Presenter: Pam Hurley, International Business Consultant

Location: Greater Columbus Chamber of Commerce, 37 N. High St., Columbus, Ohio

Business is an integral part of the society in which it operates. Employees, customers, contractors, suppliers and often governments are all stakeholders in the company just as much as the shareholders themselves. The world as a whole is changing rapidly and so also are the various societies of which business is part. That means business too must change to keep in step with all its stakeholders. Technology in all its various forms and "globalization"-best illustrated by the huge increases in foreign direct investment-are key drivers of this constant whirlwind of change in which we all find ourselves.

One significant consequence of this whirlwind is a shift in the expectations which the stakeholders have of business-particularly multinational companies. Many national governments now have far less economic power than the businesses which operate in their countries. Forty of the one hundred largest economies in the world are businesses, not governments. Furthermore, surveys show that confidence in traditional institutions is at an all-time low. Society responds to these developments by seeking and often demanding that business takes responsibility for issues which have hitherto been the province of governments. These new demands present very real dilemmas for business.

• What legitimacy does business have for becoming involved in such issues?
• To whom is business accountable and how?
• Are the legitimate expectations of shareholders compatible with these wider societal demands?

The business response to these demands must be a genuine one which is then delivered. Rhetoric must be matched by performance. Transactions are now so transparent, and audit so prevalent, across a huge range of topics that any dissembling will soon be apparent. It would destroy the credibility of the business as a whole. This means that companies can no longer be presented as faceless institutions, turning an honest penny for the shareholder without doing too much damage to the environment. Businesses will not be unanimous in how they respond to these wider social demands. They will draw the line in different places in terms of balancing stakeholder concerns. They may disagree on who should be the judge of ethical performance.

While the trend in the United States has been to approach questions of business ethics through the machinery of "ethics officers" whose first concern is with legal compliance, in Europe, by contrast, there is much more concern with obtaining external perspectives on how a company is doing. A whole range of approaches to "social reporting" and "social auditing" is being developed with the objective of providing an account to the world of the corporation's behavior in relation to all of its stakeholders. Some of these approaches currently found in Europe are: 1) social balance sheets-a legal requirement in France and Italy, mostly concerned with employees, 2) ethical accounting-popular for smaller companies in Scandinavia with focus on stakeholders, 3) benchmarking-increasingly popular within sectors and 4) social audit-used by the New Economics Foundation (NEF). See note.

But whether one follows the U.S. or the European line, there are no absolute answers to these and the myriad of other questions which arise. Of course, business cannot and should not bear the entire responsibility for answering them. But business is on the firing line. Corporations can and should lead the debate involving educators, academics and the whole battery of stakeholders who have a legitimate view. At the end of the day, business will be required to justify and live by the conclusions reached.

DISCUSSION

What is the perception of European-based multinational businesses in former colonial countries? Is assistance with infrastructure, for example, resented as an attempt to return to a state of dependency? Or is there a risk that a whole basket of demands once met by government will now be placed on the doorstep of business?

The consensus was that this area needed careful handling. Offering selective help with particular projects was fine but it is dangerous and unhelpful for the development of community self-sufficiency to have business take on too much.

What are the respective roles of schools, parents and business in creating an ethical and morally sound society?

There was some feeling in the group that educators had opted out of their role as advocates of ethical values because of concerns about political correctness. Saying nothing about ethics and morality has proved much safer than expressing a view. In any case, whose values should prevail? The consensus was that too much of a vacuum has been created. It is not for schoolteachers to impose their values on their pupils, but local communities need to work with their schools to establish a program of character and civic education. By the time kids take up employment, and business can exert an influence, it is really too late unless some groundwork has already been done.

NOTE

The New Economics Foundation, located in London, England, was founded in 1986. It exists to 'build a just and sustainable economy with ideas and actions that put people and environment first.' NEF challenges those who insist that there is no alternative [to the current way of doing business]. Source: http://www.neweconomics.org

Pam Hurley received an MA (Hons) from Edinburgh University. She continued her studies and received a Postgraduate Certificate in Education. Her early career was spent in United Kingdom central government working on public and social policy. For the last fifteen years or so she has specialized in people and organizational issues in a range of public and private sector organizations. Pam's most recent corporate role was with Shell International as one of the team producing the highly regarded Shell Global Scenarios. Her role was extended to include support for the program of organizational and culture change. Pam now specializes in facilitating the whole process of organizational improvement from the design of strategy through to implementation. Using her HR (human resource) skills alongside strategic business experience, she provides support for a range of public and private sector clients in the United Kingdom and internationally.

ABOUT THE LOCATION

Participants in the October Conversation were greeted by Pat Groseck, Senior Vice President, Greater Columbus Chamber of Commerce. The Chamber has a membership of more than 4700 businesses that employ 330,000 people and it provides many services to its members. As an example there is a need for an increase in available work force since the unemployment rate of Columbus hovers below 2.5% at present. To meet this need the Chamber is developing plans: 1) to work with public schools and colleges to retain graduates to this area and 2) to attract professionals, especially in the field of information technology, from other states and other countries. According to Groseck, as more businesses become global in seeking new customers, there will be an even greater need to deal with global ethics issues.

Highlights is one of the benefits of membership in the Council for Ethics in Economics. The Council thanks Celianna Taylor for assembling and editing this and future editions of Highlights.

We acknowledge with gratitude the special support of Leadership Circle members Ashland Chemical Company and Jones, Day, Reavis & Pogue.

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