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move outwards from the individual at the centre�察�to internal groups
including their immediate work environment�察�colleagues�察�team and peers�察�
and on to external groups�察�suppliers�察�customers�察�shareholders and eventually
on to ever´distant publics and organizations。
Ethics and Social Responsibility 227
ASSESSING OBLIGATIONS
Not all stakeholders will be affected by any one particular strategy or course
of action�察�nor will those that are affected be affected to the same degree。 So
the next step in the process is to see which stakeholders will be affected and
to what degree。 This can be done using a Stakeholder Relevance Matrix�察�as
in Figure 9。2。 This shows which stakeholder groups will be affected by the
decision to relocate a production unit to a new lower´cost country。
Figure 9。1 Stakeholder mapping
You
Organization
Shareholders
Customers
Suppliers
Government
petitors
Department
Teams
Peers
Town/Immediate Neighbourhood
Your Country/Region
Other Countries and Regions
Industry/ business sector
International governments
Wider publics affected
Figure 9。2 Stakeholder relevance matrix
Proposed strategy
Move production to
lower´cost country
Positively affected Adversely affected
Directly affected Employment created in
new country
New munity in new
country
Existing workforce
Existing munity in
existing country
Local subcontractors will
lose work
Indirectly affected Shareholder returns
improved
Home government gets
less tax
Management will have to
travel more
228 The Thirty´Day MBA
The next step in the process is to analyse the specific interests/expectations
and rights/responsibilities of each affected stakeholder group。 Following
through with the example of relocating a factory�察�we can see in Figure 9。3
the different expectations and rights of the three stakeholder groups seen to
be most relevant to this decision。
Figure 9。3 Stakeholder rights and expectations grid
Stakeholders
Customers Shareholders Employees
Rights Be given
information on all
factors concerning
new production
source
To be informed in the
annual report and
accounts or sooner if the
implications will cause
public discussion
To statutory
redundancy
payments
Expectations Any change should
be seamlessly
implemented
That the pany will
treat employees properly
That the move is in the
long´term best interest of
the organization
To be consulted
and given help with
job search
STAKEHOLDER STRATEGIES
Having identified the stakeholders and weighed up their rights and expectations�察�
an organization has basically three possible ethical stances it
can take�此�
。 Immoral business�此�Make decisions that are clearly unethical to large
groups of stakeholders。 The Mafia and organized crime in general
certainly fit into this category�察�as in many respects do the sex industry�察�
large tracts of the gambling industry and arguably the tobacco and
drinks industry too。 These last three are accepted as being a customer¨s
inalienable right to free choice�察�aided by being major employers and
taxpayers。
。 Amoral business�此�Make decisions without considering their ethical
implications either through carelessness�察�indifference or the mistaken
belief that business is there to make profit only。 Such businesses see
governments and their laws as the only ethical or moral constraint they
need concern themselves with。
。 Moral business�此�All decisions are made considering what is ethical�察�fair
and just。
Ethics and Social Responsibility 229
IMPLEMENTING ETHICAL AND RESPONSIBLE
STRATEGIES
Ethics and values play a central role in shaping a pany¨s identity and
reputation�察�building its brands�察�and earning the trust of customers�察�suppliers
or other business partners。 While honesty�察�fairness and responsibility are
crucial for building a good reputation�察�an organization that is looking for
pre´eminence in its field needs to go beyond just meeting stakeholders¨
needs。 It has to emphasize the message that it is a。。ractive as a business
partner and as a good corporate citizen。 To achieve this status the following
steps need to be pursued�此�
。 Acknowledge and monitor all stakeholders with a valid claim on your
a。。entions。
。 municate regularly with stakeholders�察�listening to their interests
and concerns。
。 Actively cooperate with stakeholders to minimize risks。
。 Always avoid actions that endanger lives。
。 Use processes that are sensitive to stakeholders¨ needs。
。 Recognize the danger that managers¨ convenience and the needs of
most other stakeholder groups will almost always be in conflict。
。 Resolve stakeholder conflicts speedily and fairly。
Resolving conflict
Unfortunately�察�however ethical and socially responsible an organization
is�察�it will at some stage�察�perhaps even frequently�察�find itself pursuing a
strategy that upsets other stakeholder groups。 A recent example of one
such conflict was Shell¨s decision�察�announced in April 2008�察�to pull out
of the London Array wind farm。 This ♀2 billion project for 341 turbines
capable of producing 1��000 megawa。。s of power was a key part of the UK
government¨s strategy to produce 15 per cent of UK energy needs from
renewable sources by 2015�察�with an aspiration to raise that to 20 per cent by
2020。 Given that in 2008 renewable energy accounted for only 2 per cent of
output in the UK�察�the London Array was seen as important�察�perhaps vital�察�
to achieving those goals。 But Shell had to weigh up the consequences of
upse。。ing the UK government�察�Friends of the Earth and its other German
and Dutch partners in the project�察�with other concerns。 Shell¨s view was
that the cost of wind farms was simply spiralling out of control�察�with steel
prices rising with increased world demand from such countries as China
and India。 In any event�察�world turbine production was booked up years
in advance。 Shell already had stakes in 11 wind farms producing over
1��100 megawa。。s and reckoned that as a pany it could make the same
230 The Thirty´Day MBA
contribution to the environment at a much lower cost to its shareholders�察�
but probably on another continent and in another technology。
Resolving stakeholder conflicts calls for tact and munications
and the recognition that while you can¨t please everyone�察�you can still
be ethical。 About 1 per cent of Shell¨s investments are in green projects。
For example�察�a pany subsidiary�察�Shell Solar�察�has played a major role
in the development of first´generation CIS ��copper indium diselenide��
thin´film technology。 This it believes to be the most mercially viable
form of photovoltaic solar technology to generate electricity from the
sun¨s energy。 Together with its joint venture partner in this project�察�Saint
Gobain�察�it has a pilot plant under construction in Saxony�察�Germany that
will produce sufficient solar panels to save 14��000 tonnes of CO2 per year。
So stakeholders such as the UK government and Denmark¨s DONG Energy
in the London Array project had to be weighed up against Saint Gobain�察�
with the German government being party to both strategies through the
participation of that country¨s energy giant�察�E。ON。 All the while�察�Shell was
under pressure to match its historic profit growth。 Authenticity Consulting
��authenticityconsulting/misc/long。pdf�� has a useful checklist to
help with decisions about resolving stakeholder conflict。
Whistle´blowers �C an ethical longstop
Not surprisingly�察�the people most likely to know about unethical or socially
irresponsible behaviour are those working in the organization itself。 Governments
around the world have adopted measures to encourage a flow of
information on ethical problems and fraud from whistle´blowers �C that is�察�
anyone employed or recently employed by a public body�察�business organization
or charity who reveals evidence of wrongdoing。 Whistle´blowers
have also been given a measure of legal protection。 In the United States
the Lloyd�CLa Folle。。e Act of 1912 started the ball rolling�察�giving federal
employees the right to provide Congress with information�察�to be followed
by a patchwork of laws covering such fields as water pollution�察�the environment�察�
the Sarbanes�COxley Act ��2002�� to deal with corporate fraud and the
Whistleblower Protection Enhancement Act ��2007��。 In the UK the Public
Interest Disclosure Act ��1998�� and various laws enacted by the European
Union and other governments provide a framework of legal protection for
individuals who disclose information。
Many firms too have established ways to a。。ract information on frauds
being mi。。ed against them�察�including 24´hour hotlines and corporate
ethics offices。 For example�察�Vodafone¨s ��vodafone/start/
responsibility/supply_chain/whistle´blowing。html�� `Speak Up¨ programme
�C launched in 2006/07 �C provides suppliers and employees working in its
supply chain with a means of reporting any ethical concerns。 Fewer than 10
Ethics and Social Responsibility 231
incidents were reported in 2006/07。 That low figure may be less to do with
the absence of ethical problems and more to do with the deeply ingrained
biases against whistle´blowing and a distrust of assurances that retribution
will not follow�察�especially in areas far removed from the watchful eyes of a
corporate ethics office。
These organizations can provide further background on the subject�此�
。 The National Whistleblowers Centre ��whistleblowers���此�
Focuses on exposing government and corporate misconduct�察�promoting
ethical standards and protecting the jobs and careers of whistle´blowers。
。 Spinwatch ��spinwatch���此�Monitors the role of public relations
and spin in contemporary society and has worked with whistle´blowers�察�
anonymously�察�on some of the most contentious issues�此�Northern Ireland�察�
the role of the media�察�genetic engineering�察�the oil industry�察�tobacco
smuggling�察�food and farming�察�and the war in Iraq�察�for example。
。 Whistleblower ��whistleblower。uk���此�Run by journalists and set
up to allow people to sell stories to the media confidentially。 It has had
a measure of success�察�breaking the story on how the Richard and Judy
Show¨s `You Say�察�We Pay¨ petition was ripping off viewers。
。 Wikileaks ��wikileaks���此�Its primary interest is in exposing
oppressive regimes but it offers an avenue for anyone who wishes to
reveal unethical behaviour in their governments and corporations�察�with
a degree of anonymity。
DOES BEING ETHICAL PAY OFF�拭�
There is plenty of anecdotal evidence that ethical and socially responsible
organizations are be。。er places to work。 At the very least�察�being ethical
provides an organization with an insurance policy limiting its exposure
to a range of legal liabilities for faulty products�察�misleading advertising�察�
price fixing and discrimination at work�察�for example。 But evidence on
whether being ethical helps a business organization to bee and stay
more profitable is less clear。 Corpedia ��h。。p��//welerpedia���察�
a pliance and ethics training pany with clients in 60 countries�察�
including RadioShack�察�EMC�察�Xerox and PepsiCo�察�produces an index
of panies deemed ethical。 panies such as Intel�察�Starbucks�察�The
Timberland pany and Whole Foods Market are in its index�察�which
it claims has outperformed the S&P 500 by more than 370 per cent over
5 years。 The rather more scientific and prehensive FTSE4Good Index
Series ��ftse/Indices/FTSE4Good_Index_Series/Performance_
Analysis。jsp�� also shows the ethical panies to be ahead�察�though by a
rather smaller margin。 Over the 5 years to May 2008�察�the 400 panies in
the FTSE4Good Index were about 15 per cent ahead of the general index。
232 The Thirty´Day MBA
But that still begs the question of what constitutes `good¨。 The FTSE4Good
Index sets out to measure the performance of panies that meet globally
recognized corporate responsibility standards。 For inclusion a pany
must be�此�
。 working towards environmental sustainability�察�
。 developing positive relationships with stakeholders�察�
。 upholding and supporting universal human rights�察�
。 ensuring good supply chain labour standards�察�
。 countering bribery。
It also excludes panies that have been identified as having business
interests in these industries�此�
。 tobacco producers�察�
。 panies manufacturing either whole�察�strategic parts�察�or platforms
for nuclear weapon systems�察�
。 panies manufacturing whole weapons systems�察�
。 owners or operators of nuclear power stations�察�
。 panies involved in the extraction or processing of uranium。
This only serves to highlight the problem of deciding what is ethical and
what is not。 For example�察�is mining uranium for nuclear power really
more harmful than�察�say�察�switching to biofuels which�察�aside from probably
releasing between two and nine times more carbon gases over the next
30 years than fossil fuels�察�will almost certainly cause food prices to stay
high�察�particularly in the developing world�拭�Or is the motor industry�察�whose
products kill more people every year than the armaments industry�察�a more
ethical and socially responsible sector�拭�
However�察�a small but growing band of business schools believe that
there is enough mileage in social responsibility and ethics to launch `green¨