Being a good corporate citizen can be good business, too

IBM, Accenture and others provide a fascinating business case for being a good corporate citizen.

When Mary Livanos and a group of her colleagues visited an impoverished South African school, they brought with them a soccer ball as a gift for the children.

South Africa was gripped in soccer fever with its turn to host the World Cup impending. For the children, many of them wearing the same set of clothes every day for the past year, that day might as well have been Christmas.

“The kids treated us like visiting royalty, and it was such a jolt to see these kids, most of them without shoes, many of them parentless,” Livanos said.

“It truly brought home what these people struggle with and that anything that you could do to help was valuable. You do realise the value of the things that we take for granted.”

It’s precisely that epiphany that Livanos’ employer, IBM, had in mind when it conceived its Corporate Service Corps program.

Through the program, teams of IBM employees drawn from all over the world are pulled together to participate in NGO work and engage with businesses in underprivileged countries. Livanos and her team were posted to South Africa, but it’s just as likely a team will work in Vietnam, Tanzania or east Europe.

Back home, Livanos is an operations delivery manager with IBM – a rising star of management talent that qualified her for the privilege of participating in a program that the vendor has now put over 1,500 of its global headcount through.

While in South Africa, she worked with tourism agencies to develop a program to capitalise on the FIFA World Cup, and maintain tourism activity afterwards.

For Livanos, who found herself working with IBMers from Japan and Italy, Canada and the US, the experience was one of substantial personal development.

“Our team was accommodated in a lodge with a very large kitchen,” she said.

“Every night we would sit down and prepare a meal together and share our experiences. We were a sounding board and were able to utilise the brain power of 12 people across all our projects.”

From IBM’s perspective, the intangible benefits were almost immeasurable. For a six month investment into the program (Livanos went through a three-month preparation process, spent a month in South Africa, and two months in debriefing), the vendor succeeded in improving the value of its brand in South Africa and developing valuable relationships with a number of NGOs.

Perhaps most importantly, the program develops the kinds of real-world management skills in its staff that cannot be simply taught, and in the process building loyalty to an organisation at a time where the industry faces a critical skills shortage.

A week after Livanos arrived in South Africa, she became seriously ill, and was confined to bed for a full four days before raw determination had her back out on the field. With no family to rely on, Livanos described how IBM and its NGO partners became the de facto carers; an experience that she didn’t put much thought into at the time, but on reflection was significant to her:

“I had IBM and truthfully I was so fortunate in that we’re well insured and our NGO partner came rushing over quickly to get me medical attention and find a specialist. I had my team running me around to doctors and getting medicines.” It’s the kind of positive publicity – both internal and external - that’s difficult to put a dollar value on when it comes to an organisation’s reputation , but for IBM (and others) it’s become a core business proposition.

The business of being good

IBM is not the only organisation to see the value in having a strong corporate citizenship program, of course.

Accenture is a global technology provider with some 200,000 staff worldwide. It too runs a program similar to IBM’s Corporate Service Corps program, which it calls Accenture Development Partnerships.

Accenture director of corporate citizenship, Jill Huntley, claims its contribution to an NGO is typically around providing people, rather than raw dollars.

“We partner with them to provide people,” she said. “People and skills to then place around the world, working with community organisations and NGOs in developing countries in order to achieve aims around building and strengthening local organisations.”

For instance, when Haiti was devastated with natural disasters, Accenture and its NGO partners responded in the reconstruction process.

“We have been quite involved and supportive in the reconstruction of Haiti,” Huntley said. “In many cases it’s possible to help them leap frog forward from where they were before. In the face of complete destruction we were able to build things better than they were before through technology,” Huntley said.

In one example, it partnered with NetHope to address a number of technological difficulties Haiti faced around the ability for other NGOs and disaster response units to quickly mobilise and communicate with other parties in situations that are by nature chaotic.

It’s not just Haiti that offers this kind of opportunity. As Iraq and Afghanistan stabilise, the rebuilding will likely have some form of backing from Accenture.

However, Accenture also acknowledges that it needs to be careful not to expose its staff to unreasonable risk through these reconstruction initiatives, and in the process suffer a potential PR backlash. Sending staff ill-equipped to handle warzone conditions into some of the more politically unstable environments (such as current Iraq and Afghanistan, Myanmar or North Korea) is unfeasible.

Although it can be argued these nations need aid more than any other, the ability to affect positive outcomes within them is relatively small, Huntley said, making them unattractive corporate citizenship investments – from both a humanitarian and business perspective.

“The important thing is to figure out how to do it well and where what you can do is most valuable. Companies can only bring certain things to the table, and can’t be everywhere all the time,” Huntley said. Accenture’s model of engagement with NGO’s has an additional benefit in giving the company access to a range of skills and clout that it, as a commercial organisation, might not have covered when breaking into these disadvantaged markets.

For instance, by nature a NGO will have the reputation ‘on the ground,’ and know how to help equip local people with the skills to find a job or build a business, and often a commercial body can collaborate with the NGO to bring various business skills and capabilities to combine with that expertise.

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Why this is important

Global organisations often struggle to develop commercial partnerships in developing nations. The reason is simple – it’s not corruption (though corruption is certainly something ethical companies need to be able to walk away from) – but the gap between the needs of a global organisation and the capabilities of groups in emerging nations is significant.

An AMR Research report from 2009 claimed that once these commercial challenges become obvious, projects were pushed to the corporate philanthropic organisation – in the process falling from the top of the business agenda and making it difficult to build any meaningful momentum.

“It was clear that for these projects to be successful, they had to be built into the core business strategy,” the report concludes.

And Regnan managing director, Erik Mather, agrees.

“The first thing that corporate responsibility is about is a way of expressing a strategic approach to running a business,” he said.

Regnan is a research and engagement organisation, and focuses on environmental, social and corporate governance (ESG) forces in the market.

It counts the ACT Department of Treasury, Catholic Super, HESTA Super Fund, Vanguard and Westscheme amongst its clients. The combined client base has invested more than $53 billion in S&P/ASX200 companies in 2010.

It then endeavours to present clients a long term perspective on ESG on behalf of its institutional investors, while advocating improved governance of ESG risks.

Being a good corporate citizen is not about benevolence. As with green technology, the message only becomes effective when there’s a dollar value that can be attached to it.

By definition, with ESG, Regnan’s concern is three fold – the ‘E,’ or ‘environment,’ is the green message – any initiative that has an environmental benefit has some kind of efficiency or long-term element to it, which usually amounts to a cost saving.

‘S’ (‘social’) is essentially the people story. Corporate responsibility has proven to be a key consideration for leading graduates and job seekers to the organisation – and the success that IBM, Accenture and Cisco have had in finding, retaining, and motivating skilled staff is a testament to that.

‘G’ for ‘governance’ is a straightforward case of looking at the appropriate checks and balances – including alignment of interests – that can affect an organisation’s ability to win and retain customers, and in effect stay open at all.

What can happen to an organisation that ignores ESG? Today, tenders give preference to organisations with strong green practices; skilled staff can leave to join an IBM or Accenture that will support their philanthropic urges.

And when governance goes wrong there’s a case study in Enron; indeed, it was such a substantial scandal that it single-handedly shut the huge accountancy firm, Arthur Anderson, down.

And yet, despite ESG being of such importance to the core of the modern business, many organisations have failed to recognise this.

“We say internally that we still have a significant amount of job security, which is code for ‘organisations have more to do',” Mather said.

“There are still some members of the old guard of corporate Australia that think of corporate responsibility as being the old checkbook philanthropy of the past, which it’s not.”

In numbers: 70 per cent of the capitalised value of a company is now a long list of intangible assets, and includes things like reputation and license to operate in the community. The latter phrase didn’t even exist 10 years ago, where closer to 70-80 per cent of a business was wrapped up in tangible (‘brick-and-mortar’) assets.

Mary Livanos’ work in South Africa was philanthropic in nature, and brought a great deal of value into an underprivileged environment. At the same time, the program she was involved in is a shining example of the approach to corporate citizenship that all organisations should look at into the future - yes it’s good work, but it’s good business, too.