Managing Responsibly

Recent corporate scandals, which have led to the near demise of some of the world's largest corporations and have ended the careers of numerous CEOs, illustrate a strong correlation between enforcing ethical behavior and business results. Empirical research also confirms a link between CSR, risk ratings, reputation standing, and various economic indicators over a number of years. However, it would be foolish to think of the adoption of CSR practices as a predictor of business success. CSR, an indicator of a well-run company, along with an effective overall strategy, high-quality products and effective branding, smart investments and innovation, and an ability to learn and adapt faster than competitors to changing conditions combine to make a successful company (Waddock and Smith, 2000).

Managing an organization responsibly is not in itself complex or entirely new. For centuries smart managers have recognized that employees are more productive when they are treated with respect, and valued and rewarded for what they know. Successful companies recognize that before they can deliver reliable high-quality product or service they must spend time with their customers to understand their known and, more importantly, latent needs.

However, what is new is that corporate responsibility now takes place in a context in which business is more

• powerful and influential,

• under greater scrutiny through the media and the Internet,

• under pressure for more than financial results from investors,

• under pressure from powerful activist groups, and

• mistrusted by large parts of the general public (Goyder, 2003).

Corporate leaders who acknowledge these conditions ensure that in all of their business relationships there is a clear and consistent idea of why the company exists and what it stands for. This is how trust and loyalty are created. They also recognize the competitive advantages of building integrated organizations, in which all stakeholders are networked in an effort to build a truly open and responsive company. Their leadership styles are visible and consistent, while allowing others to assume greater responsibility.

Successful corporate leaders have found ways to break down the walls of functional silos that inhibit accountability and communication. Their senior management teams have bought into some simple, smart business practices - which avoid polluting and accompanying fines; which respect and value employees; and which contribute resources to the community in ways that not only grow their business, but the community as well. These executives are also effective at breaking through the intricate web of managers whose self-interests and internal politics can undermine a company's directions, success, and ultimately, its public trust.

Today's responsible company seeks a clear understanding of stakeholder expectations, yet does not raise the bar too high in delivering on them. The company's values do not only rest on the wall for all to see, but are integral to strategic planning and decision-making.

Lastly, but no less importantly, successful leaders admit where their companies face significant challenges or have failed. They also admit what they do not know about running a sustainable and socially responsible company.

Having successfully made the transition from chemicals to bioscience, Monsanto pioneered the development of genetically modified crop seed that reduces the need for pesticides and herbicides. Company officials, however, never anticipated the major opposition from environmental groups, consumers, and antiglobalization activists, and the public fears of genetically modified foods. In 2000, then CEO Robert Shapiro admitted as much: "We learned that there is often a fine line between scientific confidence, on the one hand, and corporate arrogance on the other We didn't listen very well to people who insisted that there were relevant ethical, religious, cultural, social and economic issues as well." Today, Monsanto continues to struggle with a tarnished image and lackluster financial performance (Vidal, 1999).

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