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2007 Annual Conference on "American Civic Engagement: Experiences and Expectations"
The
Association of Americans for Civic
Responsibility (AACR) held its Fourth
Annual
Roundtable
Conference on Wednesday,
April 25, 2007. This day-long event
brought together more than 40
participants
from various
backgrounds representing seven states
and the District of Columbia. It was
hosted by the Syracuse
University's Maxwell School at the
Washington D.C. campus (Greenberg House)
and
sponsored by Hill
& Knowlton. The conference was
organized as a panel discussion with
interactive participation
focused on three core aspects of
American civic engagement,
namely:
§
"Corporate
Responsibility: Moving Beyond the
Business Case"
§
"Employee
Engagement"
§
"Civic
Engagement of American Citizens and
Institutions Abroad"
In
addition, Mr.
Stephen Jordan, senior vice president
and executive director, U.S. Chamber of
Commerce - Business
Civic Leadership Center, gave a keynote
speech during the luncheon session,
discussing BCLC's
perspective on trust-building in U.S.
society.
The
following is a
written record of participants'
presentations and the discussions that
followed
each panel of
presentations.
MICHAEL
SCHNEIDER:
Director of the
Maxwell-Washington International
Relations program, Syracuse University,
and a
chairman of AACR's
Advisory Committee
Welcome everyone
and
thank you for coming here today. I would
like to start with a few words about
the Maxwell School,
Syracuse University, where I head the
Washington International Relations
program
based here in the
Greenberg House.
Maxwell
School is
located in Upstate New
York. It is quite a lovely region. If
you haven't been there, I urge you to go
there. I went to my
undergraduate school at Rochester
University, which is down the road from
Syracuse. And along the
line in applying for colleges, I went
from one school to the next. From the
Rensselaer Polytechnic
Institute, all the way west, I ended up
in Rochester. So, it was kind of natural
for me to go back
to Syracuse when I joined the faculty
about nine years ago. Previously, I had
been in the U.S.
State Department and the U.S.
Information Agency, and it was time for
me to do
other things.
Syracuse has a
long-term commitment to international
engagement, to engagement in
general. The new Chancellor talks about
scholarship and action and she's
serious about that,
encouraging faculty and students to take
the concepts on campus and apply them
in their work and in
their careers as citizens around the
world.
Syracuse
University is a
fairly international
university with a significant number of
students from abroad. We also have a
high number of students
from various ethnic and racial
backgrounds in the United States, which
to me, is
one of the joys of
teaching in the university. I see this
in my students who come to Washington
with very rich
backgrounds, many of them are first
generation college students. It's a
blessing actually to be
able to work with people who are as
alive through the opportunities and the
changes that are
occurring in our country. So, we're a
little bit of a microcosm in that
respect.
The university
has been
in Washington D.C
since 1990. The academic program has
been here, the international relations
program started in
1994. You know the motto of the Maxwell
School, the theme is the classic
Athenian oath "to leave
the city state a better place than it
was when you found it." The title of the
Maxwell School is
the Maxwell School of Citizenship and
Public Affairs for good reason.
Every since its
founding
it the mid 20's,
it was designed not only to give people
skills and knowledge, to give them
opportunities to network,
to meet people, but also to give them
values. To help them find their own
values no matter what
they be. To determine the paths that
they want to take as citizens, global
citizens, especially
these days.
Our students,
both
graduates and
undergraduates, come to Washington for a
semester or a summer. They inevitably
mix internships with
academic courses that we teach here. The
difference between teaching in
Washington and teaching on
campus is one of a degree, I guess you
might say. We teach more from the
professional policy, the
institutional standpoints, the practical
standpoints. We build into the
academic work the practical
skills that students will need when they
go on to careers.
So, the
international
relations program
has been flourishing for the past 14, 15
years at both graduate and
undergraduate levels. Our
students are moving into the career
world. One of our best examples is
Pavlina
Majorosova who was a
graduate student in our program several
years ago.
At any rate,
the
Greenberg building was
first constructed in 1900 by a senator
from the state of Colorado. It had a
checkered history. It
was the residence of Joe Tumulty for a
while, press chief for Franklin
Roosevelt. It was, in better
days, a nightclub. It was an SRO. Then
came a terrible fire in 1987-88, maybe
89. Several people
were killed in the fire on the
4th floor. The building was
rehabbed. A furniture dealer
used it as display room. The university
purchased it in 1990 and opened it up
as a campus here as a
venue for presidents in Washington.
This
neighborhood, by the
way, has
several other similar institutions.
Stanford in Washington is right up the
street. Boston
University is another long block up
where there are several universities
housed
and with programs.
So, this is a good neighborhood for
access to Washington physically and in
many
other ways.
That's my way
of telling
you about the
building, about the program, about the
university here. Just a bit about the
session today and then
I'd like to introduce Joy.
First of all
we'd want to
say thanks to
Chad Tragakis and Pavlina Majorosova for
helping organize this and to Hill &
Knowlton for
sponsoring the event. It's really
wonderful to see that kind of leadership
and
I think it will make
a difference in the long run for
us.
I want to thank
all of
you for coming
from far and wide, from many places.
From Florida, New Jersey ... it's
wonderful that you all
came. I think it's obviously a testament
to Joy Cherian's influence and impact
on all of us.
I met Joy in
1967 as a
freshly arrived
student in graduate studies in law at
Catholic University and we became fast
friends, family friends
thereafter. That's how many years, Joy?
40 years? Don't tell any of my
students that. Everywhere
Joy has gone he's been creative and been
a force for betterment in his work with
the American
Council of Life Insurance, in his
creation of South Asian and Asian
American
coalitions, in his
creation of his company, and in the
creation of American Council in Trade
and
Services, and now the
creation of the Association of Americans
for Civic Responsibility.
We're really
pleased.
This is a new
enterprise. It's gaining some traction.
It's gaining support. We're looking
for ideas and one of
the chief motives for this meeting is
that we want to exchange ideas and
information and knowledge
about international and national civic
responsibility. Joy can explain the
concept of institutional
civic responsibility better than anyone
else. He's taking the idea of corporate
social
responsibility and he's extending it to
a larger canvas with perhaps deeper and
richer meanings.
We'll be trying to explore those ideas
today in our conversations first of
all.
Secondly, we
want your
ideas. We want
your proposals, your suggestions. We
want practical ideas that you can
provide
for us for AACR and
obviously for all of us to take back to
our respective institutions.
Finally, of
course, we
want to build
contacts. We want to build ideas for
other people who we might engage. We
look
to you for all of
this assistance. I will, in the panel
that I'm chairing, talk to you a little
bit more about the
academic dimension: how we train people,
how we can through campus life and
academic approaches
enhance the idea of international
institutional civic responsibility.
With that, I
want to
introduce Joy to say
a few words and then we'll get into the
business of our day.
JOY
CHERIAN:
President and
founder of
AACR
Good morning
everyone.
I'm Joy Cherian,
founder and president of the Association
of Americans for Civic Responsibility.
Welcome to AACR's
Fourth Annual Roundtable Conference.
AACR is a
relatively
small organization,
but we have big dreams. Our mission is
to bring together people from different
sectors of American
life who are passionate about civic
responsibility. We want to share best
practices, to advance
ideas, and to foster an ongoing dialogue
that, in a small way, will help make
our wonderful country
a little bit better.
America has been so
good to me. Since arriving here from
India roughly 40 years
ago, I have been given the opportunity
to get an education, to start my own
business and to serve my
country as an EEOC commissioner.
Now that I'm
retired,
AACR is my effort
to give back - to say thank you to this
country that has given me so much. I
like to say that it's
really enlightened self-interest -
because when I look at my grandchildren,
I
realize that it's
about what kind of country I'm helping
to leave to them.
I encourage you
to learn
more about AACR
by visiting our Web site or to please
see me during one of the breaks today.
We
would love to
engage with you to find ways we can
support what you are doing and to share
your
success stories
with others.
Before we get
to our
first panel, let me
quickly say a few words of thanks.
First, to my dear friend, Professor
Michael
Schneider, chairman
of AACR's Advisory Board, thank you for
all of your efforts to make today's
conference a success and
thanks to Syracuse University and the
Maxwell School for hosting us here
today.
And to Chad
Tragakis and Pavlina Majorosova of Hill
& Knowlton, thank you for organizing
and sponsoring
today's event.
To start, let
me
introduce the moderator
of our first panel. Chad Tragakis is
senior vice president of the corporate
practice at Hill &
Knowlton, a leading global public
affairs and public relations firm. Based
here
in Washington, Chad
leads the firm's North American
Corporate Responsibility Team, providing
counsel
in the areas of
sustainability program development,
issues management, CSR reporting,
business
ethics and corporate
reputation.
Chad has worked
with companies such as HP, Motorola and
American Standard - and
he works pro-bono for Ashoka,
Darfur-Darfur and, I'm happy to say,
AACR, where
he currently serves
on the advisory board and chairs our
group's Committee on Institutional Civic
Responsibility.
Chad, thank you
again for helping to organize today's
conference.
1st
Discussion
Panel:
"Corporate
Responsibility:
Moving
Beyond
the
Business
Case"
|
CHAD
TRAGAKIS
-
moderator
Senior vice
president of Hill & Knowlton,
Washington, D.C., and a member of AACR's
Advisory
Committee.
Thank you Dr.
Cherian. Welcome everyone. Thank you for
being here - I realize you have many
responsibilities, many
priorities this week - and many choices
for how to spend your day. We sincerely
appreciate that you
have chosen to spend part of today here,
with AACR. We will endeavor to make
sure that you leave
today's event with some new ideas, some
new contacts, and with renewed
inspiration.
Today's
conference
comes on the heels of National Volunteer
Week, and I know that many of the
companies and
organizations represented here today
were active participants in that effort.
This marks the second
time AACR has held its annual conference
in conjunction with National Volunteer
Week, and it is in
that spirit that we gather today to talk
about not only employee volunteering,
but about all the
facets of Corporate Responsibility -
from business ethics & governance,
to
environmental
stewardship, to product responsibility,
to employee engagement, to diversity, to
philanthropy, among
many other things.
The
2007 AACR
conference also coincides with the 40th
anniversary of the publication of
Clarence Walton's book -
Corporate Social Responsibilities.
Walton has been called one of the
fathers of
CSR - and in his
1967 landmark work and in many others,
he helped establish, clarify and advance
the concept that we
know today as corporate
responsibility.
In
his pioneering
work, Walton acknowledges the cynics and
the skeptics of CSR - those, he writes:
"who insist that a
firm best serves the public interest
when it best serves its own private
interests through effective
service to consumers, adequate profits
to stockholders, fair working conditions
for employees, and
scrupulous observance of the law." Those
critics, Walton says, who argue that
"to go beyond these
commitments is folly."
Even
four decades
ago, however, Walton wrote that in spite
of the prevailing attitude of the day,
"one finds evidence,
especially in large enterprises, of a
willingness to support not only higher
education and the arts
but slum-clearance projects, reduction
of air and water pollution, civil
rights,
job training for
the unskilled, and the like. In most
cases, the justification is enlightened
self-interest - a
principle cherished in the orthodox
business creed and hallowed over
centuries
by slow accretions in
the common law."
Walton goes on to
say that "growing evidence indicates
that the modern corporation is
consciously
placing public
interest on a level with self-interest
and possibly above it. This development
is explained by the
fact that a corporation is really as
much a social and political entity as an
economic unit. For
example, the concept of polity and of
public interest is generating concern
for
problems of internal
governance and, more specifically, for
the appropriateness of "due process"
procedures to assure
justice when discipline, demotions, and
discharges are involved. This
quasi-legal evolution within
the corporation is paralleled by rising
concern within society's overall needs -
needs technically
outside the corporation's purview but
which increasingly command executives'
interests."
Again, that was
40
years ago - but much of this sounds like
it could have been published last week
in Boston College's
Journal of Corporate Citizenship or
BCLC's Corporate Citizen
newsletter.
The
notion of
corporate responsibility has certainly
evolved and expanded since Walton's day,
but at the heart of
corporate responsibility as a construct,
as a theoretical idea, there remains an
underlying tension
between two schools of thought.
Some
argue that
corporate responsibility must be rooted
in an ethical imperative to be effective
- and that a
business-case only approach leaves a
company vulnerable to quarterly earnings
pressures, market
shifts and other short-term external
pressures that can undercut a company's
-
and
society's - long-term
interests.
Others argue that
without the business case, corporate
responsibility efforts are secondary,
ancillary or marginalized
at best - and PR, greenwashing, or fluff
at worst.
Our
first session
today - Corporate Responsibility: Moving
Beyond the Business Case - will explore
this
tension.
In
the past several
years, we've seen more and more business
leaders "buy-in" to the notion that
doing good can be good
for business too. Numerous surveys of
U.S. and global CEOs indicate that
C-Suite executives now
realize that corporate citizenship is a
fundamental part of business practice.
The
business case
for corporate responsibility is now well
defined. It's clear that a genuine
commitment to corporate
responsibility can translate into
stronger financial performance and
profitability through:
§
operational
efficiency gains and resource
management
§
mitigation
of risks (including lawsuits,
fines, protests and boycotts)
§
improved
reputation and branding
§
enhanced
employee relations (yielding better
results and cost savings with respect to
recruitment, motivation, retention,
learning and
innovation, and productivity)
§
improved
relations with the investment
community and better access to
capital
§
increased
sales through brand-awareness,
consumer-preference and cause
marketing
§
stronger
relationships with communities and an
enhanced license to operate
§
access to
consumers and new revenue streams in
emerging markets
§
qualification
for billions of dollars in
public sector business
§
product
innovation
All
of this has
helped silence the critics of CSR -
those who subscribe to Milton Friedman's
oft
quoted argument
that: "The business of business is
business!"
But,
in pushing so
hard to frame and defend CSR purely in
terms of the benefits it can bring to
business, are we
neglecting the moral or ethical case for
business responsibility? And is there,
in fact, an ethical
imperative for doing more, for going
beyond what's expected, for getting
involved, for giving
back?
Consider the
analogy
of business as a car driving down the
road. That business, that car, must obey
the posted speed
limit - the driver must use only
unleaded gas, must wear a seatbelt and
ensure
that babies and young
children use approved car safety-seats,
they must use turn signals and obey all
traffic laws. But
when that driver sees another car broken
down by the side of the road, he or she
isn't legally
obligated to stop and help.
Now,
whether that
broken down car represents global
climate change, species extinction, bird
flu
pandemic, poverty,
human rights abuses, illiteracy or a
lack of diversity - some would argue
that,
as corporate
citizens - or, in Walton's view, as
unique social and political entities -
companies have a duty to
move beyond mere compliance - beyond the
basics of operating legally and
responsibly - to a higher
level of engagement, performance and
contribution. That they are ethically
obligated to give back
to the local and global community and do
what is within their power to effect
positive
change.
This
notion isn't
new. Years before Walton and others
began writing about CSR in earnest, some
innovative companies
were taking enlightened self-interest to
heart - and taking corporate
responsibility to new
heights.
In
1943, Robert
Johnson developed the credo that would
come to define the culture of Johnson
& Johnson. The
credo outlined the company's four areas
of social responsibility: first to its
customers; second to
its employees; third to the community
and environment; and fourth to
stockholders.
In
the 1950s, Bill
Hewlett and Dave Packard set out the
corporate objectives that would come to
be
known as "the HP
Way." In Hewlett's words, the HP Way is
"a core ideology . . . [that] includes
a deep respect for
the individual, a dedication to
affordable quality and reliability, a
commitment
to community
responsibility, and a view that the
company exists to make technical
contributions for the
advancement and welfare of
humanity."
Clearly, a
company
cannot solve all of the world's problems
- just as we, as citizens, cannot help
every stranded driver
or fix every broken car.
But
every company
has something they do or make better
than anyone else. A unique capability, a
core competency, a
special product offering. And many firms
now feel compelled to put that product
or expertise to use
to help society or the planet. Today,
many companies have even built doing
good
into their business
model and into the fabric of their
corporate cultures - think of Google and
Whole
Foods, for
example.
So,
where do the
business and ethical rationales for
corporate responsibility converge? Where
do
they diverge? And,
can they co-exist?
We're fortunate
to
have two outstanding panelists with us
today in Jennifer Woofter of Strategic
Sustainability
Consulting and Jane Meier of Whole Foods
- who will share their perspectives on
this topic. We're
equally fortunate to have in you, so
many representatives from the business
and
NGO sectors here as
well, and I hope that we'll hear from
many of you in the discussion portion of
this session.
Jennifer Woofter
is
the founder and president of Strategic
Sustainability Consulting, a business
designed to provide
under-resourced organizations with tools
to actively manage their social and
environmental impacts.
In this role, Jennifer draws upon her
expertise in the fields of CSR, ethical
investing and
organizational accountability systems to
help clients make the leap between good
intentions and
long-term sustainable
performance.
Prior to
launching
her own business, Jennifer was a social
research analyst with Calvert Group. In
addition to
researching companies for inclusion in
Calvert's socially responsible mutual
funds, Jennifer also
led the company's initiatives to promote
corporate accountability through
increased transparency and
disclosure.
Jennifer also
worked
on Capitol Hill, as a staffer with the
Senate Committee on Homeland Security
and
Governmental
Affairs, where she focused on federal
accountability systems.
Her
publications
include "Non-Financial Disclosure and
Strategic Planning: Sustainability
Reporting for Good
Corporate Governance," issue briefs on
the topic of corporate transparency, and
a variety of reports
on women's rights in developing
countries (Somalia, Democratic Republic
of
Congo, Botswana). She was
also on the team of Senate staffers that
produced the 2001 report "Government at
the Brink", an
agency-by-agency account of fraud, waste
and abuse in the federal
government.
Jennifer holds a
bachelor's degree from the University of
Oregon and a masters degree from the
Virginia Polytechnic
and State University. Most recently, she
was a member of the first graduating
class of the
Strategic Leadership towards
Sustainability Master's Programme at
Blekinge
Tekniska Hogskola (in
Sweden).
Jennifer, thank
you
for being with us today!
JENNIFER
WOOFTER:
President,
Strategic
Sustainability
Consulting, Washington, D.C.
Thanks so much.
Thanks
to AACR for
inviting me back. I was here last year
to talk about corporate social
responsibility from the small
and medium size enterprise perspective.
Since then I have had many good
discussions with Chad about
these topics. I wouldn't necessarily say
'arguments,' but many impassioned
discussions about the
tension between the business case and
the moral or ethical case.
It's such an
important
topic and I'm so
glad that Chad gave me such a good,
broad topic, because it really allowed
me to
focus my comments
on my day-to-day experiences as a
sustainability consultant and to provide
you
with some reflections
on where I see some of the rubber
hitting the road in terms of engagements
that
the clients want
today in terms of social and
environmental consulting
services.
Just to give
you a little
bit of
background about Strategic
Sustainability Consulting, as Chad said,
we focus on
helping
under-resourced organizations. And what
does that mean exactly? A big portion
of our client base
is small and medium size enterprise,
NGOs. We actually have a significant
portion of our clients
that are big companies that just don't
have the in-house expertise or
capability
to tackle all of
their sustainability issues or their
corporate social responsibility issues.
We
come in and do
things like a day-long workshop on
understanding their company's social and
environmental impacts.
So, having done
this for
a couple of
years, I'm now able to sort of step back
and say, are there generalizations that
we can draw about;
what are the motivating factors behind
companies that are seeking to be more
engaged in terms of
corporate social responsibility? And
over time I've learned what makes a good
consultant.
I've really
sort of
narrowed it down to
two things. The first one is as
consultants, we must understand the
motivation
of our clients and
what is their desire to be involved in
corporate social responsibility and
sustainability. In some
cases it's because it is the right thing
to do. Many times I get initial calls
from clients who
say, 'Hey, we know we need to do
something with this climate change
thing, but
we don't know what it
is. Can you help us? What would you
suggest?' Or 'Our employees have asked
us
to look at greening
our operations. What would the next step
be?' Other clients come and have a
very, very specific
idea. They say, 'We'd like to cut our
energy costs by doing a green building
audit.' In that case
it's more of a business case driver.
Understanding
motivations
is the first
part, but to be a successful consultant,
my job is to help them be strategic
about their approach.
Once I understand why they are
interested in doing corporate social
responsibility, my job is to
help with the 'how' part of it. This is
where the, I think, the convergence of
the ethical case -
because it's the right thing to do,
because you want to keep your employees
happy, because you've
been asked to do it, because it's a
mandate that's come down from the board
about being more active
in the community.
Then from the
ground up,
the challenge is
finding the ways that it's going to
benefit a business. Is it through
reduced
costs, through
improved efficiencies; is it through
better employee loyalty and lower
turnover,
which is very, very
under estimated cost to
businesses.
My challenge as
a
sustainability
consultant is to balance between those
two. To be able to find the win-win
situation where the
moral or ethical desires to be a better
corporate citizen are also supplemented
by actions that add
to the bottom line of a business. The
way I like to think about it is that
business is about
people. At the end of the day, if your
corporate social responsibility or
sustainability program
does not involve things that people are
excited about, it will not have
long-term success. You
shouldn't tackle climate change just
because it's hot in the news right now.
If
your people cannot
get behind it, do not understand the
motivation or aren't excited to talk
about
it when they go home
at night with their families, you will
not be able to carry it through.
So I think
finding issues
and finding
strategies and initiatives that really
inspire and empower your employees to
get
involved and to
take charge and to be innovative and
creative is such a key issue.
On the other
hand,
business it's also
about structure. It's about the actual
building that it's in. It's about the
legal structure. If
you have obligations to your
stockholders that is something that is
very real.
And so in terms of
when we think about business as a
structure and as an organization with
institutional systems,
that's where the business case comes in.
You shouldn't pick corporate social
responsibility
programs just because your employees are
excited about them. That's missing the
point, too. People
get burned out. People will leave the
company. You shouldn't have recycling
programs just because
Joe down the hall is really enthusiastic
about it. When he's promoted out to
another department or
leaves for another job, hopefully he
will have some sort of
institutionalization
of recycling
program that will carry it through long
term.
So this is
where I think
the meaning of
the ethical and the business case comes
in. We need to find those intersections
where you get
employee enthusiasm and innovation and
creativity, but also find the places
where there is a
business case; where there are firm ways
to quantify the benefits to your
organization and also
systems in place to make sure that there
is improvement over time. I think
sustainability and
corporate social responsibility, that's
a long-term effort and we need to make
sure that there are
systems in place to insure that over the
long term we are really doing the right
thing.
CHAD
TRAGAKIS: For many
people, Whole Foods is the
very definition of a sustainable
business. The company was founded in
Austin,
Texas, 27 years ago
and has since grown into the world's
leading natural and organic foods
supermarket and America's
first national certified organic grocer.
The
Whole Foods
Market motto, "Whole Foods, Whole
People, Whole Planet" really captures
the
company's mission to
find success in customer satisfaction
and wellness, employee excellence and
happiness, enhanced
shareholder value, community support and
environmental improvement. Not
surprisingly, Whole Foods
has been ranked for ten consecutive
years as one of the "100 Best Companies
to
Work For" in America
by Fortune magazine.
We
are fortunate to
have with us today, Jane Meier, a
marketing director and community liaison
for
Whole Foods Market.
For the past three years, she has been
responsible for implementing regional
and
national marketing
programs, including the store's donation
and 5 percent Community Support Days.
She has also been
integral in creating Whole Foods Market
team member and customer educational
opportunities. Jane is
passionate about forming productive
community partnerships with local
non-profits and educational
institutions. She earned both her
bachelor's and master's degrees at the
University of Georgia, the
state in which she was raised.
We're glad you
moved
up here to DC, Jane, and we're so glad
you could be with us today!
JANE
MEIER:
Marketing
Specialist/Community Liaison,
Whole Foods Market, Washington,
D.C.
Well, after
that
introduction, I don't
know what I can say. I sound pretty
fabulous on paper. Welcome everyone and
I'm glad to be here.
I'm glad to talk about what Whole Foods
is doing. I'm going to pass a pile each
way, because I
think some people walked in. These are
brochures that I brought.
So I guess for
me, this
question of is it
the moral case or the business case is
kind of like the chicken or the egg
question. For us at
Whole Foods, it's, I think, at any
corporate social responsibility group
contrary to what popular
society believes, that it's PR or it's
us trying to be fancy or cover up that
we're really dumping
raw sewage in the back or whatever
society believes, that corporations are
just
these evil people
and they do all this work so they can
cover up or for the tax break or for
whatever else.
I think that at
least at
Whole Foods
Market, the basis for doing corporate
social responsibility or doing this
community outreach work is
based on a deep moral belief of our CEO
and founder, John Mackey, and the people
who started that
grocery store in 1980. It was called the
Safer Way. There are 60 of his close
friends who started
that business. John Mackey continues to
lead by a moral compass. He was
accompanied by that even
in the face of Wal-Mart selling
organics, every grocer in the market
copying
things that worked
successfully for Whole Foods Market. He
continues to be the philosophical,
moral guidepost for the
company.
Whole Foods
Market, for
those of you guys
who don't know, was based on one or our
core bodies - we have five core bodies,
but we believe that
our business is based on five key
stakeholders that are interdependent.
You
cannot separate the
stakeholders and the benefits to each
stakeholder. It has to be and
interdependent relationship.
Those stakeholders are investors,
community, environment, customers and
our team
members.
A lot of time
there is
tension between
the right things to do for the
stakeholders. For example, team members
at our
store get a 20
percent discount, free health insurance
after six months and competitive wages.
It's great for our
personnel. It's one of the reasons why
we're on Fortune's 100 Best Companies to
Work For, 10 years
in a row. The negative is for investors.
They would love for us not to give
the 20 percent off and
not give free health insurance. We've
been giving free health insurance for 27
years and it's
getting expensive. It's hard. We spend
more on wages than most other grocers,
but we believe that
that's the right thing to do as a
company.
There's
composting that
we're doing at
our stores right now. That's a program
that has been really popular in
California and we're working
on trying to get haulers and people in
our stores right now. It's been a huge
effort to undertake
as a region. Right now it's actually on
the bottom-line profit dollars costing
us more than
throwing our compostable materials away.
We've employed a person in Montgomery
County, called the
Green Mission Specialist, trying to help
make folks more aware about composting
in the stores, which
is another cost to our bottom line, but
we believe as a company that it is our
moral obligation or
our civic duty to make sure that the
waste that we produce that is
compostable
is composted.
We live in this
world and
we want our
children to have farmland instead of
landfill space. We want the stuff that
we
produce - we don't
want to be this big producer of waste.
With the fabulous prepared foods and the
cut fruit that we
have, there's 16 tons, I think, of
compost that we composted at my store,
one
store, last month.
That's 16 tons that didn't go in a
landfill, which is great, but it's still
costing us more money on
the bottom line. When you're facing
competition it's hard, but we still do
it.
It's like one of
those things, when I talk to my store
team leader about things like that, it's
just part of our
business.
I think John
Mackey, when
he founded this
business, I don't think he ever realized
it would be as popular and successful
as it is, but he
founded it on his ideas of how business
can be different; that doing good and
making money isn't
mutually exclusive. For instance, last
year he decided to take his salary of a
dollar from Whole
Foods Market and donate a large part of
his stock options to two foundations
that the company has
started, The Whole Planet Foundation and
Animal Compassion Foundation.
There's a lot
of
criticism. I read the
Motley Fool about him doing that. There
are still CEOs that make tons of money
that still have boo
coos of money. Basically, you want to
make fun of him for making a dollar a
year? I think it's
pretty fabulous. I think the thing about
money for all us is we could always
spend more. We could
always find a way to use it. I think he
still really guides himself by that and
is trying to use
the company as a positive choice or a
positive source for good.
Some things
that he's
started is Animal
Compassion Foundation, which is a humane
treatment of farm animals. It's trying
to make the
practices more humane and less
traumatizing for the animals. He sees it
as a
problem in our
business. We're in the grocery business.
We sell meat. It's a problem that he
feels like he needs
to work to solve. We're not going to
make any more money off of probably how
animals are treated
out on the farms, but for him it's a
moral imperative that as a grocery we do
the best that we can
to make the treatment as humane as
possible. We get made fun of all time.
The
lobster, the crazy
lobster debacle, he's been on 60 Minutes
saying 'yeah'... but we still do it.
The company
recently
asked the local farm
line, loan program, which is providing
$10 million in loans to local farmers
who
may never sell in
our store. We want to support local
farming communities.
Recently, the
executive
meetings were
held in D.C., and I had an opportunity
to hear John Mackey speak. He was
talking about back in the
day there weren't local farmers'
markets. Local farmers' markets have
grown
tremendously in the
years that Whole Foods has been in
business. He said that the only organics
they could get when
they opened the store in Austin was out
of California and they were pretty
sketchy. They weren't
sure if they were really organic and
actually two of those big farms ended up
closing down due to
allegations that they were not selling
what they said they were going to. He
didn't have any place
in Austin, Texas, to go buy organic
produce. That's something that he wants
to
make sure that our
children's children have farmers that
they can buy from.
Right now we
have a whole
trade
certification that's just started that's
insuring the products that we source
from other countries
meet our high standards, that we provide
a fair wage to producers, good working
conditions and
promote a sustainable
environment.
I think, and my
estimate
of what our
company does, I think that we believe
it's imperative that as a business we
use
the leverage that we
have to be the change that we want to
see in the world. I brought some
examples
of what we're doing
globally, nationally, regionally and
locally to be that change.
The first
example is the
Whole Planet
Foundation, which is this brochure to
the left. It has the national, regional
and local. The Whole
Planet Foundation was started in 2005.
It was based on the Grameen Bank model.
We're giving micro
loans to poor women in countries where
we do business. It's very likely that
these women will never
sell product to us, but we believe by
going into Costa Rica and buying
bananas,
which is our top
seller. You're out of bananas at the
grocery store and people think they had
a
heart attack. You
have to have your bananas, right? From
Costa Rica. The expectation is that
there's produce. We
want to give back to that community
that's sourcing us even though the
people
receiving the micro
loans may never sell to Whole Foods
Market.
A way that we
used our
position as a
retailer to leverage more funds for this
Whole Planet Foundation recently, in
the mid-Atlantic
region, we have asked customers to
donate at the register. It was a way for
the
customers to feel
very tied in to what Whole Foods Market
does. Our team members really, really
got behind it. A lot
of these team members are immigrants. A
lot of them have seen the poverty in
the world. It was one
of those things like Jennifer was saying
where it was really tied in to what our
team members cared
about.
We were able to
raise
$165,000 which is
going to change about 1,200 people's
lives in these poor countries. One store
in Arlington did a
really amazing job and raised $18,000,
because their team members got behind
it. We used our
position as a retailer with access to
thousands of customers a day to help
these
people. Because
people feel so far away, they feel like
they can't do anything, but donating $2
or $5 at the
register really does change lives.
That's something we're doing globally.
Nationally, if
you look
at this, it's the
Whole Earth Weigh-In. I know the whole
carbon footprint is so in vogue right
now and we definitely
played off of it. This is 30 days and 30
ways to reduce your carbon footprint.
It's one of my
favorite national programs that's come
out in a while and it's bringing
attention and awareness to
the global warming issue. Two years ago,
Whole Foods Market became one of the
first Fortune 500
companies to be 100 percent wind powered
and a lot of people have followed suit
as a result of that.
I think
customers have
the expectations
that we're going to do the right things
for the environment and this booklet
shows you how to do
that. It does the great business thing
of highlighting why our brands are
different. Why do you
want to buy natural detergent when it's
more expensive? Why do you want to buy
recycled plates?
Why do you want to buy coffee that's
shade grown? Why do you even want to
shop
at Whole Foods if
it's more expensive? That's the
perception out there. So it was a great
way to
capitalize on one
of our core values, which is that we
care about the environment. Here's a
way,
as a consumer, try
one of these 30 ways to make a
difference in climate change.
Part of that
initiative
that was started
a couple years ago was the reusable bag
campaign. If we could just get people
to carry these to the
grocery store every single time, we
would make a huge environmental impact;
not
just huge, massive:
gas and hauling the bags, throwing them
away, recycling, all of that. And so we
try and use our
national clout to create awareness in
that arena.
When these were
introduced, I guess it
was probably two Octobers ago, nobody
had reusable bags. Now, if you look
around MOMS has them,
Trader Joes has them. I don't know how
it was in the rest of the country, but
nobody around here
had reusable bags. We had been one of
the retailers to start that moral
movement of maybe I should
bring a bag to the grocery store.
Regionally, in
this pink
brochure, you
can read about our partnership with the
Komen Race for the Cure. We started
this partnership nine
years ago before there was pink Roombas
and pink Kitchen-Aids, and Race for the
Cure everything. We
started it because our shoppers are
often affected by disease. Some people
don't really clean up
their diets until they get cancer or
they get sick or somebody they know gets
sick. We raised a lot
of money for the program. We raised
three quarters of a million in nine
years.
Our floral team
actually takes a financial hit, because
we sell $14.99 bouquets and they are the
same bouquets we
sell for $14.99 every day and $3 of the
price gets donated to the Komen Race for
the Cure. That's
$3 less the floral team is making for
that six weeks of selling the bouquets,
but they get really
excited about it. They participate in
the race. They see what an impact our
business is making.
It's another way that we have been able
to use our customers and our customer
base to basically
raise money for a really important
organization.
The last one
that's near
and dear to my
heart because it's something that I
created at the store was MANA Food
Center.
Over the holidays,
we sold these reusable bags for $2 and
all of the profit from the reusable bags
went to fund MANA
Food Center Smart Snacks program, which
is an elementary school program for kids
who are on free or
reduced lunch. It was a simple thing as
we were selling the bags anyway and we
just decided to
donate all the sales to MANA Food
Center. It's great. It's an
environmental
impact. It's a moral
impact. We're a food retailer. There are
people who don't have food and to
create awareness around
that topic - we do daily food donations
to MANA, so it's very tied in. Our team
members already
knew what MANA was and what they did, so
we were able to see a moral, social
tie-in.
I guess that's
just a
quick review of
what Whole Foods Market is doing. For
me, in closing, I think good social
responsibility efforts
should be like the chicken or the egg
question. You should be able to look at
this and ask, 'Is
Whole Foods doing this to make money or
are they doing this because it's the
right thing to do?'
Hmmm, I don't know. In my opinion,
that's when you know you got a winner in
terms of what you're
doing and if it makes sense to your
business.
I look forward
to the
days of more
conscience consumerism. I think the era
that we're entering right now is where
people ask
themselves: 'What are other retailers
doing, where are my clothes coming from,
what impact is my
life having on society?' Maybe there
will be a day when people ask: 'Oooo,
does
the grocery store
compost? I wonder. Do they do the right
thing in the community?'
I think in the
meantime
we'll just
continue to lead by moral compass
instead of just the bottom line. I don't
know
is it a business
case or is it the socially responsible
moral way for the company? I don't
know. I guess that's for
us to know from our experience and all
the academics and everybody around this
table to figure out.
All I know is
that when
it's the dead of
winter in the holidays and I'm tossing
turkeys and it's crazy at the store, I'm
glad that I have,
and I think our employees are glad, that
they work for more than just a grocery
store. That's what
we try and meet as Whole Foods
Markets.
CHAD
TRAGAKIS:
I'd like to
open the floor to some questions and I'd
also like to invite
particularly some of our corporate
representatives here today to share
background on some of the
programs that they're doing if they want
to talk about balancing the moral
compass, or the civic
duty as Jane put it, with the business
case that Jane and Jennifer were
discussing. I would also
like to open the floor to questions. I
don't want to call anybody out, but just
looking at my
Motorola Sprint Nextel phone. I'm
looking at it and I know Motorola has
been
doing some great
things. I'm not as familiar with
Sprint/Nextel's efforts in the area of
corporate responsibility
and how you, to Jane's point, balance
the tension and to Jennifer's point, how
you get to the root
cause of the motivation, but I think
maybe that's the answer to the question.
I'll open it to
either of you if you want to share
something just to kick it off.
CHUCK
EGER
(Motorola):
One of the interesting things to me in
listening to the presentations was the
phrase 'do the right
thing.' I'm not sure that's always so
clear. I certainly have some questions
about that. I wonder
whether that's a culturally based
decision for a global company. And how
do you
make a culturally
based decision? And if it's not
culturally based where are the precepts
that
we're looking at in
order to know how to do the right thing?
That's a question that I'd certainly
like to hear
discussed today at some point.
Having said
that, I, of
course, believe
that Motorola does do the right thing.
We have several programs that we work
on. I think that one
of our obligations is to do what we do
in a way that benefits society as much
as
possible. You have
to separate that from corporations that
do good things, but it's not necessarily
related to good
business. Those are two completely
different kinds of social responsibility
activities.
Although I
think it's
nice to contribute
to the community - nice isn't the right
word - important to contribute to the
community in ways that
don't necessarily match up with
business' core expertise, it's really
fundamental that you apply the
core expertise. One thing that Motorola
has done is we have developed a very
inexpensive phone for
use in places where people don't have a
lot of money to pay for communication.
Good working
communication is essential. Places like
India where the level of wired line
communication is pretty
much nonexistent in many parts of the
country. You have to have wireless
communication to really
have successful communication, but the
phones are out of reach of the means of
the people. That was
where we rolled out our, we call it the
'Moto phone,' and it is a product that's
simplified in terms
of features. It has a display that's
designed to operate in the bright sun
and
is intended to
really be of social benefit to the
people of the region. It was also
obviously
a product we hoped
we could make some money on.
I think that's
a nice
demonstration of
the confluence of using a corporation's
technical expertise, but driving towards
a specific social
need rather than sort of a marketing
cause. So I'll stop there.
CHAD
TRAGAKIS: I appreciate
that and I know you
brought some literature to share. We'll
put it on the table.
CHUCK
EGER: Let me say
a word. I was only able to come up with
last year's corporate responsibility
material because our
new material is being published, like,
tomorrow. So, it will be on our Web site
shortly, if anybody
has a burning desire to see what we're
up to this year.
ALEX
HAHN
(Sprint/Nextel):
Just to add,
I think we talked a lot this morning
about the business case -
corporate doing because it's the
business case for it or it is just the
right
thing to do. I think
the answer is both. With everything that
we do there is the business case for
it, but also there is
the purely altruistic case for it as
well. I'm just thinking of Sprint
recently. We are very
involved with the March of Dimes. We
just did a large employee March of Dimes
walk. We had over
300 people walking. Why do we do this at
Sprint? Why do we encourage our
employees? Why do we
spend a lot of money and raise funds for
the March of Dimes? Obviously,
preventing premature birth
is a huge issue and it's a huge need and
it's something our employees can relate
to that everyone
has been affected with and knows a
premature baby. It's an important social
issue, but there's also
a business case for it, too. As
corporations, health care costs are
enormous.
What we can do to
help prevent premature birth, there's
going to be a direct correlation to a
reduction in our health
care costs.
Our partnership
with the
March of Dimes,
it's just one of the many outreach
programs that we do but I think it shows
that
for all the
initiatives that we do, it involves both
the business case and the fact that as
a corporation, it's
important that we are engaged and can
contribute, so I think it's both.
CHAD
TRAGAKIS: Thanks,
Alex. Nancy, first, thank
you so much for being here today. We're
delighted that you're here and Nancy is
going to be one of
our panelists in our session this
afternoon. Thanks so much.
NANCY
SMITH-NISSLEY (U.S.
State
Department):
You're very
welcome. I just want to say my
colleagues at Motorola
are being a little bit modest here. Not
that I'm plugging Motorola over any
other carrier, any
other company, but Motorola did win the
Secretary of State's very competitive
and very prestigious
ACE award both in 2004 for the work in
Brazil and in 2000 for their work in
Malaysia. So I wanted
to give a little mention and praise to
Motorola in that regard. It is the only
U.S. company that
has won this award twice.
AMANDA
LEPOF (Red
Cross): I see the
difference between philanthropy - doing
good for doing good -
versus giving to advance business
interest in the following: More and more
companies are dictating
giving with terms and returns to seek
their objectives and not always to
advance
what an NGO has set
forward as its goal to help PPI. Is it
about saving lives or your bottom line?
Why NGOs should be
held accountable? They shouldn't have
activities designated by
business.
Participant: I have a
question as a consumer. What is the
definition of a socially responsible
company? I go on Merrill
Lynch and they have this statement that
determines what qualifies as socially
responsible. What's
the definition?
CHAD
TRAGAKIS: Jennifer,
putting her Calvert hat on,
actually can answer that.
Participant: I was
wondering how do they define this and
what percentage of companies in the
United
States could fall
into that category?
JENNIFER
WOOFTER: I
think it depends on where you set the
bar and what issues you prioritize over
others. When we talk
about big, publicly traded corporations,
very few of them would be considered to
be stellar
corporate citizens across the board.
There are a few that stand out. I think
Whole Foods is one of
them that is socially responsible and
the investment community almost
unanimously agrees is
considered socially responsible.
I think for
other big
companies though,
it gets more challenging. Particularly
if they've been around a long time,
because what is
considered socially responsible today is
not the same as what was considered
socially responsible or
important 20 years ago or 50 years ago
or 100 years ago.
Some socially
responsible
investment
funds will prioritize environmental
responsibility. Others focus on
community
giving. There's a
lot of different socially responsible
investment funds out there today and
that's why it's so
important to read the material that they
provide to understand how they are
screening the
companies. Everybody does it a little
bit differently. I think, one of the
challenges is that you
can probably find every big company in
one socially responsible investment fund
or another. A lot
of it is research.
I know Nikki
from my time
at Calvert when
I worked just across the hall from her.
I don't know, would you agree with what
I said?
NIKKI
DARUWALA (American
Rights at
Work): I do agree
with
what Jen says, but also would add in
that it's a personal
definition. There is no one, single
definition of what corporate
responsibility
is. I think each
organization and individual entity
defines what it means given their own
value
set and of what
ethics and integrity is. Also, for
social investment firms even though
there
may be two or three
that say they look at environmental
responsibility, how they define looking
at
environmental
responsibility varies. Some may say, 'Do
they have a policy on the books?'
Others may look deeper
to see if that policy is being executed
and in what format. Still others might
look for tangible
results of that policy and then define
it based on that.
So, there's
just a wide
gambit and I
think each individual person as an
investor, as a consumer, as a variety of
different hats that we
wear, needs to looks at what our value
system is and then what's being offered
out there by that
company or by that investment firm. Does
that match up with what you're looking
for?
JENNIFER
WOOFTER: If I
could just add, I think this also goes
back to the question of how do you
define
what the right
thing to do is in a global, culturally
diverse - the world that we live in. I
think my response to
that is to look for companies that
engage their stakeholders in all of the
locations that they
operate. I think that figuring out who
you impact is asking them their
opinion. What should we be
doing? How can we be more responsive to
you? What are the impacts you see our
company having on
this community, on this group or
consumers, on our investors? When that
needs
to happen in a
culturally specific area, particularly
for globally operating firms, that to me
is a real sign of
corporate social responsibility. Not
just taking a set of values at the home
headquarters, but
balancing that global standard with what
is relevant and appropriate at the
local level.
MATT
MANI (Booz Allen
Hamilton): Two
comments. One is, I think we have to be
very, very careful about this
concept of do the morally right thing
versus the business case, because morals
are completely
subjective. Just as an example, a couple
days ago the CEO of United
Technologies was on CNBC
talking about all the great things their
company is doing to reduce greenhouse
gases and he got
literally decimated and attacked,
skewered by the anchor for: 'How dare
you
bring this issue up,
because it's not proven that carbon
dioxide is a greenhouse gas and so on
and so
forth and it
generated into a political debate. So I
think you have to be very, very careful
about that - or let
me give you another example. This was a
couple years ago. The guy who owns
Dominos Pizza decided
to contribute part of his money towards
charitable campaigns and then people
didn't want to eat his
pizza anymore. You have to be very, very
careful about that as a
businessperson.
The other point
I want to
add here is,
particularly today, there are a lot of
private equity firms that are players
and
that are part of
the stakeholder group. There are very
few private equity firms - I don't think
I've met a single
one that will say, 'Well, the industry
is growing at 10 percent, you're only
growing at 2 percent,
but that's no problem because you're
outspending everybody else on your
corporate social
responsibility programs.' That just
doesn't happen.
I think there
are two
things that we have
to think about at the same time as
looking at what can we do that - I like,
Jennifer, what you had
to say about you should do the things
that people who are part of your
organization can really get
behind and the things that engage your
stakeholder groups. In addition to that,
I think part of
what an organization like AACR or what
we should think about is how we create
the right incentives
that make it possible for our corporate
body to be able to do socially
responsible activities.
Things, for
example, like
carbon offsets
have really made a big difference and
there are companies like the airlines,
Delta Airlines or even
GE and other firms that are now really
investing a lot of money and effort into
trying to reduce
their contribution or their use of
energy because of the carbon offset kind
of
incentive. I think
part of the discussion has to be around
how do you create the right environment,
the right
incentives, and an environment that's
accepting and promotes socially
responsible behavior versus
just expecting that everyone's going to
do it?
Secondly, I
would add to
that that I
don't think you can have the same
standard for every company, because
there are
companies that are
going to be in different industries,
that are going to be in different
stages.
A privately owned
versus pubic owned company; an early
growth company versus a mature company.
They are going to be
dealing with different issues and
applying the same standard to all, I
think,
becomes very, very
challenging. That's my two cents.
Participant: To
continue with that point, I just want to
say civic responsibility and social
responsibility are kind
of four quadrants. One, responsibility
as an organization to the organization.
That means the
stakeholders, the management, the profit
is an important factor, and also what
kind of profit. All
those responsibilities are one part of
it.
The second one
is the
economy. Again,
you mentioned about the discussion on TV
about, for example, UPS, they have a
huge fleet of
earth-friendly trucks. There's a lot of
measures that corporations can take.
That's, to me, that
is a socially responsible move.
The third one
is social
justice. Making
people's lives better, good. Not
infringing upon somebody's rights.
That's
social
responsibility.
The last
quadrant is the
employees -
giving them fair wages and being fair to
them and those kinds of things. So I
see corporate
responsibility and civic responsibility
are four quadrants, so if that makes the
analysis better.
RON
STURMAN (The Washington
Times): Again,
I'm Ron Sturman, community relations
manager of the Washington
Times and I noticed that
we're the only media company represented
here
and I wonder what
message is there.
CHAD
TRAGAKIS: I think
DayZ Loop is in media,
too.
RENEE
STEIGER (DayZ
Loop): We consider
ourselves media. Different kind of media
- We're an online
TV network for teen girls.
RON
STURMAN:
Of
course, I'm sorry. The Washington
Times is a company,
privately owned
company that is
undergoing quite an internal transition.
We don't know how that's going to sort
out. We're also in
an industry that's trying to define what
it's all about. There are internal
stresses that we
experience within the company and also
within our industry.
There is a
great deal of
debate within
the company right now on what our role
should be with respect to community
relations and corporate
social responsibility. And I confess and
want describe the nature of the debate
by telling you that
I drive a Prius. Our advertising
director drives a Lexus SUV and that
just
about sums it all up.
What we try to
do through
our community
relations program is to fulfill a
mission that tries to make the community
a
better place for our
employees, for our advertisers, for our
readers and for the general public - a
better place to live,
to work, and to learn.
We try to use
through the
community
relations program our core competencies
to do some decent things in the
community. We are really
not a newspaper. We are an information
and communications company. We use a
lot of different
technologies, as do all newspapers. So,
to think of us as a newspaper doesn't
truly describe what
all newspapers are experiencing. We use
satellite technology. We use the
Internet. We use
broadcast media.
Today is World
Malaria
Awareness Day and
through community relations we try to
fulfill our mission by entering into
strategic partnerships
with companies. One of those companies
is the Global Business Coalition on
HIV/AIDS, TB, and malaria
and through that partnership, we are
able to convey to the general public
that
this is a very, very
serious problem. We have run public
service ads for the Global Business
Coalition and for other
organizations that we partner with.
Now, there is
great
debate within the
organization. How are we benefiting by
running this ad? The community
relations manager will say,
'Well, it's a public good. This is
something we ought to be doing.' And the
advertising staff may
say, 'Well, you know, we just lost
$14,000 because we didn't open this
space to
a commercial
advertiser.' That's the kind of
discussion that goes on at the
newspaper.
We have a new
president;
he's been on
board just about two weeks. I'm very,
very hopeful that he will resolve the
discussion, because
prior to his being president, he was our
marketing director and vice president
and he hired me to be
community relations manager, so I'm
hopeful that community relations will
get a
fair hear.
I have a
question, Jane,
that I would
like to ask you. There are so many good
causes that you could support, that
Whole Foods could
support and there are always too few
dollars chasing too many good causes.
What
is the process
inside the company where you decide
which causes to support and which will
have
to wait for a later
day? And I could also ask that question
in a Motorola or Sprint Nextel.
JANE
MEIER: I guess
I'll speak first. I think for Whole
Foods, you're right; when I'm making
decisions, we have a
donation request form and we put it out
there that we contribute to hunger,
arts, education, animal
compassion, humane treatment of animals,
and things that would develop like
workforce development,
culinary arts and stuff like that. Then
I try and look at the validity of that
donation request and
see if it falls into one of our issue
areas. I think that's how a lot of
companies are starting to
do it now.
I don't know.
This
business for me is
still pretty new. I know a lot of people
have been in it a long time, but it
seems like from my
perspective it's becoming a watershed
moment where the company's different
departments used to have
their pet causes and they would give
money away and we wouldn't really know
how
it went. It
wouldn't have any strategy attached to
it. I think less and less that's
happening. More and more
it's about trying to get centralized and
have some kind of strategy. So at the
end of the day, you
do what you can and what's most
pertinent and what you're able to do
best with
your business.
One of the
causes that we
support that I
think is a really good business fit for
us is a volunteer event with Montgomery
County. It's Martin
Luther King, Jr. Day's volunteer event
and we've been donating the products and
volunteers to help
make about 1,500 lunches for homeless
shelters in the area. For me, as a
community relation's
person, that's a great way to spend my
money because I get to put my employees
in a place where
they're going to succeed as volunteers.
They're really comfortable around
food. They're really
good around food. It's a highly visible
event that's open to the public; our
general consumer is
the public. It gets people to touch our
food, which some people are freaked out
about. You know,
peanut butter's going to have tofu in it
or something. I guess I kind of think
of that event as,
'How does it fit in with our mission?
How do our employees benefit?' You
always have to think of,
in this position, 'What's in it for the
business? How does this partnership
work?'
RON
STURMAN: Are you
the decision-maker?
JANE
MEIER:
I'm the
decision-maker for the Rockville store.
There's actually one of me in every
Whole Foods in the
company.
RON
STURMAN: So,
each store . . .
JANE
MEIER:
Has the
local decision making for local
donations. We give away five percent of
our
after-tax profits to
non-profits. We do that in two ways
mainly at the store level through
donation
requests. We have a
fiscal period donation budget and then
we do five percent base at each of the
stores four times a
year where five percent of one-day sales
is donated to a local non-profit.
My most recent
five
percent day was with
Community Ministries of Montgomery
County, which is an organization that
works
in our county that's
very strong. Five percent of our day's
sales on Wednesday, March
28th will be donated to
them for a specific program.
RON
STURMAN: And may I
ask that same question of
Motorola?
CHUCK
EGER: Yes, but
I'm not sure I can give a complete
answer. We, of course, have a
foundation.
The Motorola
Foundation has its own sort of set of
criteria for what it will contribute to.
We're faced with the
situations and a number of people who
want to participate in the community
where
we are. I've tried
to evaluate in terms of where we are.
One of those criteria, I think where we
can do something
nationally rather than for a specific
locale, there's attractiveness to that
since we are after all
selling nationally.
I can't tell
you
specifically what the
criteria are for giving to communities.
The foundation has a formula that I'm
not so familiar
with. I will say that one of the nice
aspects of it as far as employees are
concerned is that
employees have had the opportunity over
the years to go to the foundation
saying, 'I'm volunteering
in this organization and I'm giving this
much money,' and the foundation will
typically, using some
formula, match it. It's some way to
funnel into that organization. We're
able
to, through the
foundation, assist employees with their
personal passion at some level as well
as make decisions on
behalf of greater corporate
interests.
CHAD
TRAGAKIS: This was an
amazing discussion -
thank you all, and thank you Jennifer
and Jane for sharing your insights. I'd
like to offer a few
concluding thoughts before we move onto
our second session:
Whether or not
companies are or should be thought of as
moral agents, we must acknowledge what
Clarence Walton
noted all those years ago: that they are
unique social and political entities -
as well as economic
units - and that they intersect and
interact with society differently from
other
organizations or
institutions.
After hearing
what
Jennifer and Jane had to say and after
listening to the perspectives that you
have shared, perhaps
its best and most effective to think of
the business imperative and the ethical
imperative as two
parallel tracks - distinct from one
another but inextricably linked (at
least in
the most
successful, most genuine instances). And
it is these tracks both drive and are
driven by companies
committed to corporate
responsibility.
2nd
Discussion
Panel:
"Employee
Engagement"
|
MICHAEL
SCHNEIDER:
I
think one of the joys of any
professional existence is seeing people
you've
mentored make it, do
well, progress. I've been with Maxwell
School now about nine years and seeing
my former students in
management positions is great.
For the moment
I want to
introduce
Pavlina Majorosova who is going to
moderate this discussion on employee
engagement. Particularly
corporate and employee engagement.
Pavlina had done her initial studies -
has a
master's degree in
International Trade from the University
of Economics in Prague, her hometown in
the Czech Republic.
Did some work on transnational relations
with regards to Iraq at the time for
her master's program
paper. She came to the Washington
program and took an active part, and as
I
mentioned earlier with
Chad's help, ended up working for Hill
& Knowlton as a consultant and
account executive working
for Chad, doing a lot of work with
diverse clients. She has been with the
company for about three
years. Thank you again for organizing
this conference and thank you for
moderating this discussion.
PAVLINA
MAJOROSOVA -
moderator:
Senior account
executive,
Hill &
Knowlton, Washington, D.C.
Thank you Prof.
Schneider. It is a great
pleasure to be here today and have the
opportunity to be part of this
discussion. Also, it has a
special meaning for me to be in the
familiar environment of the Greenberg
House
since that was the
place I often visited when I was a
graduate student here a couple years
ago.
Now, I'd like
to open up
our next panel,
which will focus on one specific aspect
of corporate responsibility and that is
employee engagement.
I am happy to welcome our three
panelists, Nikki Daruwala, Melody
Holmberg and
Adam Goozh, who will
discuss from their company perspectives
the benefits as well as challenges
companies face while
striving to engage their workforce as
part of their corporate responsibility.
We have
interesting
issues to cover and
before Nikki starts, I'd like to say a
few words about her: Nikki is Director
of
the Socially
Responsible Business Program at American
Rights at Work, a leading labor policy
and advocacy
organization located in Washington, DC.
In her role, Nikki is responsible for
launch and
development of the organization's
socially responsible business advocacy
and
outreach. Prior to
joining American Rights at Work in 2005,
she was Manager for Advocacy and Social
Policy at Calvert,
a leading socially responsible mutual
fund company.
Nikki also sits
on the
Board of Coop
America, a national organization that
provides economic strategies for
businesses and individuals to
address today's social and environmental
problems and also serves in the
capacity of Advisor to The
Institute for Women's Policy Research, a
national organization focusing on
women's advocacy
research.
Thank you Nikki
for being
here today!
NIKKI
DARUWALA:
Director,
Socially
Responsible Business
Program, American Rights at Work,
Inc.
Thank you for
the
introduction Pavlina,
and thank you Joy for inviting me to
this roundtable conference. I am a
researcher at heart and so
completely believe in the power of
information. Therefore, I thrive on and
am
grateful for the
information and knowledge shared by
speakers and participants in venues such
as
this.
Let me begin by
introducing you to an
organization I am proud to work for and
to be associated with. American Rights
at Work is a
DC-based labor policy and advocacy
organization founded in 2003. We
envision a
nation where the
freedom of workers to organize unions
and bargain collectively with employers
is
restored,
guaranteed and promoted. I joined the
organization in the summer of 2005 to
develop and launch the
Socially Responsible Business Program.
This program engages forward-thinking
business and labor
leaders to develop and promote sound
policies and collaborative efforts that
sustain workers,
businesses and society at large.
I firmly
believe that
companies that
embrace corporate responsibility
principles do much better in the long
run. By
developing a
comprehensive set of corporate policies,
programs and practices that are
integrated into the
day-to-day business operations,
companies account for both past actions
and
future implications.
The measurements and benchmarks that are
the foundation of these efforts provide
a structure for
ongoing and systematic improvement.
Sound corporate responsibility policies
and
practices can help
manage and mitigate some of the greatest
unseen corporate risks; not only making
the company a
better community citizen but also
benefiting employees, the environment
and so
on.
Determining a
company's
level of
responsibility requires an evaluation of
many factors such as ethics and
governance, citizenship,
product quality, environmental
assessment, and so on. Of particular
interest to
American Rights at
Work is the assessment of corporate
responsibility in regards to employees -
a
company's greatest
asset. Respecting workers' rights is a
critical element in the definition of
corporate success.
We look to see if companies acknowledge
workers' freedom of association, the
right to union
representation and the right to bargain
collectively. For a growing number of
employers, respecting
workers' rights often takes the form of
neutrality agreements, card check or
other more progressive
avenues for union representation. We
also seek evidence of fair compensation,
a
safe and healthy
workplace, an effort to ensure work/life
balance, humane working conditions and
a workplace that
supports workers' dignity through
equality and fair treatment.
Corporate
responsibility
is often defined
in many different ways depending on the
individual, organization or
corporation's value system.
But, let's try to push the envelope just
a little bit. Yes, it is absolutely
true, and there are
studies to confirm this, that corporate
responsibility improves financial
performance, increases
employee morale, betters brand
reputation and so on, and while there
are some
corporations that are
motivated by these factors, it is still
important that companies strive to have
the courage to do
the right thing simply because it is the
right thing to do and for no other
purpose or reason.
That, in essence, is what corporate
responsibility is all about. Not PR, not
green or white
washing, not window dressing their
programs, and all the other hypocrisy
and
mockery associated with
it. You simply do what is right because
you are guided by your ethics and
operate with integrity.
But, when you do the right thing, you
know good things happen.
It's not easy
and it
certainly doesn't
happen overnight. Instead, a typical
corporation undergoes several stages and
I
am borrowing a page
from Elizabeth Kubler-Ross' well-known
book "On Death and Dying" where she
defines the five stages
of grief. (1) Denial - not us, we are
perfect!; (2) Anger - the damn enviros
and
unions!; (3)
Bargaining - here's where the PR engine
kicks into gear; (4) Depression -
nothing we do is good
enough for the damn enviros and unions;
and finally, (5) Acceptance - this is
the first step toward
change.
So, let's
discuss how
these stages
manifest themselves with respect to the
issue of workers' rights. There are
several U.S. and
international instruments such as the
ILO Conventions, National Labor
Relations
Act and so on that
were created to protect a workers' right
to self-organization and freedom of
association. However,
despite these protections, workers face
considerable difficulties when trying to
gain union
representation. Every 23 minutes in
America, a worker is silenced through
firing or punishment for
exercising his or her right to demand
fair treatment. Findings of a 2005
University of Illinois
study revealed that most employers take
full advantage of the opportunity to
tread workers' rights
to a free choice before a union
representation vote. According to the
study,
they do this by
aggressively harassing and coercing
workers in an effort to undermine union
support. Thirty percent
of employers fire pro-union workers, 51
percent of employers coerce workers into
opposing unions
with bribery and favoritism, 82 percent
of employers hire high-priced union
busting consultants, and
91 percent force them to attend
one-on-one anti-union meetings. It comes
as no
surprise that 58
percent of eligible workers say that
they would like to join a union to
exercise
their freedom of
association rights.
As corporate
stakeholders, be it in the
role of consumers, managers, employees,
investors and so on, we all have a role
to play to influence
and expect responsible behavior. While
many companies would lead us to believe
that massive
layoffs, slashing benefits, employing
temporary and cheap labor, and
preventing
workers from forming
unions are necessary to remain
profitable in the global economy, some
employers
have found another
way that works for their bottom lines,
their employees and their valued
customers. Often, these
companies move beyond what is mandated
by law and try to align their actions
with their corporate
philosophy and ethics and therefore
empower their employees.
·
Employees
of Jackson and Perkins, the nation's
largest specialty rose producer, enjoy
benefits that far exceed those of
non-union workers, a
routinely exploited workforce.
·
New
Orleans contractor Boh
Bros.' vision after Katrina struck was
to get workers back
on their feet and back to work.
·
Rick
Bradley, the EVP for Cingular
Wireless - the new AT&T - views the
CWA union as an important strategic
partner
that shares mutual
goals and values. They know that they
are doing the right thing and that in
turn, it promotes good
business and strong customer
service.
·
School
districts such as the Douglass County
in Colorado, found unforeseen benefits
such as higher student scores and a
better caliber of
teachers as a result of doing what's
right.
·
Leading
academics at MIT such as Tom Kochan
have been systematically studying our
country's leading integrated healthcare
organization Kaiser
Permanente with fascination. He found a
20 percent reduction in workplace
injuries, a dramatic
increase in patient satisfaction scores,
and improved employee satisfaction and
retention.
Now, let's also
give
credit where credit
is due. Often it takes visionary CEO's
to get a corporation to this stage.
Construction company
McAninch Corporation's CEO Dwayne
McAninch sees unions as an asset, not an
obstacle and leads his
company to respect workers' rights. CEO
of Minnesota's largest healthcare
provider, Allina
Hospitals, Richard Pettingill got it
right when he said, "Old adversarial
models
of labor-management
are outdated. By involving employees in
all stages of decision-making, Allina
can improve quality
of care and make the company a better
place to work."
So, let's keep
pushing
that envelope
further and discuss how there is a real
need for a genuine proactive approach to
corporate
stakeholder relations. This entails two
key ingredients: (1) Transparency and
disclosure - a
willingness and openness to honest
discussions. Again, as a researcher who
thrives on knowledge I
know firsthand that information and
knowledge is the cornerstone of a
relationship built on trust;
and (2) Engagement - which can be viewed
as the most desired outcome of how
employees perceive their
work, the work situation, the people
around them and the likely outcomes of
their association with
the organization.
Companies that
place a
high priority on
open and honest relations with their
employees, respect their rights and
engage
them fully in the
corporate operations process are much
better positioned to take on the
challenges of global markets,
increased competition and increased
consumer demands.
If the two key
ingredients -
disclosure/transparency and engagement -
were to be flushed out into concrete
steps to attain a
meaningful labor-management partnership,
it would most likely include the
following ten
components:
1. Mutual
respect
(including a
recognition of workers' rights)
2. Full
acceptance of
management and
labor as equal partners
3. Shared
decision
making
4. Jointly
developed
definition of
operational quality and standards
5. Joint
development of
business plans
and goals
6. Ongoing
professional
development and
learning
7. Continuous
integration
of cutting-edge
technology
8. Shared
financial and
technical
information
9. Shared
determination
on costs and
related resources
10. Dedicated
staff of
labor and
management in leadership roles
Through
American Rights
at Work's
experience with both labor and
management, we have learned that both
can benefit
from collaboration
and partnerships. The bottom-line
benefits for business include:
productivity
increases, high
employee morale, low turnover, higher
retention rates, "buy-in" on corporate
mission and vision,
high loyalty, higher caliber of
employees as an "employer of choice",
innovation, better reputation,
and quality of products and
services.
For employees,
the
bottom-line benefits
include having a voice at work and a
seat at the bargaining table, training
and
development, better
wages and benefits, improved working
conditions, a safe and healthy
workplace,
inclusiveness and
diversity at work, control over work
quality and production, and respect at
work.
Overall,
society benefits
from improved
product and service quality, community
and stakeholder involvement, and
attention given to other
societal concerns.
In looking back
now at
the importance of
Freedom of Association, one can conclude
that it is not just a fundamental
workers' right but that
it is also a fundamental corporate
right. Employers must also have the
ability
to partner with
their employees and the labor
organizations representing them.
Respecting
workers'
rights should be a
critical element of how we as a society
define corporate success. Profits at
the expense of
workers' rights, safety, fair
compensation, environmental hazards, are
not in
line with how we
define good jobs or responsible
corporate behavior.
Oliver Wendell
Holmes
once said: "A mind
that is stretched to a new idea never
returns to its original dimension."
Thank
you for giving me
the opportunity to stretch your mind
with a few new concepts and thoughts.
PAVLINA
MAJOROSOVA:
Thank you Nikki. Next, I'd like to
introduce Melody Holmberg. Melody holds
a
bachelor's degree in
Political Science from Azusa Pacific
University, located in sunny Southern
California. She moved to
the D.C. area a little over three years
ago to work for KBR Government and
Infrastructure. During
her time at KBR Melody created and
managed a strategic community relations
program that engaged
employees across five continents.
Recently, Melody joined General Dynamics
Advanced Information
Systems as a senior communications
specialist. As she joined the company at
the
time when they were
going through a major reorganization,
Melody has been involved in a number of
"culture shaping"
projects with the goal of increasing
employee engagement and morale.
MELODY
HOLMBERG:
Employee
Communications,
General Dynamics
Advanced Information Systems, Fairfax,
VA
Thank you,
Pavlina. As
Pavlina said, I
recently joined General Dynamics
Advanced Information Systems. They went
through a huge
reorganization of the business line that
included integrating a bunch of
multiple legacy companies
that had been operating on their own for
a number of years -- about seven
years.
They created a
new
department for
employee communications where we've been
tasked with withdrawing all these
legacy cultures into one
culture and improving company moral and
making sure that employees know that
their jobs are secure,
because there are panics with
reorganizations. People are afraid of
losing
their job or that
layoffs are coming. We have calmed that
perspective down. Also, just to
improve overall moral. We
have employees who came from companies
that have been around fifty years,
thirty
years or twenty
years and they got tacked onto this
larger company. We had a challenge in
dealing with that kind of
a culture and we're still dealing with
it.
I don't touch a
whole lot
the community
relations aspect of it. Communication is
an important part of any organization,
especially when
you're communicating change to the
employees and trying to get them
acclimated
to a new culture and
a new way to do things.
Some of the
things that I
touch more on
the civic aspect of it would be
highlighting the different areas that we
work
in. We work all
across the United States. A lot of our
employees are involved with different
community outreaches
and events that we've been highlighting
in our newsletter, the Internet and in
our employee
magazine. It's really highlighting
employees and what the employees
contribute
to the company and
their importance to the company.
Hill &
Knowlton had
done a great job
in helping us produce these
publications, and we are very grateful
to them.
Also, especially to
Chad who is a great writer.
We're working
to
establish more community
involvement through community relations,
and I have an outside role with that
where I'm just
supporting the communication plan. Some
of the things that we've done recently
was Engineer's Week
since General Dynamics is about 60
percent engineers. They build satellites
and
rockets and other
things like that.
Engineer's Week
is part
of a larger
organization that General Dynamics
supports with funds and also gives time
to
employees to bring
students from their communities to the
General Dynamics facility or somewhere
else where they can
teach them about engineering and really
pour into the lives of these students
and increase awareness
of engineering. We had about, I think,
2,000 employees and children that
participated in this
week-long event at over 31 of our
locations in the United States.
One thing about
General
Dynamics that I
do like as a larger company is their
strong emphasis on ethics. The CEO of
General Dynamics, Nick D.
Cheria, has created what
they call the blue book.
Basically,
it's his vision for ethics and
what it means to be an ethical
company.
That's really driven down
from the top all the way to the
business units. We have about
100,000
employees who are
underneath General Dynamics and
that is the one thing that I
could see that
gets spread across the
whole culture.
As
far as
employee
engagement, I'd like to talk about my
time at KBR. I spent three years there
and KBR reorganized at
least once a year until this last year
when they finally were separated from
their mother company,
Halliburton. During one of their
reorganizations they got rid of their
corporate communications and
fit communications more into business
units. I was the part of the government
and infrastructure
organization that had all the contracts
in Iraq. What they wanted to do is
really focus on getting
employees engaged and also boosting
employee moral.
I'm
sure
all of you are
familiar with all new reports about how
global Halliburton is. If you're an
employee who just
worked 12 hours to fix a shipment of
toilet paper or food to get to the
troops
and you get home and
turn on the TV and then your work is
being blasted, it kind of has an impact
on
moral, so when you
go to work the next day, it's kind of,
like you believe in the mission, you
want
to help the troops,
you want to make sure they're supported,
but at the same time it's like, 'Well,
everybody thinks my
company sucks', and it's all politics
and I won't get into that. A big thing
that we were able to
do is really to build on KBR's legacy as
a community leader.
In
Houston they were
very, very involved. If you ever go to
Houston, half the town is named after
George Brown. You
have the George Brown Convention Center
and all kinds of things. The Brown
family was very into
philanthropy and making sure that they
gave back to the community. This was a
100-year-old company,
so back then they weren't really into
all the environmental stuff. That came
down later where they
made a lot of improvements. We were able
to get leadership buy-in to create
this program, but we
still had to prove ourselves.
Most
of
programs were,
like I said, in Houston. We had
employees in 51 countries all over the
world.
So when I came in, I
had some challenges. We had two people
in Houston who were into their Houston
things and then we
had corporate Halliburton that was very
Houston-centered, so I had to kind of
fight and be very
passionate about moving things out. We
were able to create some programs in
Arlington where we got
involved with the National Race for the
Cure and we got employees involved in
that. We were able to
sell it, because we could say, 'Hey,
we're going to do cause branding,' blah,
blah, blah. So, we
were able to sell it that way.
But
then
afterwards,
after we really got to present what we
were going to do, we were able to engage
employees and really
get them involved with an important
cause. We raised about $12,000 just from
employees in
Arlington. They were really into it. A
lot of them had family members who were
touched by breast
cancer, so we did the race.
After
the
race we did a
barbeque - we had about 80 people who
participated in the race - that brought
them
all together and it
really gave them a chance to see other
people from different departments and
get
to know each other
and just kind of build some camaraderie.
After
that event, our
communications department was golden.
The president let us do whatever we
wanted. We said, 'Hey,
we want to do a picnic.' He let us do a
picnic. With Hurricane Katrina, that
was a little bit more
of a challenge because of some of the
different corporate things that we had
to
deal with. A lot of
corporate bureaucracy, but we were able
to actually work with CreateHope to set
up a last minute
fund where Halliburton was able to
raise, I think, $1,000,000 for Hurricane
Katrina victims and we
did some other little things.
We
had
tons of employees
who were going down there to work with
the U.S. Army Corps of Engineers to help
with different
projects that they were doing. Our
employees were working all day. They
worked
on 12-hour shifts
where people would come in and they
would rotate out. We just decided to
give
them cookies and they
absolutely loved it. From then on we
would do little random things just to
show
that they were
appreciated.
Some
of
the other things
that we did to engage employees that
weren't in Arlington or in Houston were
a
school supply drive
in Arlington where we shipped all these
things to our co-workers who were over
in Iraq. They took
the school supplies to a girl's school
in Iraq and I was also able to secure
funds for them to have
a water purification system installed in
the school. As you can imagine, in the
desert there's not
a whole lot of water. These families
could not afford to get water, so most
of
them would get water
from the school but the school's water
was contaminated. That was absolutely my
favorite project;
go and help these kids in Iraq and then
also engage our employees who were over
in Iraq with a
meaningful community event.
After
that was a success,
I was able to get another $10,000 to
install five more reverse osmosis water
purification systems in
several schools in Iraq.
As
we started to
prove ourselves, I was able to get my
colleges to open up their mind to being
strategic in community
relations and we were able to spread
that to the UK and Australia. We had
some
stuff in Canada that
was part of a different business line,
but also in the Middle East where we
really got employees
involved and got them engaged in
different volunteer activities. We also
used
CreateHope to do
matchings. We actually gave them a
headache. We said we were going to
expand
our giving program to
Australia, the UK, Canada and then I was
fighting to get the Middle East
involved, too. At the very
last minute, I gave them 40,000
employees that needed to be included in
their
system.
It
was
actually a really,
really good experience. The employees
really liked it because they were able
to
find organizations
that they wanted to give to. It was
really easy, because we did it through
payroll deductions and
then KBR matched it by 10 percent.
Those
are
just a few of
the things that we were able to do to
get employees involved. It's been three
plus years in the
real world and it's been a really
exciting adventure and I absolutely love
getting employees
engaged.
I
think
some of the keys
to success that we need to take away is
the importance of aligning what you're
doing with the
community to your business objectives. I
think if you can get leadership the
say, 'Hey, we want to
do something good', it's good to see
what you're good at, where a need is, we
based it on
communities and what their need was. We
usually gave precedence to anything
that had to do with the
military. We also involved education and
health. Anyways, I was trying to
answer your question and
I forgot where I was going with
that.
Leadership
buy-in is very
important and you might have to prove
yourself, but as long as you're very
persistent and you can
show them result after result and really
be passionate about it, I think you can
get some good
buy-in. If your leadership empowers you
to do things, I think that's really key
and passing on
empowerment on to other employees to let
them know they can make a difference I
think is the real
key to success.
PAVLINA
MAJOROSOVA:
Our final panelist is Adam Goozh. Adam
is the founder, President and CEO of
CreateHope, a company
that helps corporations with their
charitable givings and community
engagement.
Prior to founding
CreateHope, Adam worked in several
professional environments in a legal and
business capacity
including the Maryland State Attorney's
Office, the Harrison Institute Housing
and Development
Clinic, and HREV, a business and
property holding company.
He currently
serves on
the boards of a
number of nonprofit organizations. He is
an advisor to the ePhilanthropy
Foundation and a member of
the U.S. Chamber of Commerce Homeland
Security Task Force.
Adam holds a
bachelor's
degree from the
University of Michigan and a J.D. from
The Georgetown University Law Center.
It's great to
have you
here Adam.
ADAM
GOOZH:
President &
CEO,
CreateHope,
Washington, D.C.
Thanks for
having me.
Hello everyone.
It's perfect actually that Melody and I
are on this panel because I was going to
use Halliburton KBR
as the example that I was going to talk
about. I'll go more in depth on that
one in a sec.
CreateHope,
essentially
what we do is
work with, not just corporations, but
organizations whether they are
for-profit
or non-profit
helping them engage in the community
from a corporate perspective as well as
from an employee
perspective; really maximizing the
impact of this program across the board.
A lot of times
we find
that organizations
have a program or they're doing things
in the community because that's just
what
they've done
always. That doesn't necessarily, maybe
one time it made sense, but things
change, times change,
and programs usually have to
change.
When we work
with an
organization, we
work with approximately 50 organizations
ranging from 100 employee or membership
base to hundreds of
thousands employees around the world,
very local to global programs. An
interesting thing is all
programs are local or they should be.
Whether they're in 50 countries or not
they need to be
localized to those countries, those
employees, and those cultures and those
communities.
What we do
typically is
enter into a
company or an organization and create a
strategic plan or help them evaluate
their strategic plan by
looking at the needs of all stakeholders
involved: the employees, the investors,
as well as the
communities that they are operating in
or selling to. Typically that's a very
long process as you
can imagine.
We help them
implement a
process and
implement a program so that what we
typically do is make sure all the
administrative aspects of
those programs are handled so they can
focus on communications and marketing
and
localizing the
programs. We give them the tools to
track the impact of those programs. Now,
impact obviously
varies across different stakeholder
groups so there are different reasons
for
doing programs.
A successful
program, a
strongest point
of intersection is company's business
needs and the society's needs and
finding
that point is what
planning is typically all about.
A successful
program, and
I'll kind of
tack on to what Melody and Nikki both
said, is a reflection of the actual
employees' needs and the
community's needs and the desires of the
community and employees. Obviously,
focusing strictly on
the employee aspect of it is the
stakeholder in this case, but that's the
topic
or our panel
discussion.
It's always
difficult to
put a program
onto employees. There always has to be
pull from those employees and those
communities. We've been
involved early on in our company in
programs that were global. Someone in
headquarters in California
said, 'This is what you're all doing in
these 20 countries.' It was a debacle;
a total failure.
That's where the company - one of our
clients learned and we learned that you
really have to spend
some time determining what those
employees and those communities need as
well as
determine what
global programs, Nikki can probably
attest to this, what are the cultural
issues, what are the
status security issues, what are the tax
effectiveness issues and what are the
currency issues?
Culturally,
asking
someone to give can be
very offensive in certain countries. So,
you can't just roll out a giving
program everywhere. We
help our clients do, whether it's giving
or employee giving or corporate giving
or matching gifts,
disaster response, volunteer, volunteer
incentive programs. It can be a mix.
It can be one or the
other. It really depends on the
community that they're operating in and
those
employees.
The goal is
always being
able to create a
level of trust and transparency as Nikki
said. This is how the employees are
involved in the
community and this how the company is
involved in the community so there had
to
be a level of trust
and transparency with all the
stakeholders involved.
From the
company's
perspective I wanted
to do these employee programs. Obviously
it's an important part, one part of
their corporate social
responsibility. They want to be involved
in the community and they use their
employees as an
extension of their company and the
morals and the goals and the ethics of
their
company.
Obviously, the
hope is
that it has a
positive impact on sales and their
consumers as well as generating a future
workforce that might
want to work for them, because they're
involved in the community. They use
their skill sets,
engineering for instance, to teach or
mentor students in schools, elementary
schools and up.
Obviously,
employees view
it as a great
benefit to be able to support their
community and to work for a company
that's
involved in the
community. Some companies give matching
gifts in grants to employees involved
or allow them to take
paid time off to volunteer. It's a
positive influence on moral and
retention
and creates, as the
goal with Halliburton and KBR was, a
sense of pride in the company that might
not be there.
One thing that
gets
overlooked sometimes
is the impact that it can have on
employees working together -
it can create a more prosperous and more productive work force. It also creates relationships between employees in an environment that's not work related necessarily,
which is a nice aspect.
There's a lot
of talk
about - this is
totally off topic, but why are most
people adding porches onto their homes
these
days? Because they
are trying to get a sense of community,
because everything is so global and
connected that people
want a sense of community and they build
porches because they feel like they get
that with their
neighbors. That gives the employees a
sense of it's their porch, so to speak.
It gives them the
ability to be involved with the
community, have pride in their company.
It's
the company providing
an aspect of the workplace that's not
related to work necessarily. It gives
them a sense of comfort
and pride.
Obviously, a
good,
successful program is
localized. It takes into consideration
the needs and aspirations and desires of
the employees and
their community. You want to try and
localize it as much as possible. It's
not
rocket science.
Our big value proposition is helping the
companies evaluate what are the needs
and desires of their
specific employees in their local
communities and handling it all.
With
Halliburton, which
KBR was a part of
and now is its own company, which is
creating new things now that you're not
there. I can tell you
all about that. It's finding its own
sense of community and its own program
now
that it's separate
form Halliburton. There was a concurrent
launch of four countries, which was
Australia, Canada, the
UK, and the United Arab Emirates, as
well as the United States. With
Halliburton, we launched those
four markets at the same time. That was
after surveying and talking with each
of those markets
locally and determining what would work
and not work as well as evaluating what
are the cultural
issues that need to be
considered.
There's a big
aspect of
using technology
to handle the administration to allow
people like Melody to be the hands-on
marketing
communications, you know, getting people
excited about the program, getting them
to understand that
this is a program that they created,
that they originated, they helped
instill.
We did a
survey. There
was an
enthusiastic acceptance of the concept.
There was over 92 percent of all the
surveyed employees.
Sounds funny, but having that survey and
getting that involved was probably the
reason the program
was so successful.
Creating a
branded
program, which was
actually the first multinational
employee benefit that Halliburton had
ever had,
was a way of
integrating the company and putting a
sense of pride in the company through
community involvement.
It was the first time anything employee
benefit, which this was for you guys,
it's one way of
getting management's buy-in, it was the
first time that had happened.
The seamless
integration
from an
operational infrastructure perspective
of tying technology, which was the hub
of
the program, people
participate via paper or via the
Internet and that system, with actual on
the
ground process in five
different countries from fiscal
management of funds to distribution of
funds to
the validation of
organizations in the communities that
the companies and the employees are
going
to support. It's a
huge, huge task and it was seamlessly
integrated as well as integrating the
employee managers or
coordinators on the ground to manage the
communication infrastructure and work
with subject matter
experts in each of those areas.
The stronger
teamwork
through the
cross-functional and cross-boarder
relationship within the company, it
really
helped tie the company
together. Employees all around the
world; it really had them feel like they
were working for one
cause and having that pride in the
company.
They saw a
growth in
participation,
volume of giving in every market
including a four times return on
investment of
what the company put
into the program. Now, return on
investment can be - that can be defined
by
anyone in a different
way really, but in case for return on
investment is not necessarily the
measurement of impact on the
community, which is difficult to
actually measure, but the success of the
program in terms of the
cost to actually run the program was
four times. Actually it increased the
next
year to five times
return on investment.
It's giving
choices with
the program. It
proved to be a benefit to the employees,
communities and the company. It saw an
unprecedented
positive growth in all tracked program
benchmarks during the second year of the
program;
participation, volume of giving, number
of beneficiary non-profits in those
local communities,
giving by business unit, giving by
location. I think the average of the
total
donation was $484 for
the year, which is really high. I think
there's statistics out there where it's
typically around
$200-$225 in employee giving programs.
Again, I think
it was
really attributed
to the thought behind the program as
simple as it is and localizing the
program
and obviously having
the infrastructure to manage a localized
program, but track corporate- wide so
that from a
marketing/communications perspective
when participation is not high in one
area,
why is it? How can
we address that? That was what was
successful and it was a positive
outcome.
Just on a side
note,
another client of
ours, Hewlett Packard, quickly, utilized
their community involvement program,
their giving/matching
program to integrate Compaq. So, when
the Compaq/HP merger occurred, it was
the
program they
launched as the first integrated
company-wide event and it was extremely
successful. It's just
another way of using community
involvement to benefit the company and
the
employees and get a sense
of pride and teamwork, which also
possibly impacts the community.
PAVLINA
MAJOROSOVA:
Very interesting. Thank you very much
Adam. Now I'd like to open up the floor
for discussion.
Jack?
JACK
OTERO
(Coca-Cola):
If at all
permissible I would like to address
what was discussed earlier,
during this panel, on behalf of the
Coca-Cola Corporation. Let me say at the
outset that our
company is a global corporation that
operates in 200 countries around the
world
to hundreds of
bottling partners.
We provide
employment for
hundreds of
thousands of people. Jobs, well-paid,
and I am proud to say that in the United
States and
throughout the world more than 50
percent of our employees are unionized
and
that our company
engages regularly in collective
bargaining with all these unions in a
cooperative effort to forge a
cooperative relationship between the
employer and the union.
Our company is
committed
to achieving the
highest standards of governance and
business ethics through a
cross-functional
team that we
established in the year 2004. We
regularly review our systems, codes and
policies to insure that
the company is meeting all of its
international business practices and
obligations.
We have a major
plan that
is called a
Corporate Citizen Corporative
Responsibility Plan, which operates on
two
fronts. One is corporate
government guidelines and the second one
is a code of business conduct.
We also have a
global
risk assessment
process that requires all of our
associated business groups around the
world to
regularly assess the
likelihood of an impact of a broad range
of social and economic, as well as
environmental, risks.
We strive to have the plans and the
capabilities to manage all risks that
may
present
themselves.
The major force
that
drives our company
in this business is optimism. Our
chairman, Mr. Isdell, believes that
optimism
is the key to
success. We also believe that business
of business is business.
We believe that
we have
four major
responsibilities that need our full
attention and priorities: one, to our
customers, two, to our
employees, three, to the communities
that we serve, and finally to our
stockholders.
A citizen
corporate
responsibility
program, we believe, is not only good
for business, but it is also a major
goal
of this company to
be fully accountable and transparent in
everything that we do. We strongly
believe in being a good
corporate citizen and giving back to the
communities that make our business
possible.
So, we always
try to go
beyond engaging
in other activities that take us way
beyond just a simple legal obligation.
We
believe we have a
moral and ethical obligation to
contribute to the public good in any way
that we
can. To achieve
the goals of the company's citizen
corporate responsibility commitments, we
always insure that such
commitments are backed up by the
necessary financial resources and human
resources as well.
Now, there are
many
projects that our
company engages in that are simply the
'do good' thing and I would only like to
mention one project,
which we are very proud, which is one of
the most important things our company
does: The Global
Boarder Project. I'm sure that some of
you around this group here can attest to
what I have to say
without taking too much of your
time.
As you know the
world
population is
rapidly expanding. We are growing on the
earth at a clip of 80 million people
per year and so at
this rate, in the year 2050 we are going
to exceed 10 billion people on this
earth. Already there
are millions of people who do not have
access to water. So, our company has
undertaken projects in
many developing countries in Africa, in
the Near East, and in Latin America to
bring water to
communities that today don't have access
to water.
We are very
proud of all
of those
projects. There's not enough time for me
to give a dissertation on all of those
activities, but you
can access our Web page www.thecola-colacompany.com
and there're many links. You can look there and find out for yourself what these projects are that we're doing and the very pressing problem of access to water in the world.
JOSEPH
MELOOKARAN
(JMA): Few comments
on Nikki's presentation. She made the
point about engaging
employees and unions. I know that there
are several companies that are not good
examples of
engaging the union for the good of the
company, good of the employees. To me,
my experience, I've
yet to see a union that understands the
pressures of the global competition and
living within the
means of, you know, when things get
tough, they don't take their fair share.
They want their share
not to be touched.
At the same
time I see a
lot of companies
without unions prospering. They are very
vibrant. This morning I was reading
The Wall Street
Journal. In Denmark, because
of the labor shortage they had a big job
fair and people were
driving from Berlin all the way to the
border. A few hundred people even barged
in before the fair
opened. The reason I'm saying this is
sometimes the unions were impairment to
the progress.
Too, I want
your input on
what is from
the union side in terms of educating the
employees as to the globalization and
how to deal with this
kind of situation that was not there a
few years ago. I would appreciate if you
could comment on
that.
NIKKI
DARUWALA: Sure.
I'm not sure I completely understand the
second part of your question. To start
with the first
part, I'm not here to speak for the
labor unions. I only see what I see.
When
I see examples of
companies where the management and the
unions work together and it does benefit
the employees - it
benefits all from that perspective.
To get to the
point of
the give and take,
I think there are examples that we have
seen through the years of companies,
which have actually
been bailed out and it is because of
that corporation that has actually saved
the company. If you
look at some of the examples in the
publications that I have - take a look
at
Kaiser. Ten years
ago, that company was in bankruptcy. It
was because of this partnership that it
came out of there.
Harley Davidson was in trouble as well.
I think one of the examples is also
airline industries.
We're seeing that a lot in the airline
industry more recently. I'm not familiar
as much with all
the intricacies of that. You take a look
at what one of the healthcare
companies in Philadelphia
said. It was because of that
collaboration . . . What tends to happen
is
companies, this is my
observing what's going on, is that
companies tend to be, in some instances,
'I'm
running that
business and you're my employee and have
that' - lot of companies have their
paternalistic view of
'I'll take care of you,' they're there
for you kind of thing, but 'You're not
my
partner.' There's
a very fine line between the two. There
is a fine line and with all due
respect, Melody, this is
exactly the kind of examples you see
where employees work 12-14 hours, but
then
we give them cookies
and it's fine; that kind of example.
That's not a partnership. That's good
thing to do. That was
very worthwhile doing, but that's not
the partnership model.
What happens
when you are
a partner, you
are approaching the employees before
crisis sets in, not after crisis sets in
saying, 'Well, I'm
going to take away your pension' or
'let's start slashing wages.' It's,
'Let's
start working
together to set what the operating
standards should be before we reach
crisis.'
'We're both in it
together.' I think that was what the big
awakening for Kaiser was. It was,
'We're in this together
and we're going to make this work. Now,
let's make it work.'
Decisions are
made on all
levels;
consultations with physicians, with
doctors, all the way from doctors to
janitors, to the nursing
assistant. They're all working together
in this partnership to try and make it
happen. That's just
one of the many examples.
JOHN
ANDERSON (Delphi
Corporation): May I
offer a thought back on that. I agree
with you that if you can do
that before you reach crisis that's
great. My company is Delphi Corporation,
which is in
bankruptcy. We're going through some
really tough times right now because of
the global economy.
Unfortunately,
unless
there is a moment
of crisis, sometimes people won't come
together. You can just look out and say,
'Everything's fine'
and then you realize that, 'Oh gosh,
here we are in bankruptcy' or 'We've got
to
figure out a way to
solve our pension problems' or wage
issues or something like that.
I agree with
you, but I
think there are,
and I think this is getting off the
track of where we want to go in terms of
community relations,
but sometimes people don't react unless
there is something that brings them to
the table to react in
crisis. That's where we are, we're a
tale of two companies. We're doing well
globally. We're
growing in Asia and Eastern Europe, but
in the United States, we're planning to
close 21 out of our
29 plants.
That gets back
to the
whole community
relations piece, because that's a huge
ripple effect on the community, on the
employees, on the
families. That's a great concern to me
and a lot of people in my company: how
are we going to
manage through that, how are we going to
deal with the issues of closing those
facilities? I think
that everybody that's going to leave
Delphi is going to have a good safety
net,
because we do have
pretty strong unions. But longer than
that, what happens to the communities?
What happens to the
charities, to all the good organizations
that are out there? I don't know what
the answer to that
is, but that's a concern to us.
NIKKI
DARUWALA: But
for me, quite frankly, the key to what
you just said is that your employees are
going to have a good
safety net, because of labor unions and
an active labor union.
JOHN
ANDERSON: I think
that's right. I think that's
correct.
Participant: Now, what
accounts for the closing of the 20 plus
U.S. plants as opposed to plants that
will be operating
overseas?
JOHN
ANDERSON: A whole
variety of things
from global competition to workforce
practices to bad management practices to
the fact that some
products just can't be made here anymore
because they can be made so much
cheaper in China or Mexico
or someplace else. We're participating
in all those markets. We have employees
in businesses in
China and Mexico. We're one of the
biggest employers in Mexico. If we
didn't
have that, we
probably would have more jobs here in
the U.S.
So, it's a very
complicated system, but
as it gets back to what we want to talk
about today in terms of responsibility
and communities, it
plays out in all these communities.
We're doing some wonderful things around
the world, but
sometimes that's overshadowed by what
people read and what they think about us
in this country.
JOSEPH
MELOOKARAN:
Just to clarify the second part, you
know, that you are confused about. What
I
was offering was
civic responsibility from the point of
the union; perhaps making the employees
understand about the
dynamics and realities so that they can
get a perspective. One of my close
friends, she shut down
her operation because the union people
did not understand the pressure of
competition and the
pricing, because she had a lot of
competition from the people who had
non-union
workers. Every bid,
she was outbid. Finally, she closed
down, the employees left the job, and
she
filed for
bankruptcy. There are a lot of
circumstances like that that is
happening.
That's what most of my
clientele is that I deal with on the
financial side of it. I know some of the
issues people are
facing. I think it seems that one of her
complaints was, 'They just don't
understand competition
and the business realities.' We have to
tighten our budget and live within our
means as a company.
They don't understand that.
NIKKI
DARUWALA: I
understand your question more clearly
now, thank you for clarifying.
I think I would
go back
to the issue of
education and it goes to the term that
you said, it's the 'us' and the 'them.'
I think we need to
get away from, at least on this
particular issue, just like many other
issues,
when you talk about
corporate responsibility, civic
responsibility, we need to push
ourselves to
move away from the 'us
versus them,' it's all of us, it's all
of us.
So, as a CEO,
if I'm
facing crisis,
because of global competition, my
responsibility is not, oh, they have to
educate. What you're
saying is that an employee
representative should have educated the
employees
about the crisis I, as
an employer, am feeling.
No, what I'm
trying to
get at is
everybody is in it together. We all
needed to educate ourselves on what that
crisis is. It's early
buy-in. It's wanting to know. For
example, if employees and their
representatives were part of
decision making early on, you wouldn't
have needed to tell them. It would have
been visible. It
would have been absolutely visible. Had
you been transparent and had you been
engaged early on -
unfortunately, you're absolutely right,
John, it doesn't happen early on. It's
crisis-driven.
It's not just
in labor.
It's in
environmental issues. It's in human
rights issues. It's all of the other
issues that we see
globally, not just here, all over. It is
not unless it hits that crisis mode
that everybody has
that 'ah-ha' moment. We've seen that on
so many big issues that deserve our
attention early on.
For example HIV/AIDS. There's just so
many issues that we need that wake-up
call early on, unless
it's a crisis …
FRANCIS
SKROBISZEWSKI
(U.S.-Polish Trade
Council): Just want to
pick up on something
Jack said that was one making sure there
were enough resources behind whatever
was being done to
ensure its essential viability and
sustainability.
It struck me
earlier,
because I work with
a small - we had a small loan program in
Poland, which I'm going to mention a
little later, a
micro-enterprise program as well. We
actually turned them into institutions.
Well, they turned the
small loan program into a bank; they
rolled it into a bank. Then we sold it
to
Fortis. That gave
it total sustainability.
I was looking
at the very
good materials
here on the Whole Foods program and I
noticed that they were grants for three
years. I struck me.
OK, you give a grant for three years,
people create little businesses, and
then
what happens? What
happens going forward?
Another thing
that I
thought about, too,
was because I've invested in business, I
ran venture funds in Central Europe.
We had a lot of nice
little businesses, but they were not
good investments. We couldn't do
anything
with them. So, you
had a little business and that was the
end of it. It never grew any further.
I think there's
more to
it than just
helping people, setting some things up
and then moving along. There's that
long-term commitment
that comes from something being more
than just a give-away program. There's
some constant link to
it. Would you know a little bit more
about those programs? I saw they were
three-year grants and
the grant isn't even being close to
drawn down. On those Grameen Banks that
you
have in Guatemala
and India and so forth, you may not
because, of course . . .
JANE
MEIER: It's not a
grant program, it's a loan
program.
FRANCIS
SKROBISZEWSKI:
The grant is from Whole Foods.
JANE
MEIER: The loan
is from Whole Foods.
FRANCIS
SKROBISZEWSKI:
So, it's a
loan? You're making a loan to . .
.
JANE
MEIER: We're
giving micro lending.
FRANCIS
SKROBISZEWSKI:
I understood that, we did this in
Poland.
JANE
MEIER: Whole
Planet Foundation is doing the micro
lending.
FRANCIS
SKROBISZEWSKI:
But, you put a grant to capitalize the
loan program. The grant was a three-year
grant. What I'm
asking is, you mentioned making sure the
resources are there to follow through
on the
program.
JANE
MEIER:
Sure.
FRANCIS
SKROBISZEWSKI:
When we did these deals in Poland, we
were there for the long-term; I spent 15
years doing this.
So, that's long-term.
JANE
MEIER: I can
speak to how Whole Planet is being
funded right now. One way is through our
customers; we raised
$160,000 . . .
FRANCIS
SKROBISZEWSKI:
I understand
that, but you're putting money into a
Grameen
micro-program.
JANE
MEIER: OK, maybe
I'm not understanding your question. The
Hope Planet Foundation is based on the
Grameen Bank . .
.
FRANCIS
SKROBISZEWSKI:
I understand, but you're putting $1.4
million into an institution for three
years. It's a grant.
It's a three-year grant; you're funding
it. So, what happens after the three
years? I'm looking at
the sustainability of the operation over
a longer period of time. Where do they
get the
money?..
JANE
MEIER: So, the
micro-lending program, if anybody's
familiar with the Grameen Bank motto,
when
the people who get
the loans, they pay them back on various
small . . .
FRANCIS
SKROBISZEWSKI:
That's right. I understand that.
JANE
MEIER: OK, so,
the money gets funneled back into the
community to give more loans. It's
self-funding thing so
that's its sustainability.
FRANCIS
SKROBISZEWSKI:
Yeah, I know, but how you grow these
things, because when Jack made the point
about having resources
that are committed to the long term to
make the program over the long term . .
.
see I could take
money and put it into something and then
I could, sort of, step back or I can
take money and put it
in and have the follow through over a
continuous basis.
RICHARD
WELLS (America's
Promise): We're the
largest cross-sectoral alliance for
children and youth and in
your material, Nikki, you have a great
quote here at top that talks about the
race to the bottom
approach. This conversation about
globalization and the intensity of
competition, I think, it's
important to look at the longer term and
the longer view.
John mentioned
the work
that he does
getting out into the future workforce.
UNICEF just put out a survey for
research that lists the
United States as 21 out of 22 developed
countries in terms of how we invest in
education and
healthcare for our young people.
The business
partners
that we're engaged
with and Chip Wheeler, a colleague here
at the table, deals closely with, but we
hear from them.
Folks like the American Manufacturers
Association or U.S. Chamber of Business
Civic Leadership
Counsel, Stephen Jordan is one of our
trustees. Those folks are taking
responsibility, we're
getting employees, but they don't have
the skills that we need. We're putting
all this money into
remediation for these employees.
There's a
larger
environment that the
business is operating in and there's a
shared responsibility between the
corporate sector and
government, frankly, which has a
responsibility to make sure that the
systems
that are in place can
support what businesses need; make sure
that young people are educated to the
degree that they can
be competitive and that they can manage
and be leaders in the globalization of
America. I'm sorry,
the world.
I guess the
bottom line
I've picked up on
is there's definitely a sense of
unilateral, we're a company, we're doing
this.
Then there's a
sense of companies working together to
make systematic change, which I think,
in
taking a long view,
makes a bigger impact on health and
education.
JOHN
ANDERSON: I'd
say, too, at Delphi we're
looking at it and we're seeing that
we're going to close some of these
plants
that have low-end
manufacturing, but we see more
opportunities to do high-end
manufacturing and
engineering in the
U.S. One of the concerns that we have is
how do we find that right skilled
trades people and
engineers to take on these U.S. jobs
that are going to be out there in the
future?
That's where
we're
putting a lot of our
foundation resources in making sure that
these people are trained and that we
are going to have
engineers.
There's a lot
of
opportunities for people
to go around the world, because
everybody's looking for these types of
opportunities. We need to
make sure that there are a number of
them here.
MELODY
HOLMBERG:
That's a huge deficit. It you look at
it, especially as a defense contractor,
we cannot hire
foreigners for some of the work we're
doing, but I think across the board as
technology ages out
with the baby boom, we alone are going
to lose 90,000 of our engineers over the
next decade. That's
a tremendous amount of our 140,000
workforce. And for General Dynamics and
many
others, Coca-Cola
and others have engineers in their
forum, so we need those kids to get
engaged
in science,
technology, engineering, and mathematics
and stay in those tracks; get engaged
in engineering and
stay here so it can be attractive down
the road.
JOSEPH
MELOOKARAN: To
add to that, look at today's Wall
Street Journal, bumper
earnings being
announced by company
after company. Yet, there are probably
10, 11, 12, 18 percent declines in the
U.S. All those
earnings are being generated from China,
Eastern Europe, so on and so forth.
That's where companies
are beginning to grow.
Fundamentally,
I think
when we talk about
labor and employees and employers, Nikki
talked about a partnership, we've got
to broaden our
definition as well. I don't think we can
look at it so narrowly and say, well,
you know, it's just
the U.S. unions and U.S. companies. We
have to partner together, because as a
matter of fact,
companies like Caterpillar or IBM, IBM -
India is a country where they have the
second largest
number of employees. By 2008, it's going
to be the number one country or they
will have more
employees in India than any other
country in the world.
Participant: 50,000
they have in India.
JOSEPH
MELOOKARAN:
IBM's plan is to have India be their
number one country where they will have
employees situated.
Now, do you call IBM an American company
anymore? Can you think about it in
purely American terms?
I don't think we can afford to do
that.
SALLY
SCOTT MARIETTA
(IBM): We call
ourselves, as you may have read, a
globally integrated
enterprise. It means that we are
balancing our activities throughout all
the
companies in the
world. Yes, we have higher employment in
say India and China and others, but
right now it is really
balanced between the U.S. and outside of
the U.S. in terms of employees.
What is not
balanced
though are our
philanthropic activities. It used to be
more in the U.S. It's now moving more
and more to be half
in and half outside. You'll hear a lot
more about that activity in terms of
globally integrating
our systems and our processes.
One thing, I
want to get
back to Adam, is
there are certain things as a globally
integrated enterprise that we do not
change based on the
country: our supplier chain network - we
are required to meet our corporate
social responsibility
activity; our hiring - it has to do with
reflecting our diversity throughout the
world. There's no
change just because we're U.S.
headquartered. We're globally
integrated.
I wouldn't say
India is
going to be the
number one area for employment; it's
going to be outside and growing. You
were
talking about the
level of technology and skills we
require in the U.S. Some of our greatest
resource entities are
still here in the U.S. and will remain
so. Thanks.
PAVLINA
MAJOROSOVA:
Coming back to employee engagement, I
think what Melody mentioned is
interesting
in that companies
can look inward and use their employees
to spread the word about engineering and
that's what GDAIS
did during their National Engineer's
Week. They had their own engineers go
into
the communities and
talk to the kids and show them how cool
it is and make them enticed for the
future to become
engineers. I think that's a huge
resource companies should use and be
aware
of.
NANCY
SMITH-NISSLEY:
I'm just agreeing. In a former life, I
was also a teacher and taught at the
junior high, high
school, and university level and this is
a common theme that a learned back in
my teaching days,
which granted was several years ago.
When I leave this particular profession
with the government, I
will probably go back to academia and
for this very reason that you're talking
about.
KEYNOTE
SPEECH:
"Values
Matter:
Emerging
Business
Policies
and
Practices
for
Building
Trust
and
Good
Will"
|
GEORGE
THOMAS -
moderator
President,
Bradenton
Cardiology Center, Florida and a member
of AACR's Advisory Committee
Good
afternoon
everyone. You know, as a cardiologist,
I'm typically attending medical
conferences and seminars on
heart health and let me tell you, they
don't serve desserts like these at those
events. And the
doctors aren't nearly as much fun as
this group is, either!
I'm
so pleased to
introduce Stephen Jordan, Senior Vice
President of the U.S. Chamber of
Commerce
and Executive
Director of the Business Civic
Leadership Center. Stephen and his team
at BCLC
are doing so much to
advance the practice and concept of
corporate citizenship. AACR has been a
great admirer of BCLC
and we hope that in our small way, we
can contribute to the same
effort.
At
BCLC, Stephen
leads the group's engagement with a
broad spectrum of companies and chambers
of
commerce in the U.S.
and globally. He has produced numerous
conferences, policy papers, and other
projects and programs
related to the fields of corporate
citizenship, business and society
relations,
global development,
education, disaster assistance and
public-private partnerships.
Some
of the notable
coalitions he has played a role in
launching include the Partnership for
Critical Infrastructure
Security, the National Cyber Safety
Alliance, Business Strengthening America
and
the U.S. Business
Education Network.
In
addition to his
work for BCLC, Stephen currently serves
on three non-profit boards: the Council
for Corporate and
School Partnerships, the New World
Institute and the Southern Business
Leadership Council.
Prior to joining
the
U.S. Chamber, Stephen served as
executive director of the Association of
American Chambers of
Commerce in Latin America. In the
private sector, he has worked in the
publishing industry and has a
background in strategy, marketing and
new product development.
He
began his
professional career as a legislative
assistant for the Senate Foreign
Relations
Committee.
Stephen holds an
M.B.A. from Georgetown and an M.A. in
Political and Social Thought from the
University of Virginia -
and he is a member of Beta Gamma Sigma,
the business honor society.
I
know I speak for
everyone here when I say that we are
indeed fortunate to have Stephen with us
here today.
Stephen?
STEPHEN
JORDAN - keynote
speaker
Senior vice
president and executive director, U.S.
Chamber of Commerce - Business Civic
Leadership Center gave a
keynote speech during the luncheon
session, discussing BCLC's perspective
on
trust-building in U.S.
society.
Thank you very
much
for that endearing introduction. I
really appreciate it. There are a lot of
good friends around
the table today. Thank you very much for
having me.
Before I
actually begin
the main body of
my remarks regarding trust, I thought
that if you wouldn't mind, I would like
to
say a couple of
words about some of the earlier
conversation that we had.
I'm actually
writing a
book right now on
future development. One of the things
that has concerned me is how past
success, in some ways, can
be a barrier, an impediment to the
future of progress.
When you look
at how we
are as people,
none of us wears the exact same thing
for 40 years. We don't drive the same
car
for 40 years. We
don't do anything, well, almost
anything, for 40 years. And yet, somehow
we
expect lifetime
employment in the same job that we've
been doing, making the same products
that
we've been doing,
and somehow there's a fundamental
disconnect there.
So, what you're
seeing
with Delphi is
going on in many different industries.
The economist, Joseph Stiglitz, called
it creative
destruction. But, when we create a
certain kind of economy, whether it's an
agricultural economy, a
manufacturing economy, a services
economy, we create all these mutually
interlocking infrastructures
to keep us within that particular
system.
So, when you
think about
the horse and
buggy industry, it wasn't just a horse
and buggy that were displaced when the
automotive culture
began. It was tackle manufacturers, it
was people making harnesses, it was
people making the
specialized cushions, it was the certain
kind of wheel manufacturers that were
set up. You have to
ask yourself in a certain way, would we
be better off or worse off if the horse
and buggy lobby had
managed to keep cars from coming into
being and with all the infrastructure
associated with
cars.
Sometimes when
you look
at the current
debates, you know whether or not to make
the transitions to new technologies or
to make the
transitions to new kinds of
infrastructures or things like that,
there are
powerful, conservative
institutions and organizations that want
to preserve that same type of lifestyle
that they've had.
They want to preserve the way that
things have been. They have validity,
too.
You know, when
people talk about the farming lifestyle
in the United States, the agricultural
lifestyle, there's a
whole way of life associated with that.
Some people want to be farmers.
I think that
sometimes
the proponents of
progress versus the proponents of the
status quo don't necessarily see that
there has to be some
kinds of accommodations to each side.
Thank God that the horse and buggy
industry wasn't strong
enough to kill the automotive industry
in its cradle. You know there have to be
certain kinds of
adjustments with that.
So, I think
that one of
the great
challenges of globalization is going to
be, as new forces and new pressures and
new things impel us
towards embracing change and innovation,
how do we manage the disruptions that
go along with it in
such a way that their impact is
minimized? And that you don't trigger a
reaction that's even more
violent than the cause provoking
it.
You look at
Latin
America, for example,
and the rise of Hugo Chavez, and the
populist sentiment that's sweeping
Ecuador,
Bolivia and
Argentina is not explainable unless you
look at the way that market reforms were
implemented in the
1990s.
So, as someone
who
believes the market
driven development is really one of the
great keys to material advancement in
human history, this
may sound a little strange, but I do
believe that we have to be sensitive to
the
adjustments. And
in a funny way, the most efficient way
to move forward, in terms of progress,
is
for it to be
slightly inefficient. I think, John,
Delphi's experience would speak to
that.
So anyway, I
felt that
the conversation
right before lunch was very interesting
in that regard, something that I've been
thinking about
quite a bit. Also, the interconnectivity
between what is happening in the
United States and what is
happening around the world is going to
continue to increase and accelerate. You
just look at things
like remittances and look at immigration
and capital flows, technology flows,
R&D and all the
rest of it and I think that today, it's
as static as it's ever going to be. I
think that these
processes are going to be increasingly
more dynamic moving on into the future.
I think that
it's very
hard for people to
anticipate disruptions. We think going
25 years into the future the trends are
going to persist as
they are today. Someone was saying that,
you know, we might have 10 billion
people. And yet, if you
were to look back 25 years ago, Russia
was still the Soviet Union, the Internet
was, you know, a
play thing at a few universities, folks
were fleeing China and India to get
educations and take
advantage of opportunities in other
countries. It's amazing how much the
world
has changed in 25
years and it's very, very hard for us to
be able to effectively deal with
disruptions.
Anyway, I have
a whole
different talk
that Chip Wheeler has heard around all
of these topics, but I won't go further
on it at this point,
but I would love to continue with this
discussion later on.
When we talk
about trust,
trust is the
number one social issue affecting
business and society relations. We have
been
studying this since
the Center was created back in May of
2000. We don't believe that trust is the
number one issue
because of the Enron scandal and because
of the recent events in 2001-2002.
As far as we
can tell,
the roots of the
current trust situation probably date
back to the late 1960s. As late as 1966,
a majority of the
American public had a favorable view,
had a great deal of confidence in the
leaders of big
business. By 1974 about 16 percent did.
So, in the space of eight years you
have an unbelievable
erosion of trust in business. That trend
line continues from 1974 until today.
It has all
kinds of
consequence for
business. Not just Sarbanes-Oxley in
2002, 2003, but in terms of your license
to operate, in terms of the
regulations that local communities want
to impose on businesses, in terms of
people giving the
benefit of the doubt to bloggers and to
advocacy organizations who are willing
to make certain types
of points. It puts businesses on the
defensive. Your CEO is no longer your
best spokesperson.
People trust people much more like them.
So, that's good news for the rest of
us, I guess.
It's very hard
for
businesses to deal
with, because it's an intangible thing.
I can't just sit there and say I want
to buy 10 units of
trust from you. So, it's very hard to
manage. And what's happened in the past,
the United States
has had two other major trust crises in
the last hundred years. Around the turn
of the century you
had the creation of major trusts. There
was the Tobacco Trust, there was
Standard Oil, JP Morgan
sat on the board of more than a hundred
Board of Directors. It was almost the
Japanese economy.
You had tendency towards oligopoly or
monopolistic practices. You had
extensive
vertical
integration.
A guy like
Andrew
Carnegie, he owned the
Coke, the coal, the railroad, the
steamship, the Bessemer steel plants and
the
distribution
networks. I mean complete soups and nuts
vertical integration on this.
So, what
happens is in
the early 1900s
you get exposés into meat-packing
practices. Theodore Roosevelt enforces
the
Sherman Anti-Trust
Act, which had actually been on the
books for 10 or 15 years before that.
What
happens? Confidence
in business comes back. So that by the
1920s folks like Henry Ford, Tom Lamont,
Herbert
Hoover - icons of business and industry
and economics - are some of the most
popular
people in the
country. The stock market goes through
the roof.
Then the 1929
crash
happens. Actually
the trust crisis doesn't hit exactly in
1929. It's probably '31-'32 where it
really becomes steep.
FDR's response to that is to establish
the Securities and Exchange Commission.
Again, they pull out
a regulatory package and what happens?
Probably the high point of public
attitudes towards business
is probably in the early 1950s. It
wasn't just a product of regulation. The
arsenal for democracy
was the biggest public/private
partnership in history to that point, in
terms of
the way that
corporate executives joined and
supported the war effort. It also gave
them
quite a bit of
credibility. It renewed a sense of
solidarity.
So,
legislators, very
familiar with this
history, see what's going on with Enron
and MCI Worldcom and all the rest of
it. They say, 'OK,
we'll pull another one out of the
playbook and we'll pass Sarbanes-Oxley.'
But what happens?
All right, today, if you look at opinion
polls, do you think that attitudes
towards big business are
better than they were? No, it's still a
sore question. So, we started asking
ourselves, what's
going on? And I don't want to minimize
some of the positive things that have
happened.
Right now the
stock
market is flirting
with almost all time highs. We haven't
had any extraordinary scandals in the
last four or five
years. You've had a number of companies
that have implemented a dramatic
governance reform. There
has been significant progress on the
number of frauds and in fact, today,
more
people who had direct
experience with an individual company
have more confidence in the company that
they know than they
did 10 years ago.
So, what's
happened is
that the tangible
concrete relationships that I have, if
I'm in Southwest, I like Southwest; if
I'm in Lockheed I like
Lockheed. I'm assuming that they're
going to operate in a trustworthy
manner.
The attitude towards
business as a whole is still really bad.
It's kind of the same attitude that
people have towards
Congress, right? Do you like your
individual member of Congress and you
think
the whole thing is a
mess, and all the other people in the
rest of the country are a bunch of
morons
for electing
theirs.
So, it's kind
of a
similar thing that's
going on now. But, the problem is that,
as Meagan and I were talking during
lunch, policymakers and
folks who are not in the business world,
have a tendency not to think about
individual business. I
love my Starbucks or I love my Gap. They
have a unique distinction in their
minds between loving
the individual businesses that they know
and the private sector as a
whole.
There's somehow
this idea
of this thing
called Big Business, which, as anyone
who works for a company will tell you,
there is no such
thing. There are big businesses.
Individual businesses have plenty of
clout
and power
individually.
So, here we are
today
with the current
situation. We've got a systemic problem
and we don't know what to do about it.
Past remedies
haven't necessarily worked. One of the
things that I would submit to you, and
why I think that
Citizens for Civic Responsibility could
be very important, is that this trust
crisis isn't just
facing businesses. We have a trust
crisis in terms of all of our
institutions.
Think about the
New York
Times, do you
think anyone trusted it as much as they
do now as they used it because of the
plagiarism scandal
that hit there? The American University,
the Smithsonian, United Way, Red Cross,
Catholic
Church.
Do you know
that at the
height of the
Enron scandal, we're talking March or
April 2002, that that was not the worst
scandal of the time?
NBC News and Wall Street Journal
did a survey asking, what do you find is
the most appalling
thing going on in the United States
today? You know what they said? Enron
was
three. Number one
was the Catholic Church scandal in
Boston. Number two was how Red Cross was
handling 911.
The trust
crisis that
we're dealing with
now is not something that's reserved
solely for business. All of our
institutions have vested
interest in working together to build up
social capital. It's funny, because we
get social capital
when we look at sports, but we don't
really apply social capital to our own
organizations or to the
environments in which they operate.
Isn't that funny?
It's very easy
to see it
in sports. The
New York Yankees do not win the World
Series every year even though they buy
the
best pitcher and
the best catcher and shortstop. It's not
just about individual talent, right?
It's about how well
the pitcher pitches to the catcher and
how well the different players in the
field coordinate with
each other. You see that very well.
Baseball itself doesn't work unless the
fans come to the
stadium and they trust the product. The
sportswriters write about it in such a
way that
communicates why this is important and
why this is excellent. The owners do a
good job trying to
make sure they get competitive talent.
In other words, all the key
stakeholders, it's not just how
well the individual team is operating on
the field, it's also how well they're
putting that external
environment together to work
with.
That is the
trust
challenge that all of
our institutions have to address. We
really need more of a science around the
development of social
capital.
How do I get my
team to
work as well
together as they possibly can? How can
some of our parts be more important than
just our individual
balance? How can we get our partners,
our suppliers, our customers, our
investors, put everybody
who out there is our sphere of influence
and engagement together to effectively
engage with us? I
would venture to say that while human
capital is now much more well developed,
social capital is
underappreciated and not appreciated as
much as it could be as a factor for
productivity.
But the way
that a lot of
companies talk
about this stuff, is that they are
defensive. Why don't I sign onto a code
of
conduct? Well, I'm
afraid that I have a rogue employee or
I'm afraid it could turn into a some
kind
of a liability
problem five years from now or God knows
what one of my vendors has done and
what my responsibility
could be because of what somebody else
did.
And people
rarely get
fired for what they
don't do. So, you have a tendency to
have a little bit of a bunker mentality.
And what does that
mean? That's a failure to act. And lack
of action actually is what makes
business stop.
We were talking
a little
bit before the
lunch started about what's going on in
Michigan. The fact that there's
unemployment, the fact that
companies aren't hiring means that
housing prices are going down. It means
that
the economy is
slowly contracting. In a way you almost
need trust. You almost need a brand of
promise to be able
to engage with other people and to be
able to have business, to have action
going on.
Some companies
are really
starting to get
the joke about this. And you'll see all
this in the Values Matter report. What
we're starting to
do is really profile companies that are
looking at it in terms of internal
organizational
productivity building. Some of the
things they're looking at are
volunteerism,
awards and
recognition, training, internal
communications can't be overstated,
clear and
transparent practices,
internal things that really get
employees feeling like they're part of
the same
team, going the same
direction, that they're complimentary in
terms of what they're trying to
accomplish and moving
forward on a common goal.
You're seeing
the same
kind of things
starting to happen in terms of the
external environment, so that you get
some
companies that are
engaging in more stakeholder dialogs.
They're saying to community leaders,
'Hey, come on down and
have pizza and let's just talk.' And you
say, 'Well, that doesn't seem like a
lot.' When you've
had a tendency to be looking at the
world as 'us versus them,' breaking down
some of those walls and
creating a semi-permeable environment
where the company and the community
start
bleeding together a
little bit more, create more bonds of
loyalty and more ways of engaging with
each other. Again,
transparency works in terms of
communicating with external stakeholders
as
well.
One of the
things that
Southwest Airlines
noticed is that they didn't sell their
employees on the idea that they were
driving an airplane.
They sold their employees on the idea
that they were allowing people who
couldn't afford to travel
before the opportunity to travel. So,
their employees had a sense more of a
mission. We're doing
something to benefit people in a way
that they hadn't been benefited before.
And you know what they
found? That internal work with customers
was having an external dynamic in
terms of generating
increased customer loyalty.
So, you're
seeing a
number of companies
really starting to say, how can I put
that external stakeholder environment to
work for us? And I
think it's paying dividends.
So, I want to
conclude
with this. First
of all, I hope you enjoy the report and
we welcome your feedback in terms of
helping us increase the
body of knowledge that we're putting
together here. But, I would say that to
the extent that we can
build civility that we can build
engagement that we can implicate values
for
liability, honesty,
trust, integrity, the work ethic - those
are all things that have both the
social
benefit and are
fundamental for economical development.
I would say the mission of this
organization is well in
line in terms of making the connection
in the linkage between doing good and
doing well.
Thank you very
much.
DR.
GEORGE THOMAS:
Thank you
Stephen. That's excellent.
I work in a
profession
where trust means
everything. How do you know when you go
to a doctor? I mean what is he going
to do to you? That's
why even in our profession, they always
say it's not science and art it's art
and science. I think
that trust is one of the most important
currencies we need to build up. I think
it's not really
confined to the corporate world.
I had the
opportunity to
be on the Board
of Directors of our chamber in our
county, our town. That was actually the
chamber of the year for
the state of Florida twice. I think one
of the things we found is how they were
helping the
businesses build trust and transparency,
building engagement, to borrow the word
from you, and I
think that's exactly what it is.
Now, I don't
want to talk
too much.
Stephen has a tight schedule and we just
need to bring in some discussion.
Participant: Thank you
Mr. Jordan, you raised a very good point
of what a challenge trust and civility
can be. Let me
throw something out, please consider it
a kind of neutral example - not a
reflection on any specific
corporation, but an issue regarding
business, trust, responsibility and
morality. That issue is
immigration or illegal immigration. We
have media organizations here, labor is
represented,
corporations, NGOs. Many perspectives .
. . Mr. Jordan, any thoughts?
STEPHEN
JORDAN:
Yeah, thanks
for the easy question.
You know, when
you look
at immigration,
it's a complex issue. I want to make a
point; I'll hopefully come back to this,
which is that a lot
folks talk about the race to the bottom,
right? When you really look at it,
there's actually a race
to the top. When you look at immigration
flows, where does immigration go? It
goes from south to
north. It's not just the United States,
by the way, this is something that's
really dramatically
affecting what's going on in Europe, and
when you look at it all over the world,
what you see is a
race towards opportunity.
The other thing
that you
find is that
about 90 percent of all foreign-directed
investment goes to fewer than 50
countries. Who was the
leading recipient of foreign-directed
investment last year? Do you all
know?
STEPHEN
JORDAN: The
United States. Over a $180 billion
dollars. In other words, more than 10
percent of all
foreign-direct investment came to the
United States last year. I would venture
to say that if you
added up all the investment that went to
the OECD, and went to the BRICK,
Brazil, Russia, India and
China, that gets you to about 85
percent. If you add just the next 11,
you're
over 90 percent on
this.
So, you got 150
countries
that are making
due with about $100 billion in
foreign-direct investment total plus
another $100
billion in aid and
remittances. We're not going to see a
situation where inequality is going to
decrease. We're going
to actually see a situation where the
wealthy countries are going to continue
to
increase in wealth
and the least devout countries are going
to lag further and further behind
unless they make
important governance and economic
reforms.
So, there's
going to be a
situation here
where the trends and the forces that
you're seeing today are likely to
accelerate. Do you know if
the United States adds four percent to
its economy, you know how much that is?
That's about $400
billion dollars. You know what that is?
That's 2/3 the size of the economy of
Mexico. It's
ridiculous on this thing. So, I think
that the pressures are actually not
going
to diminish
regardless of what legal things happen
in the United States. They are likely to
accelerate.
Where the
rubber is going
to hit the road
is to what extent developing countries
are going to realize they have
tremendous
governance
challenges. And to what extent we
realize that because of
interconductivity,
because Mexico does
adjoin the United States that foreign
development is actually a domestic
development issue.
I don't know if
that
answered your
question about doing the right thing
versus doing good things, which are
different aspects of it.
But, I think that the responsibility,
the focus of the center of the
responsibility isn't
necessarily within the United States. We
can play the supporting role. The
locust of it is going
to be in those particular
countries.
Participant: Thank you
for that presentation. I was fascinated
by how you explained and talked about
the various aspects
and concepts of trust.
I try to
consider the
idea of trust from
both a Western point of view and an
oriental point of view. It is probably a
relatively new concept
for us, but in 551 B.C., Confucius
talked about Confucian Social Theory
based on
trust. When I
think about Confucian thought, I
consider the concepts respect and
compassion.
That's the
underlying foundation to me.
What it's
boiling down to
is when you
look at the Enron difficulties and other
fiascos in the previous two years,
Western as compared to
the Eastern thinking, is that we try to
govern ourselves from external forces.
To shape our
behaviors - whether it is corporate,
religious or political behaviors - they
are
governed by external
mechanisms. As opposed to the Eastern
cultures, where they think a person is
good
inherently.
Therefore, my
question
for you is, should
we govern ourselves within thinking we
are a good person or should we govern
ourselves by outside
rules and regulations? How can we find
the right balance in our governance
system? We cannot
control and regulate everything that we
do. You mentioned education as a
process. How can we get
there?
STEPHEN
JORDAN: Look,
the strongest and most sustainable
entities are ones that combine both
elements. The people who
make them up have a spirit and that the
laws themselves are strong as well.
That's why you've
really got to look at how well the
spirit of the laws and the letter of the
laws
conform to each
other.
That means that
I don't
think that you
can expect every single individual in an
organization to necessarily buy into
the same moral
framework. I don't think that even if
you were in a high trust environment,
good governance would
go away. You would still need good
governance practices no matter what.
The other thing
is that
conditions change
and good people can have very different
strategies, strategic approaches to
similar issues. So,
even if there's no moral component
associated with something, sometimes you
can
have very different
behavioral approaches to it. In those
kinds of situations you also have to
have
institutional
support for what you're doing. You have
to have rules.
Look, the
United States
is not very
comfortable with a moral conversation.
What you said about the Washington
census, we thought if you
privatize everything, deregulate
everything, set up market structures for
the
things you want to do,
voila, you will be on the road to
development. That really didn't
understand
some of the moral
complexities inherent in some of the
environments in Africa and Latin
America.
I think that as a
country we need to be able to have those
kinds of dialogs as well. To be able
to say there is
normative agenda that goes hand in hand
with institutional agenda.
NIKKI
DARUWALA:
Thanks, I especially like the idea of
when you brought up the example of
Southwest Air. I think
it's a well-worthy company to know. But,
my question is, not sure I'm going to
frame it correctly
here. I wanted to gage your opinion on
when there is a company that has been
gaining the trust of
its stakeholders and working with them,
but then operates as a company in an
environment where the
industry trade organization or others,
other business entity organizations and
groups, take a
contrarian approach or something else
that then erodes that particular
company's
trust with its
stakeholders. For example, maybe the
Chamber of Commerce does not, obviously,
hold the same opinions
of all of its member organizations, it's
a vast organization. How are you able
to mesh those two
together, reconcile their differences
and how can you still keep the companies
trust going when
everybody around the company is not
necessarily taking that same kind of
position?
STEPHEN
JORDAN: You
know how I was talking about inefficient
efficiency? This is why I think it's
great to have patent
rights. For example, if I have a
brilliant invention, I should be able to
reap
some reward for
that. Is the march seven years or 10
years or 13 years? Who knows? I should
have some protections
at the start. That implicates
R&D.
I think that
when you are
talking about
fledgling industries, and you want to
promote innovation, having some kind of
protections that allow
you to stimulate innovation are very
important.
I think that
some things
are very
important to conserve and to preserve.
At the same time, you have to allow
change to happen as
well. I think that where I'm going is
kind a checks and balances theory of
development. One of the
things I find is that there's a whole
conflict around what norms are the right
ones. Social
responsibility, in a lot of ways, the
codes of conduct, are the norms in the
eye
of the beholder on
this.
In the battle
for norms
you want to
create market competition a little bit.
You want to see which ones succeed and
which ones don't.
You would never want to create a
situation where we're saying, STOP, and
we're
going to preserve
this status quo the way that it is right
now for all time on it. But, at the
same time, how do you
create a situation where you don't wipe
out the good things in a particular
context?
The only way
that I can
really answer you
on the hypothetical, this is getting
more into a specific case, is, I think
that
industry conditions
vary. The way that travel and tourism
sectors are configured is totally
different than the way
medical products are configured. To get
into the individual thing of it, we
would have to talk at a
different level below it.
My bias would
be that you
don't want to
privilege one entity at the expense of
the others. In a complex moral
environment where you have
complex stakeholders and by the way, the
stakeholder population has diversified
tremendously over
the last 30 years. As the boomers retire
you're going to see a doubling or
tripling of stakeholder
groups. It's going to get even more
complex. I think there's got to be a way
to accommodate, but
at the same time, you cannot gum up the
gears so that people can't adjust to new
realities.
Participant:
If
that was me, I'm kind of having a little
trouble connecting the dots. It's too
abstract.
STEPHEN
JORDAN: I'm
sorry.
Participant: Maybe I'm
way too fanatic, I guess. I need a nuts
and bolts kind of thing here. Let me
ask you this. I
understand your general opinion. People
don't trust institutions; governance
isn't adequate to
create trust apparently.
STEPHEN
JORDAN: It
did. It did help in some levels, but not
in the fundamental way.
Participant:
Presumably, when we don't trust our
institutions, it's not just any specific
institution, it's all
institutions. I don't trust corporate
America myself. What I'm vague on is
what your proposal is
for getting trust back. I'm not getting
that.
STEPHEN
JORDAN: It's easier
for individual companies than
it is for us,
business as a whole. I think I could
probably say what individual businesses,
individual
institutions, individual organizations
are doing to promote and build up trust
with Americans.
There are a variety of tactics that we
can put in the book.
Honestly, I
don't really
know what to do,
to say. If I could wave a wand and say,
restore trust in business where
actually good people and
some of the regulations that have been
proposed are a little excessive. I don't
know what would
cause that. I don't think there is a
silver bullet. I think that we've gone
beyond saying 'Trust
me,' to the situation where we have to
demonstrate by action. We build
credibility by doing
it.
Participant: I guess,
but you don't have a proposal for what
we call tactic, what tactic that would
be. Better customer
relationships, better . . . When I call
up the company I don't have to go
through a 10 minute menu
or get somebody that hangs up on me or
is it . . .
STEPHEN
JORDAN: I would say
that it's individual businesses
taking steps to
proactively understand how to build
individual social capital. Hopefully,
that
rolls out over
time. At the same time, organizations
like ours communicating the fact that it
was less than 1/10
of one percent of all businesses that
were engaged in those particular
scandals. The 98 percent of
all businesses believed that ethical
practices are important.
There's a
communications
component to
this that we have to really raise
awareness about what businesses do.
There's
an operational,
there's a policy, there's . . .
Participant: Do people
not trust institutions because of these
events like the Catholic Church, Enron
or is it that they
don't trust institutions, because
institutions, in their own experience,
treat
them badly. Which do
you think it really is? Do you have
findings that reflect one or the
other?
STEPHEN
JORDAN: We don't have
findings one way or the
other. I can tell you
this, one the positive side, that the
best way to be considered a good
corporate
citizen is not to
fire your major workers.
Participant: I just
want to make an observation about your
statement on lack of trust and the
public
perception about
the business community. First of all,
you must understand that a lot of this
is
self-inflicted on
the part of the business. When you
consider what happened in Enron and
Worldcom, that recent
scandal at Hewlett Packard, and
something that happened yesterday.
ABC News had a
story last
night that
three presidents mishandled funds. Those
three, each of them, had earnings over
one year in excess
of $1.7 billion. It adds to the lack of
credibility in terms of, how is
possible to make that much
money even if they earn it.
How about a
case of those
CEOs who were
corrupt and who actually were fired for
incompetence and yet they went home with
a huge, golden
pensions? All that reflects a great deal
on the business community and as you
know, this affects
all of us who are in business.
I think that in
terms of
looking for a
solution we need to do two things:
communications, externally, to the
public,
but also
communications, internally, to the whole
business community. We monitor our own
behavior in terms
of how we treat these things that create
the public perception that business is
not to be
trusted.
STEPHEN
JORDAN: Executive
compensations is a huge issue.
One of the things
that we've done is we've reached out to
the co-roundtables. In fact, is Jed
Ipson here?
STEPHEN
JORDAN: Jed is
actually on loan to us from the
co-roundtable and the
Ethics Resource Center and
Accountability and a couple of other
organizations.
He said, you know,
one of the things that would be
interesting would be to develop a set of
principals around
compensation. For example, how do you
not penalize entrepreneurship? How do
you not penalize CEOs
who are willing to take on hardship
cases, turn around stories? How do you
not
penalize companies
that do less badly when their entire
industry takes a down-turn? If the
housing
market is awful and
your particular firm breaks even, that's
a solid performance vis-à-vis. One of
things we've asked
him to do is to figure out principals
for compensation that make sense to a
lot
of people.
Then, as we
were looking
at, we realized
that there should be a second set of
principals for management. Like how you
could be vis-à-vis the
firm. It might make sense for, I forget
the cell phone firm in Scandinavia that
did this, which is
the one that had the massive downturn,
it had like 10-12 years of profitability
and then they
offered the CEO a bonus even though -
because they had a downturn, but it
wasn't
as bad as it could
have been.
He refused it.
You have
principals for
the boards in terms of how it structures
its compensation and they you have
principals for
management in terms of how it reacts
vis-à-vis. That's leadership. Again,
that's a normative thing
that you have to implicate in a
different way. It's not something that
necessarily lends itself
very easily to rules.
JENNIFER
WOOFTER: I
was going to say something related to
executive compensation. I think when we
talk about a lack of
trust, when we ask people about their
mistrust in business or corporate
America,
it's not, 'Do I
mistrust the customer account executive
at Motorola?' it's, 'Do I mistrust the
CEO?' I think we're
talking about feeling alienation.
Feeling like the decision makers of big
business, the top
executives, do not understand what a
normal person is going through in terms
of
being an employee,
in terms of being a customer, in terms
of being a member of the community.
I think
executive
compensation plays a
big part of that, feeling like you get a
$20 million bonus because your company
didn't do as badly
as the industry, but you're still laying
off people. There's a level of
disconnect. You can make
an argument that says, we didn't do as
badly as our peers. But millions of
dollars when laying off
people? I think it's a feeling of
alienation. I think when we talk about
what
can build trust
back, I think it is getting a sense of
getting executives who really come
across
as feeling like
they're still regular people. It's not
just executive compensation, it's also
lifestyle and who
they interact with on a regular basis.
Are they sitting around tables like
this? Are they off to
fancy parties or fancy showers
curtains?
STEPHEN
JORDAN: Part of it is
if you don't feel like
you're on the same team,
then are you?
JENNIFER
WOOFTER:
That's true and I think that touches so
many of the things we talk about. Labor
management, well,
labor just doesn't understand the
competitive needs that we do.
In the airline
industry
we saw the labor
unions come to the table and say, 'Let's
make this work.' Took huge pay cuts
and now the airline
industry turned around and is making
huge profits. Their executives are
making
millions of dollars
and the labor unions have not gotten
back the same pay that they had back in
2001. The airline
industry is doing better than it was
projected to before September 11th. It's
examples like that
that exemplify why there is this
disconnect and this loss of
trust.
STEPHEN
JORDAN: It's kind of
funny, a lot of folks have a
tendency to think
business is about profits, right? If
you've been in management, you've been
in
a business, you
realize the best business functions if
I'm taking care of my customers, if I'm
taking care of my
employees, if then, the investors
hopefully will slot into place. If I'm
out of
whack in terms of
the different constituencies, the
business goes off in a way.
Yeah, I think
that one of
the biggest
problems in the future is going to be
this single issue. People that think
it's
all just about one
thing and I think that a lot of the
conflicts in business and society
relations
happen when one
piece of that jigsaw puzzle gets too
powerful for the rest. Folks get upset
when unions get too
powerful, people get upset when
investors get too powerful, they get
upset when
senior management
gets too powerful. It goes back to that
checks and balances that I was talking
about before.
MATT
MANI (Booz Allen
Hamilton): We have to
take a broader global view when we think
about corporate civic
responsibility. We can no longer afford
to think insularly about corporate
responsibility only in
the country where the company is
headquartered. Companies are becoming
increasingly global and many
corporations are growing their
workforces and generating their primary
growth in
markets outside the
United States. This necessitates
thinking about workforces, communities
and
civic responsibility
globally and the good a company does
overall, vs. only the activities of a
company within certain
national borders.
RON
STURMAN (The Washington
Times): Stephen, I
find
your comments very, very meaningful and
I responded
viscerally to one word that you use,
civility. Because I find that there is
such an absence of
civility in our public discourse in this
country and I'm very, very concerned
about that. I think
that has an impact on the institutions
that we trust or don't trust. I find
that absence of
civility also in much of our
communications with the media. I'm very
troubled
by that.
I wanted to ask
you if
there are
institutions that stand out in your mind
as institutions that are most
trustworthy or perceived to
be most trustworthy by members of the
public.
STEPHEN
JORDAN: I would have
said until about a year ago,
the military. Until
right before Abu Ghraib, it was military
by far. A lot of folks respect some
non-profit
organizations very much. I would say
within our non-profit community you've
got
two tendencies: one
towards advocacy and one towards
service. I would say the service
non-profits
do very, very
well.
JANE
MEIER: I just
wanted to go back to executive
compensation. I think one of the things
that
hopefully this does . .
.
STEPHEN
JORDAN: Your CEO is
something.
JANE
MEIER:
He's
something. Well he's one dollar I said
that, but recently we changed the
compensation to be
whoever's in corporate management that
it has to be no more than 19 times the
average team members
salary. That's one way that our company
is controlling the dollar amounts of
CEOs.
STEPHEN
JORDAN: How did you
get 19?
JANE
MEIER: You know,
they just changed it from 14. It used to
be 14 times. I would have to do some
research on how we
got to 19.
STEPHEN
JORDAN: See, I like
things like that that don't
limit upper
compensation, but create an incentive to
improve the bottom end.
JANE
MEIER:
Simultaneously
when we did that we increased the
minimum wage at all our
stores in at least the D.C. area to
$10/hour. That's the minimum that
anybody
would pay. It's very
connected. CEOs didn't just go up.
Everybody went up, which makes it hard
to
make labor budget,
sales, and profits and blah, blah, blah.
STEPHEN
JORDAN: Yeah, but
they must have been hating your
CEO for tracking
down the pay thing, right? Everybody
only gets 19 times the . . .
JANE
MEIER: I just
wanted to share that.
STEPHEN
JORDAN: Check
out the Internet on any single issue
that's out there, there's some blog
somewhere that somebody
knows something about what happened.
What I think is going to happen is that
at
a certain point
we're just going to get overloaded with
information and the salaries of editors,
people who can
manage information, is going to go way
up. People are just going to be sick of
the information
overload that's out there.
In case you
hadn't
noticed, I'm pretty
constitutionalist and the federalists,
they talk about the idea that the
factions balance each other
out. I believe in, let them rip, let
everybody out there and let's see what
comes out the debate.
GEORGE
THOMAS:
Thank you
Stephen!
3rd
Discussion
Panel:
"Civic
Engagement
of
American
Citizens
and
Institutions
Abroad"
|
MICHAEL
SCHNEIDER -
moderator:
Director of the
Maxwell-Washington International
Relations program, Syracuse University
and a
chairman of AACR's
Advisory Committee
Thank you
again,
Stephen. I wanted to
use Mr. Jordan's comments as a kind of a
segue into the conversation for our
last panel. It struck
me throughout the morning's discussion
and this afternoon's discussion that
there are a number of
transient changes that we're seeing in
the world today that make a difference
to
us at a number of
levels. I want to add another concept to
the one that Stephen raised. He talked
about trust. Trust
is the very operative principal. It's a
very important factor, but it's what we
call an intervening
variable. It's not the source, it is a
symptom, it is a symbol, it has an issue
to be addressed of
the lack of trust as cause.
I want to throw
out
another word,
compartmentalization as a source of some
of the difficulties and some of the
challenges that we're
facing whether we be in the business
community or academia or labor community
or
professions today.
First of all,
apropos of
the conversation
we've been having this morning and what
we're entering into today, I want to
mention Patrick Mendes'
new book. This is the second edition on
Localization, subtitled "The human side
of globalization as
if the Washington consensus mattered."
Well, everyone now is acquainted with
Washington consensus
that is the reigning viewpoint from the
'80s on that privatization and all that
goes with it is the
route for development in many parts of
the world that had not begun to develop
by the 1980s largely
talking about Latin America, South Asia,
Southeast Asia, to some extent, and
Africa particularly.
Now that is being challenged, by the
way, in many countries these days,
particularly is Latin
America. Patrick is on to something.
That there are fractious, that there are
disruptions.
Stephen mentioned this a lot in his
conversation.
How to build
trust, how
to build
civility, how to pay back in simple
terms, how to build a civil society, how
to
influence citizens
in this country and perhaps citizens
abroad to contribute to the common
wheel,
to well-being.
That's the subject for this afternoon.
What we're finding, what we're doing.
I approached
the issue
from the
standpoint of nation-state of behavior
and nation-state diplomacy. I guess you
might say my
background in diplomacy, before I joined
the faculty, leads me to think about
these issues from the
standpoint of world opinion and the
standing of the United States. Another
threat that came out of
this morning's conversation, and this
afternoon's too, is how much the United
States stands as a
representative of the diverse world
public's that we see: how many people
coming
here, how many
issues that exist here that have impacts
abroad, how many issues abroad that
have impacts in the
United States.
Well, this is
certainly
on the minds of
decision makers in Washington. I was
down at the State Department yesterday
talking to a number of
people about another project I'm
involved in. We observed that the U.S.
standing in the world is at
its lowest since the Vietnam War period.
In fact, in my research, it's lower.
The Iraq war, the
policies in the Middle East, if you
will, the perception around the world
that
we're unilateral,
that we're not listening. You might say
the employees of the world, this is a
gross overstatement,
are complaining about the management of
the world in that, kind of, corporate
metaphor. There's not
enough transparency, we're not listening
well enough, the whole litany of
complaints about the
United States that you've heard about so
far.
In response,
the
Undersecretary of State
for public diplomacy and public affairs
has come up with an idea, which I find
very far-reaching.
It's called the Diplomacy of Deeds. It
may be a little corny for some people.
What she's talking
about is for the United States to try
and develop a sense of shared
commitments
with other people
and other governments around the world.
The list that she came up with very
briefly was a shared
commitment against extremism, a shared
commitment to humanitarian responses, to
long term
commitments of foreign aid, particularly
in the health area, to the beginnings
of an effort of the
United States part to open our own
markets, open up the markets of the EU,
change some of the trades
patterns that have existed so that trade
and not aid will be dominant.
We observed the
fact that
remittances are
a huge part of the international
economic equation. Just this weekend,
there
was an article in the
Times magazine's section: there
are 200 million people who send
remittances of about $300
billion a year, vastly overshadowing
foreign assistance possibly second only
to
business doing
business openly and
competitively.
Well, the open
and
competitive business,
the movement of people, the movement of
finance, the acceleration exponentially
of
telecommunications and information flows
are all contributing factors to the
lowered trust that we
have in our institutions here and to the
lowered trust that people have in the
United States as a
global community in microcosm as a
nation-state actor, as a leader.
That's the kind
of
diplomatic or
nation-state perspective that I come to
in introducing the discussion today. I
think the
conversation we've had this morning fits
neatly with that construct that we need
to look at not just
the domestic aspects of civility and
civil responsibility and participation,
and
openness in
communication within institutions and
among institutions, but we have to look
at
it
internationally.
Everything we
do here
domestically is
heard overseas and seen overseas, has an
impact overseas and increasingly, what
happens overseas
affects our daily lives and the
decisions that decision makers make
here,
whether they be in the
corporate world, the academic world or
government. Thus, the panel discussion
on civic engagement
of American citizens and institutions
abroad, picking up on Joy's comment
about
the importance of
institutional civic responsibility. I
want to stress that again.
I'd like to
introduce our
speakers for
today. I'm going to obviously ask that
we compress our remarks so that we have
lots of time left.
If we do go into the reception time
we'll bring out the chocolate and the
cheese
and the wine and
we'll continue to discuss for a little
bit.
Nancy
Smith-Nissley is
senior coordinator
for the Office of Economic Policy and
Public Diplomacy in the State Department
Bureau of Economic
Energy and Business Affairs. She has a
long background in business outreach and
community service
through business and marketing and
public relations in the corporate world,
in
the academic world
and in the U.S. government. It's really
a treat to have Nancy here. Nancy is
the manager of the
State Department's Excellence and
Business Award, which she will describe.
It's
a pioneer effort by
the Department of State to lend the good
office then the support of the United
State's government to
business that does good domestically as
well as overseas.
Terrence Guay
is a
colleague of mine from
the Maxwell School. He is also now a
professor at Penn State University who
has
been working in the
field, has sort of cut across the
dimensions of political science,
international
relations and
business policy in his courses and in
his research. He had done a lot of work
on research that
relates to good business process.
Dr. Paul Jhin
has a
distinguished career
in the Peace Corps and public service.
He is now the liaison from the Peace
Corps to the White
House Initiative on Asian Americans and
Pacific Islanders, AAPIs, with the
Department of State's
interagency working group, with the
White House initiative on digital
freedom
and the United Nations
Secretary General's office. He has been
director of the Office of Planning
Policy and Analysis of
the Peace Corps for the past five years,
has a long record of public service in
Asian affairs dating
way back, and has a background in
education with many degrees, five
degrees, I
think, in math and
science, has served in the District of
Columbia as the assistant superintendent
for educational
technology.
Francis . . .
sorry,
Francis, I misplaced
your bio, but I can tell you a little
bit and you can tell us . . . Francis
Skrobiszewski is the
director of the U.S.-Polish Trade
Council here in Washington D.C, a
long-term
colleague of Joy's and
ours, and a supporter of the AACR. He
has been paving the way in dealing with
the many bilateral
issues that involve the U.S. and Poland
today. Poland is one of those exemplars
of the integration
into a modern world economy and all that
goes with it. Certainly there are
strong and deep ties
between the Polish and the American
community in the United States that are
very
meritorious.
With that, I'm
going to
ask Francis to
lead off a bit and then I'll turn to
Nancy and Terrence for their comments
and
we'll join in the
conversation.
FRANCIS
SKROBISZEWSKI:
Esq., Director,
U.S-Polish Trade Council,
Washington, D.C.
Thank you Mike.
When Dr.
Cherian asked me
to speak about the U.S.-Polish Trade
Council as an example of "Civic
Engagement
of American Citizens
and Institutions Abroad," I realized my
own involvement in such outreach goes
back another 15 years
to my service as an officer of the
Enterprise Funds in Poland and Hungary,
and
I'll describe those
activities as well.
The U.S.-Polish
Trade
Council was
established in 2002 to promote science
and technology exchange and stronger
commercial ties between
Poland and the U.S. - essentially
"building bridges" between the
scientific and
business communities
of the two countries.
The USPTC is
comprised of
an
all-volunteer group of international
business leaders with professional and
technical
accomplishments in both Poland and the
U.S. There are only eleven of us who
serve as officers or
directors and a couple of advisors, but
unlike many not-for-profit corporations
that pay honoraria
or salaries, we all have to make a
contribution when invited to serve.
We work with
various
networks of Polish
and American corporate, academic and
government organizations. We connect
U.S.
business leaders
primarily in the Silicon Valley, where
the USPTC is headquartered and most
members are located, and
we advocate Poland as a destination for
technology investment and
cooperation.
We have
organized special
events and
symposia in Silicon Valley/San
Francisco, Warsaw and Washington, D.C.,
where I
am located. For
example, I briefed the rectors of
leading Polish universities in DC on the
role
of venture capital
in technology transfer, and my
colleagues hosted them next in Silicon
Valley
with briefings and
introductions. Then, we invited one of
the leading legends of Silicon Valley
venture capital to
Warsaw for a reception with the rectors
and other leaders from Poland's
scientific, business and
government communities. In 2003, when
the Polish Prime Minister was planning a
trip to Los Angeles,
we convinced him that a Silicon Valley
visit would be more valuable for Poland
and we introduced him
to U.S. IT industry leaders, who in turn
became more interested in investment
opportunities in
Poland. In 2005, USPTC held a symposium
on Stem Cell Research in the U.S. and
Poland, and in 2006,
we held a symposium on Web 2.0 Wave in
the U.S. and Poland. Last month, USPTC
was a sponsor and
organizer of the Global Technology
Symposium at Stanford University,
bringing
together business,
government and academic leaders,
primarily from Central and Eastern
Europe, but
also other
countries, and their counterparts in the
USA.
Turning briefly
to the
Enterprise Fund
program: in 1989, then-President Bush
and Congress recognized that the U.S.
private sector would
need to play a role in helping develop
the Polish and Hungarian private
sectors,
as those countries
made a transition from Soviet-style
command economies to free markets.
They conceived
of
privately-managed
investment funds capitalized with public
money - $240 million for the
Polish-American Enterprise Fund
and $60 million for the
Hungarian-American Enterprise Fund - to
provide equity
and
debt financing of
local businesses promoting private
sector development.
The Funds were
established as
not-for-profit corporations - private,
not U.S. government entities - but
subject to
oversight, with
their Boards of Directors, appointed by
the President. The U.S. directors, who
are senior
investment executives and other
professionals, have served without
compensation
- some for over 17
years now - that is real civic
engagement!
In PAEF's 10
years of
operations, before
returning its capital to the U.S.
Treasury:
·
it
invested $200 million in 50 Polish
companies
·
participated in
nine IPOs on WSE
·
provided
$300 million in loans to 10,000
SMEs
·
extended
$180 million in loans to over 30,000
"micro-enterprises"
Both PAEF and
HAEF have
returned capital
to the U.S. government and established
foundations in-country to continue their
good work.
That is an
example of
successful civic
engagement, which I am proud to have
been associated with.
NANCY
SMITH-NISSLEY:
Economic Policy
and
Public Diplomacy,
Bureau of Economic, Energy and Business
Affairs, State Department, Washington,
D.C.
Thank you very
much.
I've really enjoyed
this whole lively discussion this
morning. I just want to start out by
saying
even though many
people may not realize this, but the
State Department very much supports and
promotes corporate
citizenship, corporate social
responsibility as we're talking about
today, civic
responsibility of a
global scale. It does, in fact, tie in
with our foreign police agenda, our
economic bureau's
mission of co-economic engagement and,
of course, the Secretary of State's
annual award of corporate
excellence.
You all should
have this
little brochure
in front of you. It describes the
criteria of this award. We just, in
fact,
now, launched
nominations for ambassadors around the
world for the 9th Annual Awards
Appropriate Excellence
program.
Clearly,
corporate
citizenship goes hand
in hand with the realities of
globalization. We talked about
globalization for
the past at least
hour of our conversation today. With the
advances of technology and
communication and
transportation, we very much realize at
the State Department that we're not into
moving goods and
services, but we're now also moving
ideas and values. This ties in with our
foreign policy agenda.
We know that
American
businesses are
philanthropic. We recognize their
efforts. We saw what the American
business
community did with
Tsunami. In fact, I just got a press
release about what Chevron is doing with
USAID to build and
develop a polytechnic institute in a
province in Indonesia. These are the
good
news stories that
we'd like to promote and support at the
State Department.
I need to
address how
this all fits in
with the whole CSR concept. Let me quote
Franklin Delano Roosevelt: "True
individual freedom cannot
exist without economic security and
independence. People who are hungry and
out
of a job are the
stuff of which dictatorships are made."
So, poverty and political unrest walk
hand in hand. This
is where we actually see the integration
of corporate social responsibility in
our foreign policy
agenda.
Total economic
engagement
is putting all
of the players together. This is why we
are so keen on the development of
pubic/private
partnerships. Perhaps that term has
become a cliché but we actually really
promote and sustain and
encourage this.
The bureau to
which I am
assigned, the
Bureau of Economic Energy and Business
Affairs recently changed its name. I'm
still trying to get
used to it. We used to be EB. Now we're
EEB. We want to emphasize the
importance, of course, of
the energy sector and what role it plays
in our economy. The role it plays in
our economy,
likewise, the work that some of the
energy companies, in fact, are involved
in
when it comes to
corporate social responsibility. If you
look at the flyer inside this brochure
you'll see the
winners from back to 1999 when I helped
launch this program, the ACE program.
I'd like to
talk about it
quickly,
because this program is a nonpartisan
program. It was launched under Madeleine
Albright. It was
carried to great heights under Colin
Powell and has been actually raised in
its
visibility and its
statute with Secretary Rice.
You can see the
criteria
that make up the
award program. A little bit earlier we
were talking about, how do you measure
CSR and what are the
guidelines and what should we focus on.
We at the State Department support the
OECD guidelines, the
Organization for Economic Cooperation
and Development. We support the
guidelines, and the criteria
for our ACE program were actually based
on OECD guidelines. The focal point of
the OECD process in
the State Department in the United
States is actually in our bureau, in our
Economic and Energy
Business Affairs Bureau.
I want to skip
over some
of my other
remarks. I think it's important that I
mention to you that we support corporate
responsibility
through the OECD guidelines, through the
award for corporate excellence, through
promoting the
important role that the private sector
has abroad, in promoting development,
and
of course, through
the G8 initiatives, which are expansive.
Everything from entrepreneurship to
investment to Africa
to the Broader Middle East and North
Africa Initiative.
I'll focus now
just on
the ACE itself.
As I said, our ambassadors do the
nominating. It's not a self-nomination
process. It's large
companies and small companies that are
nominated and are awarded this award by
the Secretary of
State each year.
You'll see, for
example,
last year we had
a sterling, really outstanding small
business by the name of Sambazon that's
headquartered in San
Clemente, California, for the work that
they did in the Brazilian rainforest
with the indigenous
people in Brazil.
We also had two
large
business winners,
because the principals who make the
decision and deliberations, which is an
interagency selection
committee, actually could not decide
between the two large businesses.
General Motors
won the
award for their
work in Columbia. They are involved in
environmental, educational and crime
prevention programs as
well as helping former members of
Columbia's paramilitary integrate back
into
civil society.
Goldman Sachs
won for
endowing the gift
of 680,000 acres of wilderness in the
Tierra del Fuego to the Wildlife
Conservation Society for
National Preserve.
What I'm trying
to get at
here is the way
we look at corporate social
responsibility at the State Department
or global
civil responsibility,
whatever term you want to use, is that
basically it goes beyond philanthropy.
We're talking about
companies that are doing well by doing
good, but also they are exemplars of
American values,
American principals and best business
practices.
I'm going to
stop right
there and I will
take questions later. Thank you.
TERRENCE
GUAY:
Clinical
Assistant
Professor of
International Business, Smeal College of
Business, Pennsylvania State
University, University Park,
PA
Thanks, Mike.
Thanks for
inviting me
here today. I found a lot of the things
we've talked about very helpful for my
research. As Mike
said, I'm a professor at Penn State so I
guess I'm the academic guy to go along
with all the
practitioners here today doing really
interesting things.
I guess what I
want to
talk about is my
work on NGO, Non-Governmental
Organizations, particularly in the
international
context in which
they've been operating. One of the
things I've been interested in the last
two
years is how
corporate social responsibility and NGOs
and businesses have been in some cases
working together and
some cases not working together in
various other parts of the world. This
sort
of combines my
interests in doing international affairs
things like Michael mentioned and what
I'm doing in
international business.
What I want to
do is
quickly talk about
three things that I've been doing
research and publishing on in the last
few
years. I'll keep the
"isms" out. I hate isms and abstract
theories as well. I'll try to just give
you the basics of the
types of things that I've been working
on. I'm going to try and draw some
conclusions that tie in
to the other things that we've been
talking about.
One of the
things that I
was interested
in a few years ago was what was
happening in Burma. As many of you may
know
there's a military
dictatorship there that came to power.
There was a lot of pressure put on U.S.
companies to do
something about their operations in
Burma. NGOs have played a very
influential
role here in trying
to persuade companies to get out of
Burma. They went around the United
States
to a number of states
and a number of cities and tried to
persuade these local governments to not
buy
things from
companies that were doing business in
Burma as a way to put pressure on these
companies to leave
Burma and therefore put pressure on the
Burmese government. NGOs were very
influential here in
working with the local governments and
using their technology like cell phones
and fax machines and
everything else to try to persuade other
local governments to do those kinds of
local laws against
international companies.
This ultimately
went to
the Supreme
Court. The NGOs got knocked down as a
result of this and the states that tried
to do this. The
bigger point that I found interesting
was how NGOs were trying to solve global
problems by working
not with national governments, but with
sub-national governments, states and
cites to try and
persuade them to try to take an active
role in international affairs.
The second area
that I've
done some work
on are codes of conduct. Not the kinds
of codes of conduct that we've been
talking about so far
today, the internal corporate codes of
conduct, but labor environmental codes
of
conduct that a lot
of companies are now getting involved
with as a way to try to deal with global
environmental and
global labor issues. In here, this is
where a number of NGO's have been
involved. My co-author and
I, we looked at a number of codes that
had been done in the labor environmental
area
internationally.
We tried to get
a sense
of when NGOs have
a lot of impact here. When governments
get together or international
organizations like the OECD or
ILO or even the UN to the Global Compact
Trade Deal. With social responsibility
issues, NGOs don't
have very much impact. When they do have
impact is when they work directly with
businesses; when
businesses form a partnership with NGOs
to try to address some of these social
responsibility
issues. Things like the Forestry
Stewardship Counsel that put pressure on
retailers to buy their
lumber and paper products from
sustainable forestry companies. NGOs had
a
pretty influential role.
Areas like Rug Mart that tried to get
rid of child labor in the making of the
rugs and carpets in
South Asia. NGOs played a very active
role there. Thing like the Global
Reporting Initiative
triple bottom line reporting where
companies were persuaded to buy
financial and
environmental and
social audits. If you're interested in
the more common financial side again
NGOs are very
influential in getting companies to move
down that direction.
The third area
that I've
been doing some
research on is looking at comparing the
U.S. and Europe and trying to get a
sense of why NGOs have
more influence in Europe than they do in
the United States. It really comes
down to, in my view, to
institutional issues. The fact that the
U.S. and the way that is makes policies
dealing with lots
of business related issues is much more
decentralized. There's national
government. There's a
local government. There are states. This
whole sort of federalism business
makes it much more
difficult for NGOs to have a lasting
impact on public policies whereas in
Europe
there's a growing
trend towards doing things at the EU
level. There's a longer tradition of
having social movements
involved in policymaking. NGOs and other
stakeholders get a greater say in a
lot of the things that
happen in European countries. Boards of
Directors often include labor groups
and other
stakeholders. Again, much different than
the U.S. institutional
environment.
Those are the
three
things that again,
just briefly, I wanted to describe that
I've been doing research on. It combines
NGO social
responsibility and international
business interface. If you have more
specific
questions, I'd be
happy to answer them.
I just want to
finish by
coming up with
one conclusion of this, one question,
and also on observation as a result of
other things that I've
heard here this morning and this
afternoon. The first is that NGOs and
social
responsibility seem
to be having - rather they impact
together and they can make a difference.
In
many cases businesses
are very willing to work with NGOs to
try and solve these problems. NGOs,
particularly some of the
environmental ones, have some ideas that
many businesses are interested in
finding out more
information about, they have access to
this information, and NGOs are resources
for information for
these businesses trying to deal with
international issues.
It's not always
a
controversial area
where NGOs and businesses are fighting
with each other - that tends to be
played
a
lot in the media.
In a number of instances, NGOs and
businesses are working closely together
to
try to deal with these
social responsibility issues.
The question
that I have
is whether this
is a good thing or not. Is having NGOs
more influential in dealing with these
issues really that
helpful? Chad had mentioned earlier this
morning that there is no right answer
and even with this
there is no right answer here. For
example, are children who are working in
sweat shops that Nike
had in various parts of Asia better off
working on the streets, on the farms,
prostitution, instead
of working in factories making Nike
products? That's a moral and ethical
issue. Everybody is going
to have a different answer to that
question.
I think more
broadly, do
we really want a
situation where entities outside of the
public sphere, outside of the
policymaking, the regulatory
and government and democratic system,
making decisions that affect the rest of
society? Do we
really want NGOs going off with
businesses to try to solve the world's
problems
or would we be
better off to have this done through
more typical policymaking
process?
It certainly
leaves out
the issue of the
free writer companies, the free writer
entities that are not involved in these
voluntary
activities. It does certainly raise
questions about the legitimacy of them
when
they are kept out
of the more traditional political
processes.
The last thing
I want to
mention here is
the observation I've had based on some
of the other discussions we've had and
what's the role of the
individual, the role that the individual
should play in many of these social and
civic
responsibility issues. I think on one
level there's a question what these
social responsible
investors want and what do they try to
do. I think on one level that's an
individual issue. If you
don't like some of the activities a
particular company is doing, that's an
individual question of
whether you want to avoid or sell the
shares that you have in that company.
The same is
true for a
customer. If you
are concerned about some of the labor
practices a company might have, it's up
to
the consumer to
make some decisions based on the
information they've collected in
deciding
whether they're going to
not buy products from a particular
company or particular store and those
kinds
of issues.
The third issue
that came
up that I
really wasn't expecting to be thinking
about a whole lot was the role of
students. Certainly being
a professor that's something I think
about a lot. It goes to how students are
trained and how
students are learned about some of these
issues, social responsibility issues.
What I found in
teaching international businesses
courses at Penn State - I try to frame
questions in the business
case vs. moral/ethical case, sort of,
framework, most of my students come down
on the business case
side. These are issues that businesses
have to address. Yes, you may be
uncomfortable about some
of the moral dimensions, but it's a
business decision that we have to
ultimately
make. We talked
about this in class just a couple of
days ago. About the Internet companies
in
China, the Googles,
the Yahoos, some of the decisions
they've made to comply with what the
Chinese
government wants. Is
that a social responsibility issue? Some
of my students seem to argue that,
well, that's the rules
of doing business in China. That's the
way we have to do business there. We
can't change what the
Chinese government wants. I can go on
with some of the other discussions we've
had in that area.
I think this
last subject
of the role of
individuals and shaping civic
responsibility, corporate responsibility
is a
rather important one.
PAUL
JHIN:
Director of
Special
Initiatives, U.S.
Peace Corps, Washington, D.C.
Dr. Paul Jhin
presented
to all
participants the historic development of
and the mission and values driving the
U.S. Peace Corps
program. He reminded everyone that it
was 46 years ago when President John F.
Kennedy, in his
campaign speech at the University of
Michigan, launched the program. Dr. Jhin
further noted that
U.S. Peace Corps volunteers are "the
best diplomats we can have because they
have compassion in
their heart and this is how they build
trust." He further stated that President
Bush's desire to
double the number of Peace Corps
volunteer is highly important since
today is
the best time to
promote peace and understanding in the
world. He also encouraged all
participants to consider
becoming Peace Corps volunteers or to
share the invitation to explore this
with
those they
know.