Business and society ethics sustainability and stakeholder management 9e chapter 5

Part I: BUSINESS, SOCIETY, AND STAKEHOLDERS. 1. The Business and Society Relationship. 2. Corporate Citizenship: Social Responsibility, Performance and Sustainability. 3. The Stakeholder Approach to Business, Society, and Ethics. Part II: CORPORATE GOVERNANCE AND STRATEGIC MANAGEMENT ISSUES. 4. Corporate Governance: Foundational Issues. 5. Strategic Management and Corporate Public Affairs. 6. Issue, Risk, and Crisis Management. Part III: BUSINESS ETHICS AND MANAGEMENT. 7. Business Ethics Fundamentals. 8. Personal and Organizational Ethics. 9. Business Ethics and Technology. 10. Ethical Issues in the Global Arena. Part IV: EXTERNAL STAKEHOLDER ISSUES. 11. Business, Government, and Regulation. 12. Business Influence on Government and Public Policy. 13. Consumer Stakeholders: Information Issues and Responses. 14. Consumer Stakeholders: Product and Service Issues. 15. Sustainability and the Natural Environment. 16. Business and Community Stakeholders. Part V: INTERNAL STAKEHOLDER ISSUES. 17. Employee Stakeholders and Workplace Issues. 18. Employee Stakeholders: Privacy, Safety, and Health. 19. Employment Discrimination and Affirmative Action. Cases.

Chapter 5

Strategic Management and Corporate

Public Policy

4 Explain sustainability reports and integrated reporting.

5 Link public affairs with the strategic management

function.

6 Indicate how public affairs may be incorporated into

every manager’s job.

Chapter Outline

• The Concept of Corporate Public Policy

• Four Key Strategy Levels

• The Strategic Management Process

• Public Affairs as a Part of Strategic

Management

• The Corporate Public Affairs Function Today

The Concept of Corporate Public Policy

Corporate public policy is

a firm’s posture, stance, strategy or position regarding the environmental, social, global, and ethical aspects of stakeholders

and corporate functioning

Corporate Public Policy

and Strategic Management

Corporate public policy -

•Incorporates sustainability as that part of the

overall strategic management of the organization that focuses on the environmental, economic,

social and ethical stakeholder issues that are

embedded in the decision processes of the firm

Relationship of Ethics

to Strategic Management -

• For business ethics to have any meaning

beyond pompous moralizing, it should be

linked to corporate strategy.

• Corporate strategy can be revitalized because

the linkage permits addressing management issues in ethical terms.

• This linkage can be better understood when

we think about the:

• Four key strategy levels (decisions are made

at several levels)

• Steps in the strategic management process

Four Key Strategy Levels

Enterpriselevel strategy

-• What is the role of our firm in society?

• For what do we stand?

-• How should we integrate subfunctional

activities and relate them to changes in our functional areas?

The Hierarchy of Strategy Levels

Emphasis on Enterprise-Level Strategy

For what do we stand?

• What is the role of our organization in

• What obligations do we have to society at

large, including to the world?

• What are the broad implications for our

current mix of businesses and allocation of resources?

Manifestations of Enterprise-Level Thinking -

• A positive, constructive, sensitive firm

response in a public crisis

• The use of:

Social Entrepreneurship -

• The social entrepreneurship has as its reason

for being a mission of societal value creation

• The creation of wealth is a means to achieve

the goal of creating societal value

• Social entrepreneurship’s central focus is the

alleviation of poverty, but it may address a range of societal goals, including education, the environment, and the arts

• The bottom-of-the-pyramid (BOP) is term

used to characterize the largest and poorest socio-economic group of people, those who live on less than $2/day

The Benefit Corporation-

• Unlike the traditional corporation, the Benefit

Corporation has a broader mission that includes having a positive impact on society

• The societal mission does not take a backseat to

shareholder wealth maximization

• The Benefit Corporation offers managers,

investors and customers the opportunity to

participate in or patronize businesses that

promise to make social responsibility an

important goal

• 12 states now have laws permitting companies

to incorporate as Benefit Corporations

The Importance of Core Values

Core Values -

•Are the deeply ingrained principles that guide all of a company’s actions and decisions

•Serve as cultural cornerstones

•Having a set of core values that are not

followed will do no good

•To be effective, firms need to weave core values into everything they do

•If a firm’s core values are not upheld, they

become hollow, and do more harm than good

Other Manifestations of Enterprise-Level Thinking -

Establishment of publicpolicy committees

-•Sustainability

•Ethics

•Corporate philanthropy, etc

Establishment of a Public affairs Office

-•Included in strategic decision-making

Identification of social or public issues –

•Integrated into strategic management processes

The Strategic Management

Strategic Management Process and

Corporate Public Policy

Components of Strategy Formulation

Strategic Corporate Social Responsibility (1 of 2)

CSR & Competitive Advantage -

•3 ways corporations intersect with society:

• Generic social issues (firm’s operations do not

affect society and issue is not material to firm’s long-term competitiveness)

• Value chain social impacts (a firm’s normal

operations significantly affect society)

• Social dimensions of competitive context (social

issues affect the underlying drivers of a firm’s competitiveness)

•These categories divide into 2 modes of

corporate involvement:

Strategic Corporate Social Responsibility (2 of 2)

Responsive CSR

•Addresses generic social impacts through

good corporate citizenship and value chain

social impacts by mitigating harm

Strategic CSR

•Transforms value chain social impacts into

activities that benefit society while reinforcing corporate strategy

•Advances strategic philanthropy that

leverages competitiveness

Measuring Sustainable Corporate Performance

• Achieving sustainability requires performance

accountability

• When firms measure only financial performance,

environmental and social considerations become side issues

• To achieve sustainability, the triple bottom line must

be reflected in every aspect of the firm’s operation

• Sustainability reports (integrated reports – IR) reflect the extent to which the firm is creating value in the

triple bottom line

• Social Audits, Social Responsibility Reports and

Environmental Impact Reports focus on specific areas

Public Affairs

As a Part of Strategic Management

Strategic Management Process

Corporate Public

Policy

Issues Management

Crisis Management

Public Affairs Management which is Part of

Enterprise-Level Strategy Environmental Analysis

The Corporate Public Affairs

Function Today

Public Affairs grew in the U.S because of:

1.The growing magnitude and impact of

government

2.The changing nature of the political system

3.The recognition by business that it was

being outflanked by interests counter to its own

4.The need to be more active in politics

outside traditional community-related

aspects

Public Affairs Defined -

The Public Affairs Council (PAC), the leading organization of executives who do the PA

work of companies, defines PA as:

•“Public affairs represents an organization's

efforts to monitor and manage its business

environment It combines government relations, communications, issues management and

corporate citizenship strategies to influence

public policy, build a strong reputation and find common ground with stakeholders.”

Public Affairs Activities & Functions -

• Public Affairs (PA) began from isolated

company initiatives designed to handle

diverse activities, but was sometimes

managed by Public Relations staffers, but they are not the same

• Public relations focuses on selling a product,

while public affairs is designed to influence

public policy

• PA activities may include lobbying, global

public affairs, social media, corporate

responsibility, campaign finance, grassroots advocacy, crisis communication, and more

Future of Corporate PA

• If the PA function is to be effective, it must have

influence at the top management level

• Because of corporate ethical crises, PA specialists

have an ideal opportunity to help transform business and society relationships There are 3 primary

opportunities:

• Help develop value-based enterprises; and work cooperatively with them on social issues

• PA executives can be thought leaders in their

firms, and collaborate with those outside the firm

on current issues

• Be mindful of global issues, including those which begin as domestic issues and migrate

• benefit corporation

• bottom of the pyramid

• business-level strategy

• corporate-level strategy

• corporate public affairs

• corporate public policy

• public affairs management

• public affairs strategy

• shared value

• social audit

• social entrepreneurship

• social responsibility report

• strategic management strategic management processes

• sustainability report

• value shift

Key Terms