how can you help orgs change to meet cr agenda

As corporate responsibility (CR) hasdeveloped over the past decade,companies have developed andcommunicated their formal valuesrelating to environment, employees,stakeholders and governance throughpublic statements. Many of thesecompanies have produced formal reportscovering their performance onenvironmental and social issues.Continued improvement and delivery ofcommitments depends on buy-in not justfrom senior management (and the CRmanager), but from managers and staffacross the organization. This is onlypossible if there is a culture that issupportive of corporate responsibility.One key aspect of making this change isunderstanding how the company’sculture affects corporate responsibilityperformance. This paper discusses someareas of organizational culture that affectCR performance including rewards andrecognition, learning and managing

change, awareness and involvement,questioning culture and flexibilityunderpinned by mutual respect. It alsoprovides an overview of our approach forassessing and fostering a supportiveculture. This is based on working withclients to manage their licence to operatein addition to extensive experience ininnovation culture and safety culture.Copyright © 2004 John Wiley & Sons, Ltdand ERP Environment.

Received 30 June 2003Revised 14 July 2003Accepted 9 September 2003

INTRODUCTION

Adecade ago most companies startedfrom a position of managing sustain-ability issues in an ad hoc manner.

Mature issues (mainly related to health andsafety) were controlled through establishedmanagement systems, and in some cases sup-ported by a company culture that promotedcertain behaviours and discouraged others.Over the years, we have observed a growingtrend of companies addressing sustainabilitythrough a more defined and organized process,often includingCopyright © 2004 John Wiley & Sons, Ltd and ERP Environment.

HOW CAN YOU HELP ORGANIZATIONS CHANGE TO MEET THE CORPORATERESPONSIBILITY AGENDA?

David Lyon*

Arthur D. Little Ltd, Cambridge, UK

Corporate Social Responsibility and Environmental ManagementCorp. Soc. Responsib. Environ. Mgmt. 11, 133–139 (2004)Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/csr.060

* Correspondence to: David Lyon, Arthur D. Little Ltd, SciencePark, Milton Road, Cambridge CB4 0XL, UK.E-mail: [email protected]

• identifying the business case or the rationaleto address environmental, social and eco-nomic issues

• developing a vision supported by a strategyto manage these issues

• beginning to measure performance throughKPIs, impact assessments, stakeholder feed-back etc.

• producing environmental, social, economicand more recently sustainability/CRreports.

The growth of this pattern can be seen from a recent study that illustrates the trend ofincreased reporting (Figure 1).

However, this increasing level of reportingdoes not necessarily mean there is support forimproving environmental and social perfor-mance from within the company. Indeed the‘power of inertia is immensely strong espe-cially in the functioning engine room of . . . themiddle ranks’ (Tickell, 2003).

To deliver sustained improvement in socialand environmental performance, a change inthe way a company sees its business and theway decisions are made is often required. Thisinvolves moving from being wholly reliant onthe formal systems and processes and at thesame time developing a proactive approach to

CR (Figure 2). This is only possible if the orga-nization has a supportive culture.

This presentation explores this theme anddiscusses an approach for assessing and fos-tering CR culture. This is based on workingwith clients to manage their licence to operate(ADL, 2001) in addition to our extensive expe-rience in innovation culture (ADL, 1998) andsafety culture. (ADL, 2000).

WHAT IS CULTURE?

There is no definitive definition of culture, andlittle discussion of what elements of culturesupport corporate responsibility objectives. Inour work, we have adapted a commonly useddefinition of safety culture a useful definitionto be applicable to CR:

the CR culture of an organization is theproduct of the individual and group values,attitudes, perceptions, competencies and pat-terns of behaviors that drive the commitment toand style and proficiency of an organization’scorporate responsibility management (adaptedfrom the Health and Safety Commissiondefinition of safety culture).

Each of these aspects of culture is presented infurther detail in Table 1 and can be interpretedin terms of factors that contribute to improvedcorporate responsibility performance. Theseare discussed in more detail in the next section.

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Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment Corp. Soc. Responsib. Environ. Mgmt. 11, 133–139 (2004)

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Figure 1. Number of environmental and social reports produced between 1990 and 2002. Source: www. CorporateRegister.com based on 3411 reports from

January 1990 to September 2002.

Figure 2. Evolution of systems to manage CR. Source: Arthur. D. Little.

WHAT IS A ‘CORPORATERESPONSIBILITY’ CULTURE?

The aspects of culture presented are not spe-cific to corporate responsibility and apply toother aspects of a company. However, throughour work in a range of sectors it clear that com-panies that effectively manage their corporateresponsibility appear to have a range of traitsin common. This section explores some ofthese traits.

Focus on rewards and recognition

Corporate responsibility can be managedthrough compliance alone, although compa-nies achieve much greater success if they fostera strong commitment from staff.

Commitment can be effectively encouragedby systems to reward, publicize and welcomeinitiatives where innovative solutions to CRissues are identified, managed and followedthrough.

In a recent ADL assessment of 15 globalchemicals companies and societal licence tooperate, we found that within the most effec-tive companies there were common themes inmanaging rewards and recognition:

• consistent implementation• bonus related, therefore people understand

that this issue is important• open reporting• cumulative (progressive) disciplinary

system, i.e. the same incident is required tooccur two years in succession in order for adisciplinary action to take effect

• root cause investigation is conducted toidentify and make distinction betweensystem failures, individual failures andsupervisory failure.

Appropriate rewards and recognition providethe motivation for people to systematicallyintegrate CR into everyday decision-making.In developing a programme of awards for CR,it is advisable that they are closely and visiblylinked into rewards for general business per-formance as staff will begin to see the twoclosely linked.

Learning and managing change

Across each sector issues are emerging all thetime. In a recent survey into food and drinkcompanies, issues affecting companies wereclassified into three categories: mature (issues

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Table 1. Aspects of organizational culture

Term Definition Example

Values The key aspects of an individual or group belief • Integritysystem that are acknowledged as being • Professionalismimportant • No blame

Attitudes Positions adopted by individuals in relation to • Pride in workexternal events • Social awareness

• Readiness to bend the rulesPerceptions An individual’s interpretation of reality • ‘Management are only interested in profits’

• ‘We are excellent at stakeholder engagement’Competence Ability to perform a task, requiring a combination • Competence to drive a train

of knowledge, experience and skill/capability • Competence to manage safetyBehaviour What people do and the way in which they do it • Ignoring a warning

• Following a system• Telling off a subordinate• Demanding high performance from each other

Source: Adapted from Arthur D. Little (1999).

older than 3 years, declining in businessimpact), emerging (less than 3 years withpotentially significant impact) and latent(greater than 3 years with unknown impact)(Ceppi et al., 2002). Of all issues mentioned inpublished media and in interviews with NGOsand company representatives, 17 issues weremature, 72 were emerging and 115 were latent.This suggests that there is a rapidly changingset of issues that companies have to under-stand and adapt to.

To an extent this can be addressed throughissue tracking and managing systems.However, this has to be supported by a culturethat includes a commitment to learn, toleranceof failure, understanding and accepting risk,openness to external ideas, learning from expe-rience, and continuous improvement.

Such cultures can be encouraged by forexample

• role flexibility• external partnerships• training beyond core skills• flat non-hierarchical organizational

structure.

Awareness and involvement

Companies that manage CR effectively havestaff who are aware of who their stakeholdersare and what their concerns are. This can besupported by processes and systems such asguidelines providing support on systems forstakeholder engagement and best practice (see,e.g., IFC, 1999). However, to be effective, thesesystems need to be supported by a culture ofwanting to understand the perspectives ofothers and their concerns. This is sometimesdifficult particularly for operational or techni-cal staff, who may consider that their role ispurely inward facing.

However, at the same time as being aware ofthe myriad of issues that affect companies, it isimportant to encourage a culture of appreciat-ing that only some issues may be material tothe company. This ability to focus also requiresenabling staff to communicate to external

stakeholders why a given issue is consideredimportant or not.

Awareness needs to go beyond this to ensurethat the business can evolve with society. Hereawareness of CR issues is key to identify solu-tions that can develop future business. A recentexample of this is the development of theHewlett Packard i-community programme,which through understanding the needs andconcerns of communities in India and Africa(among other regions) is able to identify possi-ble new markets. (Hewlett Packard, 2002).Another example is that of Novozymes(http://www.novozymes.com), who haveused NGOs to help identify emerging biotech-nology issues. For this to work, there has to betrust between the two parties.

Staff should also be involved internally. Thismay involve close engagement of staff in thedesign of standards to ensure commitment andefficient dissemination throughout the organi-zation. This view is endorsed by an interna-tional food and drink company who in a recentassessment stated ‘the implementation of cor-porate programmes often fails because thegeneric frameworks that are used lack rele-vance to the local conditions faced by businessunit managers’ (Ceppi et al., 2002).

The best way for employees to be involvedin managing CR issues is to have firm com-mitment from senior management. Thisinvolves visible decision-making supportingCR at board level. It also involves making atransition from a target-driven culture to avalue-driven culture.

Questioning culture and problemidentification/solving

Companies need to have an explicit approachfor managing problems. Often there can be sit-uations where problems are not considered ina comprehensive fashion. Companies that onlylook at issues selectively often find themselvesunable to address emerging issues.

From a recent ADL study of food and drinkcompanies, we concluded that many of the

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tangible issues such as employee safety andwaste from operations could be addressed byscientific approaches. This, however, does notalways assist in understanding and managingless tangible impacts such as child labour, foodpoverty or ethical trading. These are driven bya complex set of factors influencing people’slivelihoods (many of which are outside thedirect control of any company) and require adifferent approach. When addressing theseproblems, successful companies are thosewhere their employees are supported in think-ing outside their immediate zone of controland looking at the external drivers that mayaffect the business from a systems perspective(see Checkland and Scholes, 1999).

Companies that discourage staff from ques-tioning corporate objectives, standards andpractices are unlikely to be effective in thisrespect.

Shared but flexible culture based on respect

Your staff forms an important stakeholdergroup and need to be managed within a CRpolicy. There is considerable literature on thissubject. This paper will not repeat thesedebates of how the needs, concerns and per-spectives of employees can be understood andrespected, especially understanding the impli-cations of different ethnicities, ages, gendersetc. Respect for staff should promote tolerancefor new ideas within the culture, increase thecredibility of communications and encouragepeople to be proud of individual, and organi-zational, achievements.

CONCLUSIONS: UNDERSTANDINGCR CULTURE

The cultural aspects of CR are critical to achiev-ing desired social, economic and environ-mental performance. Many companies haveaddressed these through written rules, often inthe form of systems and processes.

It is clear that all organizations, withoutexception, are actually driven by a set ofUnwritten Rules of the GameTM (Scott-Morgan,1994): ‘What really goes on around here’, bestthought of as being the advice you would givea friend about how to survive and prosper inyour organization. These are often rules suchas ‘Protect your own turf’ or ‘Don’t stick yourhead out above the parapet’. The unwrittenrules are sometimes tacitly recognized, butignored when it comes to driving through achange. In some cases, they are not even rec-ognized. Yet misalignment of these unwrittenrules with the written rules will not result inthe delivery of the desired improvements insustainability performance.

Through our work we know that unwrittenrules are actually always logical rather thanirrational or random. This means that it is pos-sible to use a systematic approach to uncoverthe drivers that lead to them, and these driversprovide a key to identifying actions needed torealign them. Our methodology uses bothclimate index questionnaires (specially devel-oped questionnaires that explore how the indi-vidual sees the ideal culture and the actual oneexperienced day to day) and interview tech-niques (either singly or in focus groups) tocharacterize the drivers and the chains of logicto which they belong. We might group theseinto three categories: (i) what is important topeople (motivators); (ii) who is important tothem (enablers) and (iii) how do they achievetheir motivation (enablers)?

These are illustrated in Figure 3.To exemplify the interactions in Figure 3, the

following very simplistic example can be used.Individuals in a particular organization mightbe motivated by the prospect of a cash bonus(the motivator). The bonus might be achievedby pleasing their manager (the enabler) whowants to see a certain level of productivity perannum (the trigger). If the manager does notreward staff for environmental or social per-formance (another trigger), an unwritten rulemay develop that says it is not worth spendingtime on corporate responsibility, just in pro-



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ducing more. The resultant side-effect will bethat the organization is productive but may notmanage business risks or identify opportuni-ties through CR. This is a rather crude examplefor the purpose of illustration; in reality, themotivators, enablers and triggers are oftenmore subtle and difficult to uncover.

This type of analysis has some clear advan-tages (ADL, 1999).

• First and foremost, it points clearly to prac-tical measures to address problems – forexample, it is easier to change a trigger or anenabler than it is a motivator. Knowing whatto leave alone is as important as knowingwhat to change.

• The method is conceptually easy to under-stand and communicate.

• The methodology involves gathering of sig-nificant ‘evidence’ for each of the assertionsin the form of unattributable quotes.

• Finally, the diagnostic process is relativelyfast and limited in scale.

The outputs from the climate index tool assess-ment provide a good indication of the climateof the company, both in terms of its current

position and where the team would like it tobe. The outputs often indicate areas that needfurther exploration or understanding, whichcan take place in subsequent interviews orfocus groups. These develop lines of question-ing that may help uncover many of the Unwrit-ten Rules of the GameTM for the organization inquestion.

Once there is a clear idea of what culture(and behaviours, in particular) support corpo-rate responsibility, and what are existingbehaviours, it is important to align culture withthe strategic intent. There are several leversthat can be used to achieve this goal includingpractices, procedures, policy and philosophy.The use of these depends on the organizationand how it needs to be influenced.

REFERENCES

Arthur D. Little (ADL). 1998. The Innovative Company,prepared for members of the OECD Focus Group onthe Innovative Firm. ADL: Cambridge.

Arthur D. Little (ADL). 1999. Managing Safety throughCulture. ADL: Cambridge.

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Figure 3. Understanding Unwritten Rules of the GameTM. Source: Arthur D. Little Ltd (1999) Managing Safety Through Culture.

Arthur D. Little (ADL). 2000. Achieving a Safe Culture.Facing the Leadership Challenge. ADL: Cambridge.

Arthur D. Little (ADL). 2001. Licence to Operate BalancingConflicting Needs, a workshop for key practitioners inthe transport and utilities industries, Cambridge.

Ceppi P, Chen P, Elias R, Xin Y. 2002. License to Operate inthe Food and Drink Sector, report to Arthur D. Little andJudge Institute of Management.

Checkland P, Scholes J. 1999. Soft Systems Methodology inAction. Wiley: New York.

Hewlett Packard. 2002. Kuppam i-community, AndhraPradesh, India, Accelerating Economic Growth and Accessto New Markets. Hewlett Packard: Kuppam, India.

IFC. 1999. Doing Better Business Through Effective PublicConsultation and Disclosure. IFC: Washington, DC.

Scott-Morgan P. 1994. The Unwritten Rules of the GameTM.McGraw-Hill: New York.

Tickell C. 2003. Johannesburg and its aftermath. TheTomorrow Bulletin 5: 3.

BIOGRAPHY

David Lyon works at Arthur D. Little Ltd,Science Park, Milton Road, Cambridge CB40XL, UK.Tel.: + 44 (0)1223 392421Fax: + 44 (0)1223 420021Email address: [email protected]



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how can you help orgs change to meet cr agenda

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