Philanthropy – No Stand-In for Better Behaviour

22 May 2009

The Economist, not normally a booster of corporate social responsibility (CSR) or sustainability as it  tends to be known in Europe, this week has a piece on CSR that hits the mark. The author concludes that corporate philanthropy (contributions to charitable causes) is being cleaved but the attention being paid to behaviour — ethics and governance in particular — is holding steady, as it should.

“There is one other important reason for thinking that companies will
maintain their commitments to sustainability through the downturn and
beyond: the need to restore confidence in business. The financial
crisis was triggered by a bout of corporate social irresponsibility on
a massive scale that has tarnished the reputations of even the bluest
of blue-chip companies. Now corporate leaders have a chance to show
that they are not just motivated by short-termism after all.”

As Intel (a client) says in the management analysis and strategy
portion of its 2008 corporate responsibility report (Note . . . I agree with ridding CSR of its restrictive ‘S’),  “By incorporating
corporate responsibility directly into our strategy and objectives, we manage our business more effectively and understand our impact on the world more clearly.”

Corporate or ’strategic’ philanthropy is a programmatic means by which a company contributes to its community. Philanthropy evidences a corporate recognition that profits are derived from the community and that a return to the community in the form of wages paid for labor and consistent dividend payments to shareholders as well as steady share price growth is — at least in terms of today’s social expectations — insufficient.

Communities expect companies to give back, and companies have obliged either through random acts of kindness or more structured investments in causes which match company values or business goals.

But let’s be honest. Philanthropy is unlikely to define or affect company behaviour when it comes to choosing business strategy, rewarding employees, managing supply chain relationships, committing to respectful and sensitive business principles and overseeing board and C-suite conduct.

A generous philanthropy program, and commitment to a cause, can comfortably sit side-by-side with dishonest accounting, excessive senior executive compensation, autocratic and harsh management, deferential governance, poor labour and sourcing practices, and denial of environmental impact. Philanthropy provides a reputational sheen, but it doesn’t de facto require ethical conduct or a socially astute business strategy. Philanthropy buys goodwill but it doesn’t drive responsible behaviour nor build social trust.

If The Economist is right, and I think it is, and the decline in spending on smoke-screen philanthropy is NOT being matched by a retreat from investment (time, focus, intensity) in better behaviour, then maybe out of the current crisis we will see a steady push-back within companies against insular corporate boards, inappropriate rock star-like CEO salaries, and short-sighted and opaque business strategies.

Comments on Empire Club Social Media Event

15 May 2009

Although it was a week or so ago, the event I moderated on Social Media and Corporate Trust in Toronto has resulted in a number of posts and articles.

For those who want to find out what others took away from the session take a look at these:

  1. From Paul Beier who blogs at One Degree (“The inside scoop on digital marketing and social media in Canada”).
  2. Panelist Tom Watson did a follow-up post on the Canadian Business magazine blog.
  3. Brian Jackson, reported on the discussion for ITbusiness.ca

I am grateful for the reports since it helps me remember what others said. As a moderator, I am too busy worrying about what the next question is to pay the attention I should to what the response was to my previous question. A failing I know, but one I’ll work at overcoming. :)

Speaking Notes on Trust and Social Media

07 May 2009

I moderated a panel today at The Empire Club of Canada on Social Media and Corporate Trust which included Peter Aceto, CEO of ING Direct Canada,  Suzanne Fallender, manager of CSR for Intel USA and Tom Watson, senior writer with Canadian Business magazine. Thanks to some lively points of view, and sharp questions from the audience, the panel was deemed a success.

Here are the remarks I made to kick off the panel . . . sorry for the length:)

It is self-evident that trust in companies has declined significantly over the past few years, although if you want to argue the point I can direct you to any number of studies, including H&K’s own corporate reputation surveys which make the case.

It has also become manifest that what can be called social tools – YouTube, Flickr, Facebook, Twitter and blogging among others – have been catalysts for impugning corporate behavior (just ask Domino’s pizza, McNeil Consumer Healthcare, Taser Intl., Continental Airlines or Dalhousie University). What is less obvious is how these tools can be used by organizations and companies to build or rebuild trust.

There are a number of hypotheses about social media and trust which I hope we can test in our short panel discussion. By doing so I think we will get a better understanding of what those of us who manage reputation both inside and outside organizations have to think and do differently to be effective.

I would like to get things going by posing a few axiomatic beliefs of my own about social media. My point of view comes from four or five years of blogging, engaging in social networks such as Facebook and Twitter, providing counsel to clients on transforming crisis, reputation and issue management strategies through the analysis and application of new social tools, teaching new directions in communications at two Canadian universities and discussion online and in person with people much smarter than me.

Let me start by arguing that companies and organizations today are facing what can only be called a sea change in the universe of idea generation, news gathering and information sharing whose only precedent may be the impact that the creation of the printing press had on industrial society after the 15th century.

I can think of at least three things that social media change that can be both obstacles to and facilitators of creating trust, and make many of our past reputation management approaches obsolete:

First . . . the concepts of personal expression and friends first

In his recent book, Here Comes Everybody, NYU professor Clay Shirky says that “We are living through the largest increase in human expressive capability in history.” The midwife of this expression is the ability of anyone to post or publish anything, anytime and anywhere and to have an audience for this expression. Now the audience may be small and may only be an audience of friends, but you can never be sure that it will stay small or that it may not persuade a much larger network of people or dispose them to act.

It is important to recognize that this is not about the technology that makes interaction possible but about the anatomy of the interaction. It is an interaction that is consistent with our oral tradition of politics and storytelling. Like 17th century coffee houses, social media are now the place to assemble, to exchange ideas and if desired to organize action/dissent.

One of the most difficult things for senior executives and communications professionals to get our minds around about this change is that our strategies now require people more than communications products, because the expectation now is for personal relationship and responsiveness and not just facts and information.

Second . . . group formation

Clay Shirky also goes on to say that “By making it easier for groups to self-assemble and for individuals to contribute to group effort without requiring formal management (and its attendant overhead), (social media) tools have radically altered the old limits on the size, sophistication, and scope of unsupervised effort.” In other words, we now have what my colleague – Brendan Hodgson – calls empowered detractors and supporters – individuals and small groups who can challenge a point of view, force transparency, expose malfeasance and also become allies and friends.

What empowers them is the ease with which they can assemble in small but potent networks using social media. And because of the low barriers to participation and action, power increasingly resides in the hands of the committed and the concerned.  The Motrin Mom’s campaign is one recent example in which an angry individual used social tools like YouTube, Flickr and Twitter to defeat an advertising campaign.

Third . . . A vastly different “news” dynamic

Because news can come from anywhere, and increasingly frequently comes to the public consciousness not through the traditional news infrastructure but through social networks, listening, vigilance and conversation are more important than they have ever been in the past.

At the same time, although circulation for newspapers is declining and publications disappearing, our appetite for news (albeit news that we want to choose rather than have imposed) keeps growing. That means companies that want to affect the way they are seen will have to be prepared to provide a steady flow of news and information – supported by crystal -clear conversation and dialogue – rather than waiting only for what in the past they have judged as “worthy” of being released.

So what do these three observations mean for strategies meant to sustain, defend or build trust in corporations and organizations? I have at least four ideas:

Communication strategies that depended on influencing reporters in mainstream news infrastructure now must include ways to incite interest and engagement from a range of individuals, groups and networks. 

Communication strategies that depended on the publication of information must now be scrapped in favour of strategies that find and/or build communities of interest and small networks of advocates, champions or apostles.

Strategies meant to influence government or specific social behaviors or even encourage buying must now recognize that the new backbone of influence is the small – but highly connected – networks of ordinary people. Media “impressions” – the historic but oh so inadequate measure of the success of communications programs by counting how many people likely had access to a certain media piece – just doesn’t tell us much anymore.

And finally . . . Generic brand building strategies should now be supplemented – okay maybe even replaced – by programs that start from people, that engage networks, and that reveal personality because as a Deloitte consultant once wrote “It’s harder to distrust a person than it is to distrust a corporation.”

Blogs on Leadership

04 May 2009

CEOs must have a tough time deciding what to read among all the blogs, online news sites, management school journals and mainstream media which offer points of view on how CEOs can lead better. Alright, they likely don’t read any of them.

Should they change their minds, here is a recent addition to the plethora of leadership punditry that may be worth watching: The Syd Blog is by Sydney Finkelstein, the Steven Roth Professor of Management at the Tuck School of Business at Dartmouth College. The blog is subtitled “Insight into the force and follies of leaders.”  His latest post looks at how Bank of America CEO Ken Lewis, who was stripped of his chairman title last week, may still lose his CEO position even though Bank Of America is run by what Finkelstein calls a “rubber-stamp board.”

Sounds like Finkelstein would not be displeased.

Tightening the Rules

26 April 2009

The legislators in the Canadian province in which I live recently charged the Ontario Securities Commission with reviewing corporate reporting standards in order to establish best practices for disclosure of environmental, social and governance practices. The commission has been asked to report back to the House by January 1st of this year. The announcement warranted only about 125 words in Canada’s national newspaper which means it can easily die a languid death.

Behind the order to review disclosure practices (other than the standard opportunism of politicians looking to take personal advantage of a crisis in trust), is acknowledgment that the public and minority shareholders have this indistinct but genuine feeling no one in corporate boardrooms is championing good behaviour.

Never having sat on a corporate board (I have been a director on a hospital foundation board) I have no idea how discussions about things like executive compensation, minority shareholder rights, and environmental and social commitments are raised and debated.

Having read Dickens, Marx, Althusser and Levy, and being ready to believe anything Gretchen Morgenson writes about boardroom mischief, I do feel a sort of native mistrust that the impact of a decision or policy on ordinary shareholders or a community ever factors into the colloquy.

Worse, I end up silently cheering regulators (although seldom legislators) when they study corporate reporting standards and insist on more transparency, even though I know I shouldn’t given the nasty stuff they can foist on business.

By all appearances, I’m not alone in mistrust.

But I also know that many corporate directors are honest and ethical people. They work hard to balance conflicting interests and to do what is right for the company, its shareholders and the community. So let’s hope that out of the OSC’s review the government doesn’t default to punitive regulation. Rather it should encourage board-lead custody of ethical, inclusive and open behaviour. A good start would be to put forward suggestions for ways boards can collect and aggregate meaningful contributions (not just by shareholder resolutions and voting proxies)from people who deserve to have a say in crucial (not all) decisions — in particular minority shareholders and ‘communities of interest’.

Corporate Blogging: Still Hesitant After All These Years

24 April 2009

More Fortune 500 companies are blogging, but the pace of growth is still shall we say restrained.

The full results of a study by Dr. Nora Ganim Barnes, Ph.D. and Eric Mattson, CEO of Financial Insite
Inc., a Seattle-based research firm are available here and a summary of the key findings are in a news release by the Society for New Communications Research.

Of the findings posted in yesterday’s statement, here are few of particular interest:

  • 81 of the Fortune 500 or 16% currently have public-facing blogs, compared with 39 percent of the Inc. 500, 41 percent of the higher
    education sector and 57 percent of the nation’s Top 200 Charities.
  • 28 percent of the Fortune 500’s blogs link to Twitter accounts
  • 90 percent of the Fortune 500’s blogs have the comments feature enabled

WSJ Takes it on the Chin

15 April 2009

I have no idea if this post from Molly Wood truly reflects Apple’s approach to public relations (“hammer and hammer and hammer and hammer”), or if it is just the usual journalistic hectoring of public relations people doing their job.

But the pull-out quotation from the Wall Street Journal that prompted the piece demonstrates why many business people (and the demos at large) occasionally — okay, often — question the devotion of journalists to seeking truth from facts. Since the WSJ article uses as its source “people familiar with the matter”, “these people say” and “they say” it is also fair game to conjecture, as The Molly does, whether the publication has been spun by a zealous public relations “machine”.

The blame, though isn’t with the public relations people, as Wood accedes, but with lame and now inadequately supported journalism:

 

“It’s not a crime for a company to have a good PR machine. It’s working for
Apple and it has for a long time. But this is a nation that is, at the moment,
finding itself in quite a pickle because we blindly believed everything that
companies were telling us. So, if we’re trying to be skeptical about, say, large
financial institutions and their outlandish and/or reassuring claims, shouldn’t
we also cast the same critical eye on a convenient flood of information that
does little other than improve Apple’s stock price a week before they have to
answer to angry and worried shareholders? Or, hey, maybe the Wall Street Journal
just trying to boost the Nasdaq on purpose. You know, to help the
economy.”

New (?) News Financing Model

09 April 2009

A hat tip to Meghan Warby for pointing this out to me . . . A small independent daily online magazine called Tyee based in British Columbia may have the new financial model for journalism we have been looking for. Tyee is dedicated to tough investigative reporting that “swims against the current” and its editor, David Beers, is asking readers to help finance political reporting during the current B.C. provincial election campaign because of the high costs of such coverage.

But this isn’t just the standard ’send us some money and we’ll figure out what to do with it’ donation approach. Beers wants funders to tell the publication what issue they want it to cover, and that’s how it will direct the funds. The publication is committed to directing the money to reporting on the issue that the donor specifies.

So, if you are concerned about the policies, programs or track record of the candidates on, for example, gang violence in Vancouver or environmental issues, you can tell Tyee when you send in your cheque and it will use it to finance the reporting of the journalists covering that beat for the magazine. The impact? With an extra $5,000, Tyee “could pay for about 30 extra reporter days . . . an extra reporter every day of the election campaign.”

Let’s talk about this.

Maple Leaf Foods’ Launches “Crisis” Blog

25 March 2009

Maple Leaf Foods (not a client) today launched a blog in response to the 2008 Listeria deaths caused by eating its deli meats and, as with much of how the company handled the crisis, it is a very good model for the language and tone of effective messaging . . . frank, honest and contrite. (Although its design is quite lackluster.)

The first post is by CEO Michael McCain and here is how it begins: “Since August 2008 twenty-one Canadians have died after eating Maple Leaf deli meats contaminated with Listeria.  We all watched in horror as the worst food safety crisis in modern Canadian history rolled across the country.” Now that’s frank and the antithesis of how many companies begin apologies after serious events.

Later in the post Mr. McCain writes “This was by far the most awful event in the one hundred year history of our company.  I can’t properly describe the overwhelming sense of grief and responsibility we all felt … I felt, personally (emphasis added).  You may remember seeing me on television back then, apologizing for the tragedy and vowing to develop the most comprehensive anti-Listeria program of any food company in Canada.” He then goes on to outline in details the changes Maple Leaf has made to reduce Listeria findings in its plants.

Even more significant he actually raises three subsequent issues related to Maple Leaf Foods’ safety performance that most people had likely forgotten.

Textbook . . .

Some Corporate Directors Like Conversation

20 March 2009

Buried in a recent survey of corporate directors conducted by McKinsey is a finding that 29% of respondents report that one of the procedural changes corporate boards are making to deal with economic turmoil is “Promoting conversations that are more frank than usual”; further, 24% believe this is an additional change boards should make “to become more effective in managing the global economic crisis”.

No mention is made of whether Twitter is a preferred tool for intermediating this new focus on conversation.