 "The 6 Pillar way to go")
Businesses are no longer isolated entities in the corporate landscape, but fully integrated into the community. They now have no option but to take into consideration stakeholders' needs and sensitivities in order to earn the license to operate. This license cannot be bought, but has to be earned.
At stake is a company's reputation; today even a single disgruntled stakeholder can potentially cause severe problems for a business. Also we live in an age where companies have to earn their reputations every day. The challenge then is to be proactive. This requires a deeper understanding of the impact the business has on all stakeholders, positive and negative. Because, every business does have some negative impact, however small it may be.
The only way a business can address issues related to reputational risks is by breaking these down into manageable proportions, prioritizing stakeholders and by actively engaging with them. We have devised a model that attempts to capture the problem and help companies work towards a solution.
1. Articulate vision and values: Business begins with a vision statement, a forward-looking statement that outlines what an organisation wants to achieve. It defines values, goals and objectives and helps proclaim the purpose of the organisation. The values articulated here may also be integrated or established as values of the corporate brand. Responsible business conduct is built upon these principles, and companies that have enjoyed enduring success are those that have remained glued to them despite changing market dynamics.
2. Identify and prioritise key stakeholders: Stakeholders are those constituencies that have a direct stake in a company, and impact or are impacted by its operations. They can be critical for a company's success. An on-going engagement plan is essential and beneficial. Also companies should be mindful of the diversity within stakeholder groups and know that establishing a dialogue with them brings about the best insight to challenges.
3. Identifying impacts, risks and opportunities: Based on stakeholder discussions, the company can become fully aware of the impact it has on economic, social and environmental sustainability. Therefore, what is now expected is for the company to address the potential risks by taking proactive steps and identify and build on opportunities.
4. Define business policies and practices: The business principles outlined by companies are reflected in their policies which are the key tools for employees to follow. An organisation must assess the extent to which it has policies in place to guide employee behaviour with regard to managing environmental aspects, labour practices, human rights and societal concerns.
5. Establish implementation management and governance systems: For business principles to be effective and command support, companies must create deliberate agendas that focus on raising awareness and implementation. One way of translating business principles into individual principles can be by creating a structured program that seamlessly integrates these processes and guidelines into management systems, and this mandates internal consultation and communication. These should also be extended to joint ventures and to contractors and suppliers, where required.
6. Measurement and reporting: It is important for companies to regularly review, communicate and report their performances across key sustainability related indicators. These performance indicators can be monitored through internal tracking and periodic reviews and reported to external stakeholders annually.
The 6 Pillar Model can be used to guide a company's adherence to the key components of strategic corporate responsibility. It can also be used to benchmark performance with others and to track their performance over time.
Lulu Raghavan
Managing Director, Landor India
Ruchi Gunewardene
Managing Director, Brand Finance Lanka
At stake is a company's reputation; today even a single disgruntled stakeholder can potentially cause severe problems for a business. Also we live in an age where companies have to earn their reputations every day. The challenge then is to be proactive. This requires a deeper understanding of the impact the business has on all stakeholders, positive and negative. Because, every business does have some negative impact, however small it may be.
The only way a business can address issues related to reputational risks is by breaking these down into manageable proportions, prioritizing stakeholders and by actively engaging with them. We have devised a model that attempts to capture the problem and help companies work towards a solution.
1. Articulate vision and values: Business begins with a vision statement, a forward-looking statement that outlines what an organisation wants to achieve. It defines values, goals and objectives and helps proclaim the purpose of the organisation. The values articulated here may also be integrated or established as values of the corporate brand. Responsible business conduct is built upon these principles, and companies that have enjoyed enduring success are those that have remained glued to them despite changing market dynamics.
2. Identify and prioritise key stakeholders: Stakeholders are those constituencies that have a direct stake in a company, and impact or are impacted by its operations. They can be critical for a company's success. An on-going engagement plan is essential and beneficial. Also companies should be mindful of the diversity within stakeholder groups and know that establishing a dialogue with them brings about the best insight to challenges.
3. Identifying impacts, risks and opportunities: Based on stakeholder discussions, the company can become fully aware of the impact it has on economic, social and environmental sustainability. Therefore, what is now expected is for the company to address the potential risks by taking proactive steps and identify and build on opportunities.
4. Define business policies and practices: The business principles outlined by companies are reflected in their policies which are the key tools for employees to follow. An organisation must assess the extent to which it has policies in place to guide employee behaviour with regard to managing environmental aspects, labour practices, human rights and societal concerns.
5. Establish implementation management and governance systems: For business principles to be effective and command support, companies must create deliberate agendas that focus on raising awareness and implementation. One way of translating business principles into individual principles can be by creating a structured program that seamlessly integrates these processes and guidelines into management systems, and this mandates internal consultation and communication. These should also be extended to joint ventures and to contractors and suppliers, where required.
6. Measurement and reporting: It is important for companies to regularly review, communicate and report their performances across key sustainability related indicators. These performance indicators can be monitored through internal tracking and periodic reviews and reported to external stakeholders annually.
The 6 Pillar Model can be used to guide a company's adherence to the key components of strategic corporate responsibility. It can also be used to benchmark performance with others and to track their performance over time.
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Lulu Raghavan
Managing Director, Landor India
Ruchi Gunewardene
Managing Director, Brand Finance Lanka