Corporates continue to spawn mistrust, and while shortfalls and scandals aren’t new, the reaction to them is. The internet and media play a big part – a story can break at speed, damaging both reputation and profit. As such, CEOs and senior executives are expected to lead in a transparent and responsible way.
According to Will Smith, Vice President for Property & Market Development at Asda, businesses can’t afford to operate in isolation: “If a company wants to be successful in the long term and build a sustainable business, its interests − and the interests of wider society − must ultimately converge. Businesses have to deliver positive returns to shareholders, but they also have to give positive returns to society.”
Jane Griffiths, Company Group Chairman for EMEA at Janssen, the pharmaceutical division of Johnson & Johnson, comments: “The evolution of social media has facilitated greater transparency and enabled people to have a voice on important societal issues. With their social and economic footprint, companies are in a strong position to affect many people so they need to rise to the challenge.”
It’s up to the leaders of large organisations to win back the trust of stakeholders and wider society. Ian Durant, Chairman of bakery chain Greggs and London property company Capital & Counties Properties (Capco), says: “To some extent there has been a loss of trust in business.
“Companies are, in their own ways, working out how best to remind the public and their stakeholders, including customers, shareholders and employees, what they are doing to manage their impact on society.”
Jane Furniss, Criticaleye Board Mentor, Deputy Chair at homelessness charity Crisis and Senior Independent Director and NED of the Solicitors Regulation Authority, says: “People feel that figures of authority can no longer be instinctively trusted. They start from a position of distrust and expect leaders to earn that trust.”
According to Charlie Wagstaff, Managing Director of Executive Membership at Criticaleye, this is reshaping opinions about what makes a good leader. He says: “The so-called ‘Heroic CEO’, who runs an organisation based on hierarchy and, in effect, their own ego, increasingly lacks the skills to drive long-term, high performance.”
Words and actions
The concept that every company should be a corporate citizen, able to manage its impact on society and contribute in a way positive way, is rising to the fore. “Good citizenship should mean good business… however it’s defined, it needs to run through the organisation and the daily lives of everybody who works there,” says Ian. “It’s about creating the right tone and encouraging the right behaviours.”
Camilla Drejer, Director of Corporate Citizenship for the UK & Ireland at Accenture, says: “Corporate citizenship… needs to exist at every level. It’s not something you can simply mandate; often actions speak louder than words.”
Leaders must translate positive ethos into actionable outcomes. Will comments: “Corporate social responsibility can’t just be what’s on a piece of paper, or in a speech – it has to actually mean something.”
Asda runs its Community Life Programme, which aims to serve its local communities. Under this initiative each store has a staff member called a Community Life Champion, whose role it is to head up activities such as fundraising for local charities or hosting community meetings.
“A couple of colleagues and I did a charity cycle in Northern Ireland; we went to each store and met the Community Life Champion,” Will says. “The links they had in their communities were phenomenal… they had great engagement with charities and local schools, for example.”
Building partnerships and alliances are important. Jane Griffiths explains that in 2014 Janssen launched a new initiative to share clinical study reports through an agreement with Yale University’s Open Data Access Project, increasing transparency around drug trials.
“More collaboration with other industry players, academia, patient advocacy, health systems and governments – which maintain a constant focus on improving trust in our company and industry − is paramount,” she adds.
Leaders need to be actively involved and prove there is authenticity in what they say. Gavin Dunn, Director of BREEAM, an assessment method for sustainable buildings, which is part of BRE (Building Research Establishment), says: “We need to live by our own rules… Cultural change only comes when everyone believes it, not when the CEO says it.
“For us at the top, there is a huge push around health, safety and wellbeing, for instance… At every meeting the CEO asks: ‘What have you done to improve things?’ If this happens at the top and across the company, people will constantly look to improve because they know it’s expected.”
According to Jane Furniss one of the “biggest challenges leaders have is that it’s easy for words to sound hollow and for people to be cynical”.
“Lots of companies have ‘integrity’ listed as one of their values but the behaviour of leaders and employees contradicts that entirely,” she explains. “You have to keep demonstrating that you mean those values by… how you treat those around you and how you live your life, inside and outside of work.”
A double bind
Good leadership should never be undermined by certain parts of the business. Charlie comments: “Boilerplate statements and marketing slogans will be torn apart in the bear pit of social media if there are inconsistencies with business practices.”
Gavin explains that BRE is in the process of divesting company pension funds from products and services that could be perceived as negative in the future, taking specific action to reduce the company’s exposure to climate change, for example.
There is a greater sensitivity towards supply chains, especially in the food industry – just look at the aftermath of the horsemeat scandal in the UK and Europe. Ian says: “Trust [in] the sourcing of products, where they come from, how they’re made and put together, is an important element in the value of a company. [Leaders] who ignore that, ignore it at their peril.”
This is crucial for an organisation of Asda’s scale, says Will. He explains: “We can improve those systems, which can then flow down to external partners. We have standards, beliefs and values – it would be inconsistent if we didn’t share those, and seek others that share them.”
There is no simple answer or quick solution when it comes to corporate citizenship and responsible leadership; mistakes will be made along the way, especially by companies with thousands of employees spread across the globe.
As Will puts it: “Companies don’t always get it right. When this happens leaders must learn; it must be fixed and we should move on. It’s continual learning… core values should remain consistent but the environment is constantly moving and we have to evolve in order to meet the standard expected.”
By Dawn Murden, Features Editor – Advisory
Want to read more on this subject? See Charlie Wagstaff’s article ‘The Corporate Citizen’