Building Organisational Reputation through Responsible Corporate Social Investments

Bolaji Okusaga

What’s Your Organization's Objective?

• Corporate Objective articulates a Organization's manner of doing business and the kind of relationships it need to create with its Stakeholders to deliver on its purpose

• These objectives are encapsulated in the organization's mission, vision and culture and help set the tone for interactions with its Stakeholders

• Corporate Objective asks the questions: What is the purpose of our organization? What value do we intend to create? What kind of ideals bind our stakeholders together?

• By answering these questions, Corporate objective helps an Organisation to differentiate, plan, execute and deliver exceptional performance

Identifying Stakeholders

Anyone on the Street

Influencers

Core Target

The Organisation and its Stakeholders

EMPLOYEES

MEDIA

SUPPLIERS

COMPETITORS

SHAREHOLDERS

GOVERNMENT

GENERAL

PUBLIC

CUSTOMERS

THE

ORGANISATION

Corporate Objectives and Stakeholder Theory

VALUE AS COMPASS

Stakeholder theory begins with the

hypothesis that values are part of doing

business

It address the Principle of Who or What Really Counts by establishing

which groups are Stakeholders in a

corporation

INPUT / OUTPUT MODEL

In traditional input-output models

corporation use the inputs of investors,

employees, and suppliers and converts

it to usable outputs

By this model, firms only address the needs

and wishes of four parties: Investors,

Employees, Suppliers and Customers

CONTEMPORARY APPROACH

Contemporary Stakeholder theory recognizes other

parties such as government, political

groups, trade associations, trade unions, communities, associated corporations as

Stakeholders.

The theory recognizes that Stakeholders are

constituencies that contribute, either

voluntarily or involuntarily, to an Organisation’s wealth-creating capacity, and may be its beneficiaries and/or

risk bearers

Understanding Stakeholder Dynamics

Dormant Stakeholders

Apathetic Stakeholders

Advocate Stakeholders

Adversarial Stakeholders

INACTIVE

ACTIVE

NON-SUPPORTIVE SUPPORTIVE

Source: Brad Rawlins, Brigham Young University

The Demands of Stakeholder Engagement?

• Every organisation relates with different publics - from the Shareholders, Staff, Customers, Industrial Unions, Government and Regulatory Bodies, Counter-parties, the Press to the local community.

Relationships and Expectations

• These stakeholders are different in terms of their interests and expectation from the organisation

Differences and Divergence

• The organisation therefore needs a deep-seated understanding of these interests and expectations to maintain a dialogue, enhance relationships and retain its goodwill among its stakeholders.

Understanding the Dynamics

Managing Stakeholders

Stakeholder Management Process

Strategy Managing Expectations Action Plan

Stakeholder AnalysisAllies Assets / Constraints Opponents

Problem IdentificationAffects Objectives / Goals Information Gathering

Corporate Objective and Corporate Reputation

The organization's vision, mission, strategy, corporate

concern and market objectives must have relevance to the

outside world

The Community outside the Organization must understand

company’s overall objective and to understand the market

environment in which their organization operates

The outside world must understand the organizations

view of the regulatory and competitive landscape

Corporate Reputation is about getting the world outside the organization to buy into the organization’s Corporate and

Market Objectives

Outcomes of Sound Corporate Objective and Good Reputation

Growth in Market Share

Market Leadership

Impressive Turn-over

Increase in Market

Capitalisation

Huge Gross Profit

Good Operating

Margin

Stock Price Commands Premium

Absence of Crisis borne out of a healthy Operating Environment

What’s Corporate Reputation without Responsibility?

“Our best-regarded companies achieve their reputations by … adhering rigorously to practices that consistently and reliably produce decisions that the rest of us approve and respect.” (Charles Fombrun [1996], Reputation: Realizing Value from the Corporate Image, p. 29.)

The Concept of Social Responsibility

Social Responsibility is a relatively new

phenomenon in business.

Rapid transformation of business landscape and altering of the social framework

Corporate leaders grapple with the fact that businesses’ license to operate have moved beyond

filling a consumption need in society in exchange for profit to

becoming a bulwark for positive social transformation

The rule of the game has suddenly

changed

The Social Responsibility Continuum

Do what it takes to make a profit; skirt the law; fly

below social radar

Comply; do what is legally

required

Articulate social value objectives

Lead the industry and

other businesses with best practices

Maximize Company’s profits by

eliminating all else

Fight social responsibility

initiatives

Do more than required; e.g.

engage in philanthropic

giving

Integrate social

objectives and business

goals

Balance profits and

social objectives

The Era of the Triple Bottom-line

The Laissez faire Approach

The Era of the Watchdog and

Compliance

The Laissez Faire Order

With the development of large corporations coming on the heels of the industrial revolution of the 19th century, there arose pungent environmental impacts and social dimensions to the operation of corporations.

Aside from the rendering returns to investors, payment of taxes to government, dispensing with wage obligations to their employees, corporations couldn’t situate their role within society.

Business For the sake Of Business

Recognition Of AuthorityAnd Tax obligations

The Philanthropic Order

The era of Philanthropy started with business icons such as Andrew Carnegie, David Rockefeller and Gerald Ford and were predicated on enlightened self-interest and the ethical notion that the wealthy should give to the needy in society.

During this era, businesses found it hard to situate their role in the larger social nexus

Giving out of enlightened self interest

The Era of the Triple Bottom-line

• Overtime, society started to question the existence of business beyond the mercantilist motive.

• Faced with greater scrutiny on the outcomes of business, companies started to report outcomes of their operations beyond profits, hence the coming to being of the concept of the triple bottom-line:

Planet• Show the impact

of business on the environment

People• Show the human

and community development impact of business

Profits• Show the outcome

of the exchange of value in return for profits

From Triple Bottom-line to Discussions on Sustainability

The Corporate Citizen

What is the Environmental

/Social/ Economic /

Technological Impact of Business?

How can we

measure it?

How can we reduce the

negative and increase the

positive?

Citizens in Communities

• Faced with the volatile and unpredictable nature of organization/society dialogue, communities have tended to withdraw their trust for the corporate citizen unless it can demonstrate that such confidence is justified in action and not just in words.

• Growing understanding of the social impact of business and rising expectations from society create a demand for higher standards from businesses on the local and global scene.

Organization/ Society Dialogue

Distrust and Suspicion

Principles of SustainabilityPRINCIPLES COMPONENTS Technology The creation, production and delivery of products and services...based on

innovative technology and organization that use financial, natural and social resources in an efficient, effective and economic manner over the long-term

Governance Companies should operate based on the highest standards of corporate governance including management responsibility, organizational capacity, corporate culture and stakeholder relations

Shareholders Shareholders' demands should be met by sound financial returns, long-term economic growth, long-term productivity increases, sharpened global competitiveness and contributions to intellectual capital

Industry Companies should lead their industry's shift towards sustainability by demonstrating their commitment and publicizing their superior performance

Society Companies should encourage lasting social well being by their appropriate and timely responses to rapid social change, evolving demographics, migratory flows. Shifting cultural patterns and the need for life-long learning and continuing education

CSI and Reputation Building

Reputation as a Strategic Business

Asset

Reputation is a critical corporate asset which must

be built in a strategic manner

Loss of Reputation = Death of Business

Corporate organizations such

as Enron, Anderson

Consulting and Worldcom became extinct as a result of the erosion of their reputation

Social Relevance as route to building

Reputation

Beyond the brand concept,

companies build and sustain on

their reputation through social interventions

Possible CSI Intervention Agenda

ECONOMIC INCLUSION

Financial Education SME and Entrepreneurship Trainings

ENVIRONMENT AND HUMAN DEVELOPMENTConservation Water Social Amenities

BUSINESS ETHICS AND INTEGRITYCorporate Governance Transparency and Accountability

DEMOCRACY AND GOVERNANCEPolitical Education Political Participation

EDUCATION AND CAPACITY BUILDING PROGRAMMESSchools Technology Upgrade / Skills Development

Trends in CSR Practice in Nigeria

CSR In Nigeria

The practice dates back to the advent of Multinational Corporations/Institutions in

Nigeria

Major Players:BATNF, Etisalat, Chevron, Shell, British Airways, Dangote, MTN

Major Areas of Intervention:- Education- Youth Empowerment- Health & Environment Issues- Community Development

A mix of social investment, corporate philanthropy and

the need to add value to the society at large

POTENTIAL EMPLOYEES

EMPLOYEES

DISTRIBUTION / CHANNEL PARTNERS

MAJOR CUSTOMERS

REGULATORS

FINANCIAL ANALYST / BUSINESS PRESS

BUSINESS LEADERS

COMMUNITIES / PRESSURE GROUPS

PORTFOLIO MANAGERS / INVESTORS

CONSUMERS

PATH

OF R

EFER

ENCE

PATH OF INFLUENCE

Social Influence and Reputation Management

Source: Regis McKenna

Achieving a Congruence in Reputation Building and CSI

• Organizations must constantly align their Social Responsibility Policy with their Corporate Strategy, to enhance execution and attainment of Corporate Objectives with various relevant publics.

• The four stages of the process are listed below:

Research

Research and Assessment of

current position with the external

environment.

Analysis and Insight

Recognition of Social Needs

Human Development

Priorities

Planning

Building a Framework of

Social Responsibility and Corporate

Social Investment

Strategy

Implementation

Application of the plan

Mining the CSI Opportunity

Organization in relation to

its Stakeholders

The CSI Project

Impact Assessment and

The Social Reporting Process

Thought Leadership

Thank You