Adm 1301 midrerm
Chapter 4 & 13.
STAKEHOLDER
Stakeholders: Individuals or groups who can influence or is influences by a organization’s purpose (NGOs, Society, charities, suppliers, employees owners, etc.)
Managers need to identify stakeholder to:obtain resources
And maintain legitimacy of business
Categories of Stakeholders
Primary: employees, shareholders, suppliers, customers
Secondary: local community, government, media
External: owners, associates, employee association, directors
Internal: CEOs, support staff, operators
Normative: those to whom the organization has obligations Istakeholder from whom the organization has accepted benefits), i.e. employees, suppliers
Derivative: Those whom the organization has not accepted benefits, but hold power over the organization (government, media, NGOs)
Managers are also stakeholders
Reasons to be against the stakeholder concept?
Categorization - it’s difficult to identify and prioritize stakeholder
Challenges in meeting expectations - no clear statement of stakeholder expectations and trade-oggs
Dilution of management focus - stakeholders diver management away from operations
Impractivality of shared governance - impractical to have competing interests gover an organization
Reasons for the stakeholder concept
Responding to stakeholders is good business
Ignoring stakeholder can have consequences
Identifies the range of individuals who loyalty is needed from
A rights holder is an individual/group that holds legal or inheritance right of protection, respect or remedy
Salience: the degree to which priority is given to competing stakeholders
Power: the ability to get a firm to do something that it otherwise would not do.
Legitimacy: perception that the actions of an entity are desirable, proper or appropriate
Urgency: the degree to which a stakeholder claim or relationship calls for immediate attention and exists when a claim or relationship is of time sensitive nature and important to a stakeholder
Matrix Mapping : categorizing and organizion’s stakeholders by their influence, according to two variables and plotting them on a 2X2 matrix.
Allows managers to asses power of stakeholder, whether or not they have means to influence organization
Problematic: oppose course of action and relatively unimportant. Respond by giving educational programs, adjusting organizational plans to accommodate them, preparing defensive plans against stakeholder coalitions.
Antagonistic: Oppose or are hostile to course of action, but very imports. Respond by identifying coalitions and taking defensive action. Prepare for undermining of supporters and objections.
Low priority: support course of action, but are unimportant. Respond by promoting involvement with supporters and giving educational programs.
Supporter: support and important. Respond by providing information to reinforce position, ask supporters to influence indifferent stakeholders.
Y axis: oppose or support corporation
X axis: importance of stakeholders
Resource dependence: when a stakeholder is supplying a resources and may exert a form of control over it due to the amount it controls, non-substitutability of the resource or the essentiality of the resource
Influence strategies depends on types of resource control (withholding and usage)
Withholding: stakeholder discontinues providing resource with the intention of changing behaviour
Usage: stakeholder continues to supply a resource sbut specifies how it will be used. More likely when collarboations are emerging
and types of influence pathways (direct and indirect)
Direct: stakeholder manipulates flow of resources themselves through withholding or usage.
Indirect: Stakeholder has an ally manipulate the flow of resources by withholding or through usage conditions. Indirect strategies require substantial communication between stakeholders — which is hard to do.
FOSTER relationships
F: reading a foundation - incorporating relationship into org. Missions and guidelines
O: organizational alignment: internal systems and structures need to be aligned to support collaboration
S: Strategy Development
T: Trust Building: Essential for stable social relationships as it promotes understanding
Evaluation: effectiveness must be assed
R: repeat
Social Capital: any aspect of a corporation’s organizational arrangement that creates value and facilitates the actions of stakeholders within and external to the corporation.
ISSUES
Issues relating to ethics, responsibility and sustainability:
Issue: point where differenct view are helf of what ought to happen
Watrick and Mahon expanded the definition of a corporate issue by identifying:
A controversial inconsistency based on 1+ expectation gaps
Involving management perceptions of changing legitimacy
That occur with or between views of what corporate performance should look like
Imply an actual resolution that creates significant impact on organization
Issues management: systemic process by which corporations can identify, evaluate and respond to economic, social and environmental issues that may impact them. (purpose is to minimize surprises, not minimize issues)
Gives companies a competitive advantage, corporate behaviour is consistent, less likely to make a social.ethical mistake
Issue Life cycles
T1: an issue is emerging and has any of the 6 characteristics
Terms have yet to be defined
One of the stakeholder will define the issue and make it current
Deals with matters of conflicting values
Not a problem that experts can easily solve
Trade-offs are possible
T2: Awareness increases (perhaps due to media)
No response yet
Government is reactive
Urgency unclear
T3: issue cannot be ignore
Responses widely discussed and stances taken
Government is active
All stakeholder recognize importance
T4: Issue peaks, potentially a crisis
NGO seeking settlements
Government being proactive
Orgos playing defense
T5: may not be relief, because issue awareness may persist
Issue materiality (sustainability materiality): a question or matter that is sufficiently important to warrant management attention. Allows focus on particular economic, ethical, social, environmetnal, financial impacts
Steps to management process
Identification of issues
Global value chain
Research, surveys, monitoring
Analysis
Hwo do issues impact businessÉ
Ranking or priotizing of issues
What life cycle are we in
Formulating issue response
Implementing issue response
Monitoring and evaluating issue response
CRISES
Sometimes issues become crises
A crisis: a turning point, a situation that has reach an ustable critical point. Can have catastrophic consequences for stakeholders, rights holder and the organization.
Crisis management: approach to remove risk and uncertainty, have more control over events
There are four stages to a crisis:
Prodromal (warning signs and symptoms) —-> Acute (crisis has occured, damage results) —> Chronic (cleanup or post-moretem lingering) —--> Crisis resolution (organization has recovered from the damage)
Crisis Management stages
Avoiding the crisis
Preparing to manage the crisis
Recognising the crisis
Containing the crisis
Resolving the crisis
Profiting from the crisis
CHAPTER 12 (13 in textbook)
What do NGOs seek to influence
Animal welfare vs rights
Technology
Economic
Social development
Civil Society: voluntary, community and social organizations or institutions that contribute to the functioning of society
Non governmental organization: groups that holds attitudes about an issue confronting society. They make claims or demands that businesses take action that will be consistent with groups principles/ usually, but not always non-profit organizations (PETA, MADD)
Public interest groups: in the context of their influence on public policy formation
Special Interest Groups: association that seeks the advancement of the financial interests of it’s members
When can NGOS exert pressure on business to effect nonmarket objectives
May be ablo to threaten businesses with harm
Bouycotts, letter-writing, demonstrations, sitouts
Business respond by changing practices -> serving NGO goals
Transaction costs
Varies by industry based on capital/sourcing costs
Natural resources: more likely to resist
Consumer goods: less likely to resist
Brand: greater value = more susceptible to NGO pressure
Competetive position: companies may pre-emptivley calculate to NGOs to diver attention to competitors.
MEDIA
A stakeholder that influence public/employee views
Often portrays business
Regulatory: print media, national media canada: CRTC
Dealing with media is a part of managers’ responsibilities
Can influence public views
businesses also influence the media
Libel chill: when a business threatens legal action if a particular article/book is published
Media spin: PR experts putting a particular spin on corporate events
Social Media: Online interaction/communication enabled by tech tools
Characteristics: instant, interactive information echanges, many topics, low cost, peronal/work lines blur
Businesses held more accountable
Corporations do not have control over social media users
A policy development institution (aka think tank): researches and analyzes various important political/economic/social issues confronting business and society.
Spirituality:an individual’s sense of peace or purpose with him/herself and the connection to others that provides meaning to life and sense of self.
SLAPP (strategic Lawsuits against Public Participation) - legal actions for the purpose of shutting down criticism
CHAPTER 7/8/8???
Corporate Social Responsibility (aka. Organizational responsibilitiy): the duty an organization has towards itself and society
The way a corporation achieves a balance among its economic, social and environmental responsibiliites in it’s operations so as to address shareholders and other stakeholder expectations
Duty
Responsibility
Business
Moral Agency
Societal contract with businesses:
FOR CSR
Business must satisfy society’s need
Business and society are interdependent
CSR is good for the bottom line
Social actions improve public image and goodwill
Proactive approach is better than reactive
ANTI CSR
Profit maximization is the primary purpose of business
Business is responsible to shareholders
CSR would give too much power to business
Business involvement in social metters increases costs
Business and society are interwoven and expectations are placed on business due to three roles as:
An institution in society
A corporation or organization in society
Individual managers whoare moral actors
These three roles are expressed in legitimacy, public responsibilitiy and managerial discretion
Moral responsibility: we are accountable for the wrongful acts we perform and for injurious effects when this was done knowingly and freely
Commit: to personally do something
Omit: personally neglect to prevent something from occuring
Co-operate: provide the resources to someone else for something to occur or prevent something from occuring
Induce: Promote a certain behaviour through incentives/other means
Business organization: socially-constructed artifact
Private Property: belongs to someone weather sole proprietorship or multibillion shareholder-owned
Nexus of Contracts: built by contractual relationships between different interested parties that interact
Legal Fiction: a separate entity under the law
Four different kinds of business cases of or for sustainability
Reactionary - focusing on profit seeking behaviour/minimized costs
Reputational - how the business is portrayed in media
Responsible - striving for success measured by CES indicators
dialogue-based - engagement with broad range of stakeholders-> collaboration
Social responsibility theories:
Amomral view: traditional view of business as JUST profit-making entity
Personal view: corporations are people and can be held accountable for actions
Social view: corporations are social institutions with social responsibilities
Moral minimum: duty of one individual totward another
People have a duty to cause no harm before preventing harm, removing harm and doing good
Complience with the law is often insufficient for conducting an ethically responsible business
(do no harm) - (prevent harm) - (remove harm) - (promote good)
Can we hold businesses accountable for actions, considering that they are legal fiction?
Legitimacy: society’s granting of legitimacy and power to businesses, reinforced by certifications
Society can: grant, impose a balance and remove this power
Capitalism: theoretically capitalism leads to economic prosperity
Moral agency: businesses do not have a moral responsibility, only people do but
Society also expects broader responsibilities - society also has frontier expectations to represent those rising standards
Social Enterprise: a model of business operation where some or all profits are deliberately used to further social aims
Corporate philanthropy: the effort of business to contribute to society socially
For: means to express CSR to community, promotes image of good citizenship, business benefits from volunteer sector, success linked to community’s health
Against: social welfare is the job of government, corporation might become accountable for charity, funds given belong to shareholders, no guidelines to measure monitor or evaluate corporate giving
Cause related marketing: purchase of particular product resulting in a donation being made
Strategic giving: an attempt to rationalise the shareholder interests whereby the corporation benefits from funds given
Social Venture Philanthropy (aka high-engagement philanthropy/ new philanthropy): the investment of human and financial resources by corporations in a non-profit community development agencies to generate a social return instead of a financial one
Forms of support: providing facilities, allowing time off, assisting with personal expenses incurred while undertaking voluntary activities
Corporate sponsorship: a partnership which has been established for mutual benefit between a business sponsor and an event or non-profit. (ex. Sports, cultural and educational events)
Argument FOR: brand image, awareness, target marketing
Argument AGAINST: cause association
Corporate voluntarism: the time and talented employees commit to community organizations w/ support and consent from employers who recognize the value of such efforts to society
Employee voluntarism
Advantages: benefits employee morale by enhancing professional skill development, good for community, sets a good example, improves the corporation’s local and national image/profile
Corporate policies regarding voluntarism: encouraging, enabling and promoting
Reputation Management: any effort to enhance corporation’s image and good name
Several stages to successful implementation:
Disadvantages: Possible employee resentment at perceived coercion to participate, cost, some employees may overcommit themselves
Identification of desired perception
Recognition of the significance of image
Awareness of influence of interactions w/ stakeholders on reptation
Continuous efforts at maintaining relationships with stakeholders
Reputations take a long time to establish and can be destroyed quickly
Corporate Citizenship: occurs when a corporation demonstrates that it takes into account it’s complete impact on society, environment and economy
Business citizenship: includes the responsibilities of corporate citizenship on a local/national basis
BENEFITS: (reputation management, competetiveness/market positioning, license to operate, leaning and innovation, risk management)
Corporate Sustainabilitiy: activities demonstrating the inclusion of social, environmental and economic responsibilities in business operations
Sustainability = Enough, for all, forever
Compliance-driven CS: follow regulations
profit -driven CS: focus on bottom line
Caring CS: go beyond legal compliance
Synergistic CS: well balanced solutions
Holistic CS: fully integrated CS
Social Impact Management: the field of inquiry at the intersection of business needs and wider societal concerns that reflects and respects the complex interdependency between the two
Evalues three aspects of business
Purpose: what is the purpose of a business
Social context: are the right/responsibilities of multiple stakeholder considered
Metrics: how are performance and profitability measured
Triple Bottom Line: evaluated a corporations performance according to a summary of Economic, social and environemntal value the corporation adds or destroys
Criticised as of being misleading/having minimal value
Social Enterprise: a model of business operations where some or all profits are used to further social aims
Non-profit entreprises that contribute all profits to social initiatives
For-profit entreprises that divide profits between social initiatives and shareholders
Social Entrepreneur: An innovative, visionary leader of a non-profit with real-world problemsolving creativity and a high awareness of ethical consiterations
A charitable foundation: a corporation or trust that operated exclusively for charitable purposes
The VBA (value+ balance+accountability= Proper role of business in society) Model: model that integrated and unifies CSR. BE, SM, SUS, CC.
RESPONSES TO CSR
Risks of not practicing CSR
Damaged reputation
Negative media coverage
Consumer boycotts
Lost sales and revenues
Labour disruption
Blockages, attacks against assets
Decrease in share value
More onerous financing or insurance terms
Increased spending to remedy past damage for core activities
Increased shareholder activism
Failure to attract and retain quality employees
Civil lawsuits, including class-action initiatives
Criminal and regulatory prosecution
Suspended operating permits
Liability for the conduct of subsidiaries and arm’s-length affiliates, for example suppliers
Increased and onerous government regulation
Difference in Large corporations vs smalle corporations
Large Corporations:
Accountable to alarge number of stakeholder
Responsible to sciety at large
Cornceerned with brand image and reputation
Shareholder pressure; ethical investing
Based on corporate values
Formal planning for CSR
Emphasis on standards and indices
Involvement of CSR professionals
Prominent campaignp; for example, cause-related marketing
Aawareness through CSR reporting, publicity
Small Business
Accountable to fewer stakeholders
Responsible to local communities
Concerned about retaining business
Pressure from lenders
Based on owner values
Unlikely to be formal planning
Emphasis on intuition
No dedicated personnel
Small scale activities: for example sponsoring local sports teams
Often unrecognized as CST activities
First step in measurement of CSR involves some type of auditing
Social auditing: systematic assessment that identifies, measures, evaluates ethe effects an enterprise has on society (not covered in the traditional financial reports)
Purpose of social auditing is to provide: information to stakeholders about the impact of the enterprise on society, basis of accountability for the social consequences of corporate activities
Measurement of social responsibility constantly changing and amangers must keep up with developments
Three reasons why reporting becoming increasingly necessary: to help maintain corporation’s reputation, to meet demands of stakeholders, to sustain corporate profitability
Corporate Reputation: perceptual representation of a corporation’s past actions/future prospects that describes the corporations overall appeal to all of its key constituents when compared with other leading rivals
CHAPTER 5 (7/8/9)
Community Investment: an approach to describing CSR activities, defined as the efforts of a corporation to help develop a community and create economic opportunities through a variety of means from donations to direct involvement in commercial activities
CSR PROCESS
Step 1: measuring CSR involved auditing
Social auditing: systematic assessment that identifies, measures evalues and reports the effects an enterprise has on society not covered in financial reports
It’s purpose is to prove information to stakeholders about the impact of enterprise, a basis of accountability for the social consequences of corporate activities
Results: CSR reporting (aka corporate sustainability reporting) is the management function that documents corporations economic/ethical/environmental responsibilities and communicates this to stakeholders
Corporate reputation: perceptual representation of a corporation’s past actions/future prospects/ Describes corporation’s overall appeal to all stakeholders when compared with rivales. Often associated with corporate image, related to character.
CR is a one-way relationship exploring stakeholder perceptions of a corporation, while CSR is a two-way relationship
Corporate reputation risks: product/service quality and safety. Environmental impact. Mishandling an incident/crisis.
Benefits of well-managed reputation: Builds stakeholder trust, may enable higher prices, increase customer loyalty, minimized the risk of damage from crisis
Stakeholders expect CSR accountability:
Most influential stakeholders:
Shareholder and financial institutionts - institutional investors and individual shareholders interested in ethical and social investing feed more information on CSR
Employees: informing employees of the corporation’s CSR initiatives results in benefits like increase employee satisfaction reduced turnover
Consumers: consumers are concerned about aspects of the goods/services they purchase ex. Where there were produced, materials, employee treatment
Social auditing approaches include
Inventory: a listing of social activities without evaluation
Program management: a statement describing particular programs
Process: a more elaborate approach incorporating the inventory and program management approach of how each program came into being
Cost or outlaw: a social economic operating statement that tabulates the expenditures an enterprise make on social objectives LESS the negative costs for social objectives not addressed. The approach is to measure the total social impact
SR accounting: a system of accounting that tabulates social costs/benefits with the objective of the best social return for investment
Social Indicators: an audit of the community is conducted using social indicators to provide data on needs.
Transparency: the extent to which financial and non-financial information is made available to stakeholders
Financial reports/stock market data
Transparency is more than disclosure: it’s two-way communication and acting on feedback
Environmental (environmental stewardship)
Climate change, biodiversity, air quality etc.
Social (human flourishing)
People and workplace, gender, LGBTQ+, BIPOC, community involvement
Governance (orgos sutainability)
Corruption, Leadership governance, Audit committee structure, Shareholder rights
Currently no legal requirements to disclose ESG in Canada
Dozens of codes and standards are used to evaluate sustainability
Codes and standards should be more transparent
Effort should be made to reduce compliance costs
Data used should be improved
Intraorganizational communication: newsletters, meeting agenas, sustainability committee meetings
Other stakeholders: complete sustainability report, brochures etc. , news media is important, word of mouth, influencers
Credibility: information that is believeable
Balance: presenting an unbiased picture of organizational performance
Integration with strategy: clearly tying sustainability goals into business goals
Comparability: enabling comparisons to previous reports of the same firm, and information from the reports of other organizations
CSR and Profitability
Corporation have financial management systems and financial metric initiatives fall into three categories
Firm process: the value created can be identified by readily available measures
Firm outcomes: the value created is less obvious and may not be measured
External outcomes: The value created is more positive perceptions of external stakeholders, increasing sales of corp’s products.
Financial metrics are the easiest to measure, -> CSR, operational and lastly, strategic .
CSR Trends
Stakeholders will continue to become more important, CSR extends along supply chain — while NGO relationships are more challenging
Key CSR issues: environment, poverty reduction, governance
Focus on CSR reporting, measurement, standardization
As CSR becomes more embedded
A multiplicity of standards exist, but GRI standards are the most used
Lack of standarsized systems make it hard to compare
Reporting/Disclosure Trends
Disclosing any conflict minerals in supply chain
Report on material non-financials/intangibles
Report on ESG in supply chain
ESG disclosures for listing on stock exchanges
GOLD STANDARD BENCKMARK KPI
Environmental
100% renewable
Zero footprint
Fair share or zet zero water
100% recycled
Net zero waste
Protects or restores biodiversity
Net positive on ecosystems
Social
Zero injuries
100% of employees have labor rights
Living wages
10% or less turnover rate
75% local workers and suppliers
Governance
Makes a profit
100% of taxes paid
Zero ethical violations
Mirrors stakeholder demographics
Full disclosure is an affirmative duty
CSR is linked to profitability, but the relationship is complex
Pure pursuit of profit is environmentally/socially irresponsible
Corporations have multiple objectives, some of which are environmental/social
Positive impact of CSR on profits
Network for Business Sustainability proposes thinking of sustainability as value creation:
Firm processes: value created readily measurable (e.g., energy conservation program benefits > costs)
Firm outcomes: results may not be measured, because value is less obvious (e.g., employee satisfaction and productivity) • External outcomes: external stakeholder perception