Archive for the ‘CSR’ Category

CSR & The Stomach for Risk

posted by Tara Knight

I was recently at a business networking event focused on arts and culture here in Vancouver. One of the speakers was the director of a theater company, and she told us a story of the perfect sponsorship – and her story struck me. I recently read a post from the Business Civic Leadership Center (BCLC) blog about how corporate citizenship was viewed by the public/business community (Katie Loovis: The Top Ten “Misperceptions” About CSR) and from my perspective, Katie was right on the money about the biggest misperceptions about CSR:

10. Can’t be trusted

9. A legal risk management tool

8. The ONLY job in the company where someone can make a difference

7. How the company supports the CEO’s favorite charity

6. A fad

5. Soft

4. One word – Greenwashing

3. Employee volunteerism, right?

2. PR

1. Philanthropy

The story of “the perfect donor” the theater company told at the event was interesting to me, because the donation of a local mining company would often be simply considered item #1 “philanthropy.” In this case, each year, a local mining company sponsors the development and production of new piece of theater.

For the theater company, the relationship was incredible – it was a stable source of funding that enabled their artists to freely create and explore, and its consistency supported their ability to plan and the financial freedom to develop (potentially) great theater.

Although my company represents a number of mining firms (though not this one), this partnership really caught my attention. What made this relationship interesting to me was why this mining company committed to donate every year – it was not primarily for philanthropy. They value the sponsorship for what it communicates about their core values as a company – the stomach to tackle risk.

The assumption and management of risk is an integral and unavoidable component of the mining business. In this case, it is a core value of their company. Each year they expose their business to significant risk exploring new resources, in business ventures, and pricing in the markets. It is fundamental to the culture of the organization that their employees and clients understand that some risks pay off, and some do not, but retaining the stomach to tackle risks is what continues to drive the company forward. It was the primary value they communicated to their team and their clients and suppliers every year by supporting bold and independent theater.

The theater company spoke quite passionately about how each year the company did not place any restrictions on what the theater piece would be, and hosted an opening night gala for their employees, VIP’s and clients. The theater company openly spoke about how some years the production was awful – and some years it was brilliant. For the artists, the donor’s willingness to support the creation of new theater, great or not great, enabled far greater freedom to explore and challenge new conceptions of their art.

As I listened to the story I thought of how many companies haven’t considered their community contributions this way – not just as being “good businesses” in the community (#1 philanthropy, but also arguably #’s 2, 5, & 7) – but taking the extra step of being a good business in the community and reinforcing their organization’s values though their community investments. For me, this is what CSR can mean – a relationship that realizes deeper benefits for everyone involved.

The Power of Apologies

posted by Boyd Neil
Anyone who has followed my posts on apologies will know how important I feel they are as a way to manage reputation in a crisis. (Forgive the self-reference, but two of the most recent posts can be found here and here.) A colleague in my firm's Seattle office, Drew Arnold, sent me an article from the Oregon Business Journal referencing a June 2009 discussion paper called 'The Power of Apology' from the University of Nottingham's Centre for Decision Research and Experimental Economics. Here is the paper's abstract:

After an unsatisfactory purchase, many firms are quick to apologize to customers. It is, however, not clear why they should do that. As the apology is costless, it should be regarded as cheap talk and thus ignored by the customer. In this paper, we test in a controlled field experiment whether apologizing influences customers' subsequent behaviour. We find that apologizing yields much better outcomes for the firm than offering monetary compensation."

Based on a study of customers using eBay in Germany, the study found among other results:
  1. "Customers who receive an apology instead of a monetary compensation are more than twice as likely to withdraw a (negative) evaluation."
  2. "When money is offered, a higher purchase price makes it less likely that a customer withdraws his (negative) evaluation. An apology works independent of the level of the purchase price."
Why then can't we assume that the propensity to consider legal action when harm has been caused by an accidental event, even if negligence is involved, just might be mitigated by a genuine (and the key here is the word 'genuine') apology?
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