Business and society ethics sustainability and stakeholder management 9e chapter 16

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 16

Business and Community Stakeholders

Learning Outcomes

1 Identify and discuss two basic ways of business giving.

2 Discuss reasons for community involvement, various types of

community projects, and management of community

stakeholders.

3 Explain the pros and cons of corporate philanthropy, provide

a brief history of corporate philanthropy, and explain why and

to whom companies give.

4 Differentiate between strategic philanthropy, cause-related

marketing, and cause branding.

5 Characterize the nature of offshoring and the movement

toward reshoring.

6 Address steps that a business or plant might take before a

decision to close is made.

7 Identify strategies that a business or plant might employ after

a decision to close has been made.

Chapter Outline

• Corporate Philanthropy or Business Giving

• The Loss of Jobs

Business and Community Stakeholders

• The actions of a business affect a range of

communities Managers must be aware of these

impacts, and manage in a way that respects

community stakeholders.

• We focus on the immediate locale, but instant

communication means that the relevant community includes the region, nation, or the world.

• For business and community stakeholders, there

are two major kinds of relationships:

• The positive contributions business can make to

Community Involvement

• Business involvement in the community

represents enlightened self-interest, because businesses help themselves in the process of helping others

Volunteer Programs - such programs reflect the

resourcefulness and responsiveness to

communities, and are essential for attracting and retaining the best talent in the workforce.Employees want to work for the “good guys.”

Managing Community Involvement – focuses on

the contribution of managerial and employee time and talent

Benefits of Employee Volunteerism

Developing a Community Action Plan

1 Knowing the community.

2 Assess the company’s resources.

3 Select projects to support; match

community needs to company resources.

4 Monitor performance of the community

actions program and make adjustments.

Corporate Community Involvement

Corporate Philanthropy

or Business Giving

Philanthropy a desire to help mankind as indicated

by acts of charity; love of mankind

Corporate Philanthropy - Business giving, the

motive for which can be difficult to assess

A Brief History of Corporate Philanthropy –

•Community chest efforts dominated early giving

•Since 1960, giving has grown to address a variety

of initiatives

•Now, the watchword is “strategic philanthropy” which benefits both society and the business

A Call for Transparency

• Companies need not disclose direct donations

to charities, but proposed legislation would require disclosure

• Proponents say the money belongs to the

shareholders, and they should make the decision, not managers giving to their favorite charities, which would not benefit the business

• Some fear that disclosure would result in fewer

donations, and would reveal company strategy.

• Non-disclosure has led to a rise in “dark

money” political funding to nonprofits from undisclosed sources

Giving to the Third Sector: Nonprofits

Business and government – are supported by profits and taxes

The third sector – ( churches, museums,

hospitals, libraries, colleges, and more)

depends on philanthropy

Why do companies give?

•Charitable – (no expected benefit for the

business)

•Community - (gifts support business goals)

•Commercial – (giving that benefits the business)

To Whom Do Companies Give?

• During any budget year, firms receive

numerous requests for contributions from a variety of applicants, and decide which to honor

Estimates of most business giving

-1 Health and human services

2 Education

3 Civic and community activities

4 Culture and the arts

Managing Corporate Philanthropy- 1 of

2

• Two aspects to the pressure on businesses

to be more businesslike in their

philanthropy:

• Base giving on business skills, resources, and

capabilities to enhance philanthropic outcomes.

• Focus on philanthropy that will enhance

corporate profitability and also make a difference in the community (a strategic approach).

• Strategic giving is on the rise

Managing Corporate Philanthropy- 2 of

2

• Factor Conditions – the available inputs for

production

• Demand Conditions – concerned with the nature

of the company’s customer and the local market

• Related and Supporting Industries – can also be

strengthened through strategic giving

• Cause-Related Marketing – a direct linking of a

firm’s product or service to a specified charity; each time a consumer buys the product, a

donation is given to the charity by the business (is this really philanthropy?)

• Global Philanthropy – depends on the size of the

firm’s workforce in international markets

The Loss of Jobs

• A negative consequence of a firm's actions;

has a detrimental impact on the community

From Offshoring to Reshoring –

processes to a different country.

• Affects blue collar and white collar workers.

• Even skilled high-tech jobs are offshored.

• Reshoring – returning of business processes

to their original location; the costs often

outweighed the benefits

Business and Plant Closings (1 of 2)

• Business and plant closings have detrimental

impact in the community.

• What rights and responsibilities does

business have in relation to employee and community stakeholders? Consider:

• Before the Decision to Close is Made –

• Is this the only option?

• Diversification

• New ownership or employee ownership

Business and Plant Closings (2 of 2)

• After the Decision to Close is Made –

• Community-Impact Analysis

• Transfer, Relocation, and Outplacement

Benefits

• Gradual Phase-Outs

• Helping to Attract Replacement Industry

• Survivors: The Forgotten Stakeholders,

need-• Emotional support

• Directional support

• Tactical support

2-Business and Plant Closings

Before Deciding

to Close

Diversification

New ownership New owner Employee ownership

3-Business and Plant Closings (continued)

After Deciding

to Close

Conduct a community impact analysis

Provide advance notice to employees/

community

Provide transfer, relocation, and outplacement benefits

Phase out the business gradually

Help attract replacement industry

?Community Impact Analysis

WARN? Advance Notice

Worker Adjustment and Retraining

Notification Act (WARN)

•Requires firms with 100 or more workers to provide 60 days advance notice before

shutting down or conducting layoffs.

•The recent global economic crisis has

prompted some states to strengthen WARN protections.

•WARN often falls short of its goals of

protecting workers.

? Communicating With Employees

Who are Being Laid Off

Be complete

Be consistent

Inform affected employees first

Inform retained employees

?Survivors– The Forgotten

Stakeholders

Notification Act (WARN)

Key Terms