing grassroots attitudes at an individual level. He notes that the average person recycles more, has increased career mobility, and is more likely to be interested in socially responsible investment.

Additionally, it is important to note that companies are realising that it makes good business sense to embrace strategies which are socially responsible. The SustainAbility think tank’s Developing Value report found that these policies save costs, reduce revenues, reduce risk, build reputation, develop human capital and improves access to capital. Michael Anderson writes the AMP Capital Investors have found that high CSR companies outperformed low CSR companies by more than 3 percent over a full ten-year period.

Companies such as IAG write that "sustainability is neither a program nor an initiative, it's considered simply good management".  They recognise the link between their industries and the social, environmental and economic wellbeing of the communities in which they operate.

With power comes responsibility. Unilever has found that use of its products leads to the consumption of approximately one percent of the world’s fresh water used for domestic purposes. This reflects a global shift where organisations are able to leverage greater resources than governments. With globalisation and an increase in the power of multinational corporations, it it vital that organisations acknowledge the impact that their actions have on stakeholders and society as a whole.

25 May 2006

Beyond the squeaky wheel

If you’re interested in stakeholder management, you’ll be interested in this recent paper by Brad Rawlins of Brigham Young University which addresses a crucial question communicators constantly face in dealing with myriad stakeholders. Which is: “How much attention does each stakeholder group deserve or require?”

Since all stakeholders do not have the same interests or demands, once stakeholders have been identified there is a struggle: who gets the attention? Sacrificing the needs of one stakeholder for the needs of another can be a problem – especially if you don’t make the right choice.

Brad’s paper synthesises a large amount of research in stakeholder management and public relations and provides a model that identifies ‘key publics’ for communications strategies. Brad writes: “By using the steps outlined in this paper, organisations can take a more systematic and comprehensive approach to prioritising stakeholders.” The paper is a very useful contribution to our knowledge of how best to prioritise stakeholders to ensure we’re hitting target, not just assuaging the squeaky wheel.

05 July 2005

The stakeholder corporation

The stakeholder corporation is characterized by leaders who understand the need to balance, prioritize, and adjust to the needs of all constituencies. Today, we understand the different forms of risk facing an enterprise if it fails to recognize the importance of those who benefit from the firm’s success and those who are injured by its activities. Employees, customers, shareholders, and communities all have something to gain, and something to lose, from the success or failure of a corporation. The business challenge is one of developing new ways to create economic and social value, and better ways to manage economic and social risk.

Read the whole presentation here.

[Source: ‘Governance and the Stakeholder Corporation: New challenges for Global Business’ by Professor James E Post, 2004 Corporate Public Affairs Oration, Melbourne, 24 June 2004]

30 June 2005

Can reputation be managed?

First, what’s the difference between corporate image and corporate reputation?

Rosa de Carvalho of Sydney’s University of Technology defines corporate image as the result of people’s experiences of a product or service and the messages sent by an organisation. She defines corporate reputation as the result of management behaviours and relationships between the organisation and its stakeholders.

Ms de Carvalho has researched whether corporate reputation can be managed and who manages it. She was especially interested in identifying how much control corporate communication practitioners have over corporate reputation.

The research concluded that the only way to manage corporate reputation is if the organisation manages the individual relationships it has with all its stakeholders, especially with the media.

While image making is often associated with favourable perception, Ms de Carvalho says this is a mistaken understanding of public relations. The definition of reputation as organisational behaviour and relationships leads to better reputation outcomes, since the whole organisation becomes involved.

Communication managers are facilitators of reputation. Through research and relationship building, they negotiate with diverse publics and ensure the organisation behaves in accordance with its values.

[Source: Rosa de Carvalho, ‘Reputation management as relationship management’, Paper to the ANZCA ‘04 Conference, Sydney, July 2004]

30 March 2005

Bloggers are to Kryptonite as Kryptonite is to ...

Last year US company Kryptonite had to recall 40,000 U-lock bike locks after bloggers revealed the security devices could be breached with a ball-point pen.
An exchange program cost the company $10 million.
It's an excellent example of the ability of the blogosphere to damage a brand's reputation.
PR News spoke recently with Steve Down, Kryptonite's general manager, about doing business in the age of bloggers.
Bob LeDrew at FlackLife has posted it here.

22 December 2004

CSR wins as asbestos dispute settled

Corporate social responsibility has emerged as the winner in Australia’s biggest personal injury settlement. As the Brisbane Courier-Mail reports:

One of Australia's most protracted and bitter fights for moral justice ended yesterday when James Hardie Industries signed the nation's largest compensation settlement, worth up to $4.5 billion. After a long and impassioned fight by victims and unions, James Hardie agreed to a plan to compensate victims of its asbestos products for at least the next 40 years….

The deal is far larger than any other previous personal injury settlement in Australia, including the $145 million paid to sufferers of medically acquired HIV and the $4 million paid by Dow Corning to 3000 victims of faulty breast implants….

Under the deal, a special purpose fund will be established, complete with a board of directors appointed by James Hardie. The company will deposit an initial payment of $250 million to the fund to provide a funding "buffer". On top of this will be annual payments by the company to the fund of up to 35 per cent of annual cash flow – $70 million to $80 million based on 2004 figures.

Claims against the existing funding body, the Medical Research and Compensation Foundation, are currently running at about $90 million.

For the last six weeks, Jackson Wells Morris has assisted James Hardie Industries with public relations advice as it negotiated to bring this matter to a successful conclusion.

07 October 2004

What went wrong with CRM

At first many enterprises thought that the way to obtain contact information was simply to buy one of the customer relationship management (CRM) software packages that were in vogue a few years back. Then they realised that customer management is more complicated than simply installing a software package, especially when the company does not even know enough about its customers to properly tailor the package