Beyond corporate social responsibility Integrated external engagement
Companies
must incorporate interaction with stakeholders into decision making at every
level of the organization.
WHAT IS THE ARTICLE ABOUT?
Traditional corporate social responsibility (CSR) is failing to
deliver, for both companies and society. Executives need a new approach to
engaging the external environment. The best way is to integrate external
engagement deeply into business decision making at every level of a company. In
this article, is shown how to make that kind of integrated external engagement
(IEE) a reality.
First Questions: Are companies doing well at external
engagement? Where might they be going wrong? How can they do better?
Are companies doing well
at external engagement?
Where are companies going
wrong?
How can companies engage
more profitably?
Define what you
contribute
“We are finding out quite rapidly that to be successful long
term we have to ask: what do we actually give to society to make it better?
We’ve made it clear to the organization that it’s our business model, starting
from the top.” —Paul Polman, CEO of Unilever
Know your stakeholders
“Companies often focus on speaking about our needs and our
business, trying to persuade people about the soundness of our activities. We
would be more effective if we understood stakeholder dialogue as an exercise to
listen and understand.” —Helge Lund, CEO of Statoil
Apply world-class
management
Creating capabilities
Employees need the right skills to include external
considerations in their decision making. That starts at the top, as Statoil’s
Helge Lund explains: “We have to have 360-degree leaders. They have to be good
businesspeople who can develop talent and build business relationships, but
they also have to genuinely understand the requirements and the expectations of
external society.” CEOs are responsible for ensuring that their senior teams
are as capable at external engagement as at internal management and that the
necessary skills are valued, promoted, and developed throughout the
organization.
Establishing processes
Putting capabilities in place is not enough; companies must
formally incorporate external engagement into business processes at all levels.
Measuring outcomes
Results should also be the only thing executives care about. In
external engagement, perhaps more than in any other business function, it is
easy to be diverted from a focus on outcomes to a focus on processes or, even
worse, an ill-defined sense of “doing good.” To retain a focus on outcomes,
companies must set targets, measure progress against them, and link incentives
to their achievement. Ideally, companies should measure outcomes in terms of
value added to the business.
Engage radically
The final hallmark of integrated external engagement is a
radical approach to communication with the external world. In our experience,
and the experience of the executives we spoke to, companies must guard against
three pervasive errors.
First, a lot of companies start engagement too late.
The second error, alluded to by Daniel Vasella is to treat
stakeholder engagement as a propaganda exercise
Aim is to please everyone—the third common error.
From CSR to IEE
FOR THE FULL ARTICLE BY John Browne, former CEO of BP, is a partner of Riverstone Holdings; and Robin Nuttall is a principal in McKinsey’s London office. SEE
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