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Business ethics. Ethics consultants work with companies on a range of initiatives that may be broad or narrow in scope. Large-scale initiatives may create guidelines for ethical decision-making, and operations for line managers from a variety of departments. More specific initiatives can include training and policies around ethical contract negotiations with foreign partners, and harassment and mistreatment of workers. Ethics consultants also reach into a variety of citizenship areas, including the design of codes of conduct and performance systems.

Communication. Many companies do not have enough staff to add citizenshiprelated activities to their agenda. There is a growing need for consultants who can temporarily serve as contract staff to implement citizenship projects. An especially common area is internal and external communications to promote citizenship activities.

Specific consultancies around major operating lines. In many respects, each function of the business possesses its own set of social responsibility issues that may require the support and guidance of consultants. As a matter of principle, every consultant advising on specific functions, systems or aspects of a business needs to be aware of the social dimension involved and to help the client to make socially responsible choices and decisions, or to direct the client to an appropriate specialist competent in such questions (see section 23.5).

23.4 A strategic approach to corporate responsibility

To assist clients to achieve excellence in corporate responsibility, consultants should possess expertise in strategic management and organizational change processes. For an approach to be successful, it must be integrated into the overall business and operational strategy. If corporate citizenship practices are fundamental to all business operations, it is less likely that specific initiatives will be discontinued, or will be removed from the day-to-day concerns of decision-makers and managers. Consultants can serve their clients by helping them formulate and implement a corporate citizenship strategy, develop their codes, strengthen their stakeholder involvement, measure performance, and train/coach their senior executives and middle managers in leadership and management. Clients can then use consultants to provide advice and support on the more specialized and technical aspects of social responsibility, such as environmental remediation, human rights practices, supply chain management or community involvement.

The elements of a strategic management approach to corporate citizenship are captured in a framework developed by Sandra Waddock and Charles Bodwell at the ILO and called “total responsibility management” (TRM):

TRM approaches can potentially provide a means for integrating external demands and pressures for responsible practice, calls for accountability and transparency, the proliferation of codes of conduct, managing supply chains responsibly and sustainably, and stakeholder engagement into a single approach for responsibility practices within the firm.9

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The TRM approach builds on well-known performance management systems such as total quality management. Figure 23.1 illustrates the three main elements or levels that make up the emerging TRM approach: (1) vision-setting and leadership systems, (2) integration of responsibility into strategies and practices, and (3) assessment, improvement and learning systems. The logic of the system is similar to that of strategic management processes used for any function of the business. The difference is in the details of its implementation. To use a TRM approach, consultants must understand the social context in which their client operates. The discussion below details how consultants can support their clients through each level of the framework, and provides guidance on the particular skills and processes consultants should have ready in their toolkit.

Level 1 – Vision-setting and leadership systems

At this level, consultants typically work with top management to define a strategic agenda for corporate citizenship and to drive a change process from the top down. In particular, consultants should assist their clients in implementing the following steps:

●Defining the integration between traditional business strategy and corporate citizenship. This process should clarify and express a corporate citizenship business model that describes the interdependence between the company’s social role and responsibility and its business success. This definition will, for example, provide the underpinnings to help decisionmakers to understand the elements of the triple bottom line, and how they can reinforce one another. Defining the link between conventional business strategy and the social role of business is essential for ensuring the long-term sustainability of corporate citizenship processes.

●Identifying priorities for corporate citizenship. After defining the integration of business and citizenship strategies, decision-makers need to identify strategic priorities that will drive resource allocation and management systems dedicated to addressing specific issues such as labour practices, supply chain management, environment, community and others. This process may involve selecting one or more of the multilateral codes of conduct (such as those listed in box 23.1) to endorse and implement.

●Leadership roles and commitment to strategic goals. The consultant should work with senior executives to define specific strategic goals, corporate policies and measurable objectives for their corporate citizenship strategy. In practice, these goals should reflect an intersection of business outcomes and social/environmental outcomes. Consultants should then work with senior managers to define their specific roles in driving and communicating the strategy.

●Committing to core citizenship processes. As noted earlier, corporate citizenship management frameworks commonly emphasize stakeholder engagement, transparency, social reporting, and measurement. Many of these tactics are unfamiliar to corporate managers. They represent new ways

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Figure 23.1 The total responsibility management system

Source: S. Waddock, C. Bodwell and S. Graves: “Responsibility: the new business imperative”, in Academy of Management Executive, May 2002 (forthcoming).

of doing business, and may conflict with conventional policies related to secrecy, financial reporting, and tightly controlled communications practices. Consultants should work to underscore that these tactics will be necessary to support strategic goals, and to secure the commitment of senior executives to support and lead the processes.

Succeeding at this first level of an intervention is not easy. It requires the consultant to mix science and art in defining an integrative corporate citizenship strategy that senior executives can comprehend, support and lead. Consultants need to come prepared with a toolkit of knowledge and methods that support strategy formulation.

Identifying key motivating drivers for corporate citizenship. It is vital for consultants to understand the factors that motivate corporate citizenship within a given organization, and to build the consciousness of key managers around these motivating drivers:10

●Values: are based on morals, and a desire to “give back” to society.

●Compliance: government regulations and grassroots activists create pressures for compliance. This leads to corporate policies and strategies that respond to legislation, criticism, inspection, pressure groups, etc.

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●Intangibles: intangible factors include reputation, brand and relationships. Intangible drivers often lead to responses that attempt to minimize the risks of pressures for compliance and create savings for the business. Proactive corporate citizenship becomes a tool to create trusting relationships with, for example, governments or NGOs, and thus reduce the risk of activism and opposition. Intangible drivers can also lead to responses that support value creation. For example, developing the intangible asset of reputation can support sales and employee recruitment and retention.

●Market: market drivers lead to the inclusion of social, as well as market-based goals in projects and investments, such as product launches, production, purchasing, or employee training. The projects may also be carried out with non-traditional stakeholders. Examples are job training of low-income individuals, clean production technologies, socially responsible consumer products (e.g. clean-burning gas), employee stock ownership plans, etc.

Unfortunately, these motivating drivers often operate independently of one another, and encourage divergent strategies that yield suboptimal outcomes for the business and its stakeholders. For example, values may lead to charity programmes. Compliance drivers may guide the business to do the least possible to comply with laws and regulations. Intangible drivers may lead to strategic philanthropy, cause-marketing, or partnerships with NGOs and government. Finally, market drivers can lead to business initiatives such as redesigning manufacturing to be less wasteful, or developing new markets in low-income areas. Most companies keep these strategies separate, and fail to optimize the resources they invest in corporate citizenship.

Understanding and applying the business case. As discussed earlier, leading models of corporate social responsibility contend that there is no contradiction between social responsibility and profitability. In fact, the argument goes, social responsibility increasingly performs a high-value support role for the bottom line. Research supports the claim that corporate citizenship adds value to traditional business goals, such as consumer attraction and retention, employee recruitment and retention, worker productivity and overall financial performance. In addition, it supports such considerations as innovation, reputation and “licence to operate”.

Consultants must first present the business case and help clients to understand how their own business and particular line functions will benefit from corporate citizenship. Consultants must also be prepared to help clients to build creative strategies that use citizenship approaches to meet societal obligations while generating returns on investments. To succeed, citizenship consultants need a broader perspective than most traditional management consultants.

Organizational diagnosis. There are two dimensions of organizational diagnosis – the marketplace and society. The marketplace is the province of traditional management consultants, but it is essential that corporate citizenship consultants possess an understanding of their client’s business fundamentals. There are two reasons for this. First, consultants need to speak their client’s

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language. Managers who are sceptical about corporate citizenship may perceive the consultant as an infiltrator representing forces that are (in the extreme) conspiring to shut down operations. Second, consultants need to be able to translate and integrate. Managers often have difficulty in conceptually linking their day-to-day responsibilities with the requirements of corporate citizenship. Consultants can provide a valuable service by helping to build this conceptual bridge between the fundamentals of business and citizenship.

The second dimension of organizational diagnosis is an understanding of the relationship between the business and society, which is where the majority of citizenship concerns are played out. Depending on the project, the consultant may need technical expertise, such as in environmental analysis. However, the consultant should also possess broader, strategic knowledge, including how to diagnose current practice and performance around key dimensions of citizenship. Where is the company’s performance effective and where is it inadequate? Consultants will do well to use frameworks such as the Global Compact or the OECD Guidelines, which can help them to make judgements and to legitimize conclusions.

Stakeholder identification. The dynamics of corporate citizenship operations manifest themselves through the interplay between a company and its stakeholders. The level of stakeholder satisfaction represents the principal form of feedback on the strengths and weaknesses of corporate management. It is therefore essential for corporations to identify and engage with key stakeholders. However, transnational organizations face a vast array of stakeholders. The challenge for consultants and their clients is to identify the key stakeholder groups – and their representatives – that should be part of the corporate responsibility strategy. One pitfall to avoid is assigning the main role to stakeholders who appear to be most threatening and behave most aggressively. Consultants should possess expertise in stakeholder analysis, mapping and relationship-building.

Issues identification and environmental scanning. The social, cultural, institutional, legal, supervisory and political environment for corporate citizenship is crucial. Consultants need to help their clients assess how current corporate operations intersect with the environment to create either vulnerabilities or opportunities for the client’s relationship and behaviour towards key stakeholders. Strategic information is needed that helps a company to craft policies and programmatic responses. The issues identification and scanning process should also help a company select its top strategic priorities. A company in a service industry, for example, may have few if any direct concerns regarding supply chain management and sourcing. However, it may have significant concerns regarding the quality of education systems as it struggles to find, recruit and retain adequately skilled employees.

Strategy formulation. The consultant should work with the client to take the outcomes of the above processes and formulate a strategic plan that is focused and clear. The plan should help managers demarcate a path between goals and concrete projects, owners, roles, measures and timelines. In

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citizenship consulting, a strategic plan serves as the client’s touchstone. It not only specifies purpose and activities it helps managers answer fundamental questions regarding the relevance of corporate citizenship, its purpose, and fit within the organization.

Level 2 – Integration of responsibility into strategy and practices

At this level, consultants can work with both senior executives and mid-level line managers. It is at this point that the company begins to implement its strategy – designing processes, systems, practices and programmes based on the new goals and priorities. Consultants may assist their clients in the following steps:

●Creating management performance systems. To implement a corporate citizenship strategy successfully, goals and action plans have to be transformed into an operational agenda and reflected in performance contracts of business lines, departments and managers.

●Redesigning practices and creating programmes. The company will need to design new practices and systems to support the goals of corporate citizenship. If, for instance, a goal is to avoid suppliers that violate the human rights of their employees, then the company will need to create specific policies, strategies, management systems, monitoring mechanisms and reporting systems. Alternatively, if the company’s goal is to reduce greenhouse emissions, it will need to modify its production model. Redesigning corporate practices and policies will typically require specialized expertise.

●Process implementation. At this level, the company will form and implement systems to engage stakeholders, monitor issues, and develop mechanisms to increase transparency. These processes should not be formed and managed in isolation, but integrated across business lines, and used as tools both to implement strategy and to create feedback mechanisms to reformulate the strategy.

At this level of intervention, the consultants’ toolkit needs to expand to include content expertise for specific issues as well as knowledge of organizational behaviour, change and strategy. Toolkit elements include the following:

Organizational change. Consultants will often find that there is much within the client organization that resists the implementation of corporate citizenship strategy, structures and programmes. Resistance (see also Chapter 4) may be intentional or unintentional. In either case, the challenge it presents to consulting initiatives is formidable. Consultants need to possess skills in change management and strategic planning. It is advisable for consultants to work only with organizations in which senior executives have demonstrated their commitment, and it is often useful to solidify this commitment by making the point of contact a senior-level manager. When this is not possible, it is

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important to use formal engagements to involve senior executives throughout the process. If the initiative is being driven from the bottom (or middle) upwards, rather than top-down, it is important for the consultant to assess realistically what can be achieved. A consultant can provide a valuable service by coaching middle managers on leadership and change initiatives, and by guiding the client through the change process. Consultants are also advised to insist on a participatory methodology that involves a variety of managers from important departments. They should work with key client contacts to develop a map of key stakeholders within the organization who should play an active and engaged role in the project.

Management support and coaching. A significant barrier to the change process is lack of expertise, experience and knowledge among managers on the social role and responsibility of the business. Consultants can design and implement training programmes that are tied into corporate strategy, and that support the management of corporate citizenship initiatives.

Technical and policy expertise. Given the complex organizational dynamics of corporate citizenship, it is easy to overlook that consulting initiatives require at least a modest level of technical and content-specific knowledge. Corporate citizenship engages the business in an array of policy issues and concerns that it has probably previously ignored. Clients will look to consultants to provide guidance and knowledge in these areas. The challenge for consultants is to help the business understand how it can engage in social issues effectively, while preserving its core business mission and functions.

Level 3 – Assessment, improvement and learning systems

At this level, consultants will work with both senior executives and line managers, and provide the company and its stakeholders with feedback about performance, direction for improvement, and the information needed to revise and improve the corporate citizenship strategy.

Measurement systems. These include systems that measure the impact of the strategy for the business and its stakeholders, as well as systems to determine whether the operations are managed effectively and efficiently. Measurement of corporate citizenship is at an early stage of evolution. At this level, consultants will need to bring expertise, knowledge and creativity to the process of creating measurement systems.

Reporting, monitoring and verification systems. Related to measurement, these systems function as the principal vehicle for increasing corporate transparency and accountability to stakeholders. These systems are also at an early stage of development. Consultants will need expertise in designing effective reporting, monitoring and verification systems.

Improvement and innovation. By tracking and measuring impacts and performance, consultants can work with clients to learn from measurement and reporting systems, and help define plans to improve performance, drive innovative practices, and enhance the existing strategy.

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