Good Citizenship Is Good Business
Citizenship is establishing itself as the requisite mind-set for doing business in the 21st Century
—Ged Hedstrom
Over the past few years there has been an increasing recognition by organizations that there is a need to accept that they are responsible to a growing body of core stakeholders, suppliers, customers, employees, society, and government. With the growth in stakeholder management, organizations have at last begun to realize that good citizenship is good for business. Furthermore, there is evidence that there are green shoots of understanding, that there is a moral choice to be made in regard to wealth distribution. Social harmony is believed to be the proper choice by many, but not all organizations or individuals would voluntarily give up their own self-interest or profit agenda to achieve it. Many capitalists would argue that changing responsibility from that of return on investment to its shareholders to that of a wider stakeholder model is little more than an attack on free market principles and is an indication of irresponsible management of the organization’s resources. Good citizenship, therefore, is to capitalism little more than a violation of the principle that bigger profits lead to better standards of living and that by not trying to achieve the highest profits possible, or by offering, for example, employees a better benefits package than the market can bear is reckless. However, what is becoming apparent through research is that wealth redistribution isn’t simply a one-sided bargain, whereby those who have given away what they have for the sole benefit of the recipient. What organizations and philanthropic individuals are discovering is that doing good has a net benefit, which returns favorable outcomes to the giver as well as the receiver. Decisions about wealth redistribution, therefore, exceed simple mathematics regarding rich to poor, inequality to fairness, profit to corporate social responsibility but instead offer a mutually beneficial outcome that all can sign up to. Results show that it is possible to invest in doing good and yet benefit from sustainable healthy profits at the same time. Thus, it is possible that delivering social harmony provides more stable market conditions and less dramatic levels of boom and bust.
Temperatism goes beyond the triple bottom line of people, planet, and profit, which is advocated by sustainable business consultants and the approach currently taken by organizations with an interest in sustainability. The multiple shareholder approach is progress, but can still be viewed in the context of a furthering of self-interest that is at the heart of the capitalist system. Marx used the term appropriation to describe the character of organizations in pursuing profit-first motives, noting “that capitalists appropriate, or commandeer, the surplus produced by labor and do not remunerate them for it” (Stokes, 2011).
Organizations still only implement policies based on the business case, rather than because it is the right thing to do. Meyer (2015) offers the concept of “doing well,” which is defined as “marked improvements in terms of multilevel performance including economic, human, and environmental aspects, indicating the magnitude of change in an upward trajectory, and highlighting future viability and sustainability.” The argument is that there is a corresponding relationship between “doing good” and “doing well,” in that organizations which do good perform better economically delivering outstanding financial results. However, “‘doing good’ is not considered a means towards ‘doing well’ (profit/economic performance). Profitability or economic improvements are an effect of ‘doing good’ . . . ‘Doing good’ is an authentic, unselfish way to shape beneficial situations for everyone” (Meyer, 2015).
Today, the majority of organizational commitment to good corporate citizenship is as a result of key factors such as pressure groups, fear of regulation from government, issues with attracting and retaining talent, and increased competitive advantage requiring the organization to make themselves more attractive to investors and customers who have a different agenda than a black-and-white return on investment. But what started as something that could be viewed as a cynical attempt by capitalist organizations to avoid interference in the market has extended to a genuine rise in organizations and government bodies attempting to do good and seeing the positive effects of doing good on their bottom line.
At the forefront of the current good citizenship model is the green business movement. Since government regulation on climate change issues is inevitable, many organizations are preparing themselves ahead of time by changing their business model and integrating green business practices into their day-to-day business operations. Even the presidential executive orders to remove climate change regulation in the United States will not completely reverse the progress made, because businesses have seen the economic benefits of environmental protectionism. Therefore, it is not just the threat of government regulation that is changing organizational behavior, rather the discovery that good citizenship is good business. For example, “FedEx’s new fuel efficient hybrid trucks reduce fuel expenses by more than a third while shrinking smog-causing emissions by two-thirds and nearly eliminating particular emissions, the company reports” (CQ Researcher, 2010). The result is more than good PR. As well as appealing to customers who may be willing to pay more for friendly products such as responsibly sourced fish, sustainable products, or organic foods, employee turnover reduces, cost savings and efficiencies are found, and innovation and creativity increase. It could be argued that organizational performance improves because an organization is purposeful and intent on doing good. The CIPD conducted a survey in December 2010 called Shared Purpose: The Golden Thread. It showed that organizations that have a purpose achieve better results in both financial measures such as profitability and people measures, including improved employee engagement and productivity. Research studies conducted by Gallup have showed that engaged employees are 18 percent more productive, 12 percent more profitable, 60 percent less likely to leave the organization, and take less time off sick—2.7 days per year versus 6.3 days for disengaged staff. Good citizenship therefore provides more than a good feeling. Doing good creates a healthy exchange of benefit for both society and the organization.
The societal benefits of higher incomes, better health, education, training, and employability are matched by corporate benefits such as higher work motivation, higher productivity, and lower absenteeism. Investments up to the point where none of the participating subjects (or institutions) can be made better off without another subject being made worse off (in absolute terms) are therefore good management practices. (Leisinger, 2007)
Many organizations are now working alongside pressure groups, such as the Carbon Trust, to develop and adopt a robust corporate social responsibility (CSR) policy and program. As well as reducing the impact on the external costs of operations on the wider environment, many organizations are promoting their role in improving the wider society and providing enhanced employee benefits package that goes well beyond the remuneration that the market would dictate for workers in the industry. The growing concerns caused by globalization and the rise in the use of technology have increased the interest in organizations doing things differently, not just for investors and customers, but also for the wider stakeholder community. The transparency created by social media means that the wider global community could now examine every organization in regard to social responsibility. Governments and organizations are more aware than ever of the pressure from ordinary people. This pressure coupled with the advances in social media means any ministerial gaff or corporate misdemeanor can spread across the globe in a matter of seconds, doing untold damage to corporate reputations and resulting in significant consequences to the bottom line. Power has begun to shift away from politicians, government regulators, and organizational leaders, instead reverting to those who use the new information super-highways to promote and market their objections to abhorrent business practices. If ever there was a time in history where fundamental change could happen and happen rapidly, it is now. We are no longer reliant on people being in the right place at the right time, or having access to vast reserves of wealth to push for reform. Having the means to hold the accountable responsible gives individuals the motivation to stand up and be counted. We are now equipped to challenge the system, to reject passivity and prevent the capitalist system from fooling us into believing we can’t make a difference.
Temperatism itself is not simply a promotion of corporate social responsibility or the welfare state, although both these ideas contribute to how Temperatism may be achieved in our society. CSR, which Veldsman (2015) defined as “an organisation acting in an ethical, responsible and sustainable manner in its intentions, decisions, actions, and impact towards its context,” does not solve the issues of fast capitalism, profit-first agendas, and the deregulated labor market that have led capitalism to have such widespread negative effects on the workers. Equally, socialism did not democratize the ownership of the means of production; rather its history demonstrates it promotes political power and elitism over the power of capital. The fight is not to do what we have always done, but to promote doing good as a new agenda, with new ideas, creativity, and innovation to support it. The fight is to change the focus of what we do, as well as how we do what we do. Instead of allowing organizations to hide behind complex multi-country structures that create a barrier between the corporate machinations and the society in which they operate, there needs to be an increased visibility. We need to develop more transparency of both what organizations are doing and awakening our awareness of how other people are living. This isn’t an excuse to gawk at the lives of the super-rich or persecute us with the despair of the amount of suffering in the world, but rather to shine a light on the ugly truth of our current predicament. We must hold a magnifying glass over the levels of individual consumption and the impact that our pursuit of consumerism is having on the wider society and the environment. Sky’s Ocean Rescue in the UK is an example of one such magnifying glass that is focusing on the impact of disposable single-use plastic on the ocean environment. The campaign blends the organization’s capacity for investigative reporting with a doing good agenda. Organizations are set up to encourage us to consume and compare our consumption to the aspirational advertisements in media and also make comparisons in regard to our peer group. This gives us an unreality about the true wealth that we may have and indeed the house of cards that is holding up the consumption of our neighbors. It was shocking that during the U.S. election 2016, portions of the electorate, and now government, are still in denial about the dangers of climate change. This ignorance of the truth of our situation cannot continue.
Organizations Make Temperatism Possible
Therefore, an essential actor in the Temperatist ideology are organizations and their impact and influence on the socially constructed marketplace. Meltzer complains that “after 25 to 40 years of talk, promises and proposals about energy, education, health care and cocaine and other drugs little if any progress is visible on these issues.” (Meltzer, 2012). These issues are as important to corporate life as they are to society. Power cuts and high energy prices impact profit; education affects the ability of organizations to find the skills, knowledge, and talent required for their operations; and the health of the population affects the cost to organizations of absence and sickness of their employees. The Temperatist approach to these problems is not to enlarge the size of the state, but increase the responsibility of organizations in these areas, again with a mandate of doing good. There is no acknowledgment that capitalism is to blame for the lack of progress in these areas, even though the energy market in the United States and UK is dominated by private organizations, and organizations are involved in the education and healthcare sectors. It is not criminal organizations, but organizations pursuing profit, which are involved in the market for illegal substances. Criminal or legal, organizations behave the way they do, in order to gain support from their core stakeholders. It is the systems that we create, through regulation, law, and socially constructed rules that govern the behavior of organizations. To complain about the way organizations act, even if they are acting legally, is directing our efforts in the wrong place. The institution of capitalism begets bad citizenship, which adjusts only when organizations are pressured to adopt different practices, such as CSR. If investors invest only in organizations that act as good citizens, then good citizenship will become good business.
The issues and faults that belie the benign promotion of capitalism have been hidden by the focus of issues and problems being the fault of individual behavior, individual circumstances, and individual failings. If we examine the outcome of the August 2011 riots in the UK, the actions by government were against individual rioters and a focus of resources was on identifying, arresting, and punishing each individual. Although there was some debate at the time as to the reasons for the riots and some examination of the social ills that led to the actions taken, it is hard to tell if any resource was committed to addressing the very problems that led to the riots in the first place. The riots were diminished from being a big social problem to being addressed as a group of individuals who needed to be dealt with separately. We were so busy pointing our fingers at the individuals involved that we forgot to address the bigger questions regarding good citizenship:
- Is it right that our economic system leaves whole sections of society underemployed or unemployed?
- What damage is a lack of investment into the talent potential of the rioters having on the individuals’ ability to partake in their role of citizen?
- How can we help these individuals feel empowered in a manner that doesn’t require violence?
As we dismissed the rioters as a few bad apples, we stand by as all the while the negative changes we have experienced in society continue to grow, because the problems of individuals added together is a bigger problem than the sum of the individual parts. Therapy and self-help books won’t fix the world’s problems, but a focus on social citizenship will. It is not enough to say that individuals are responsible for their actions toward society, if we do not hold organizations to the same level of accountability. Good citizenship is more than just doing the right things because they are morally promotable, but rather because there is the recognition that there are greater social and economic benefits associated with strategies, which consider the long-term effects of how businesses operate in the wider environmental context. If society, government, and organizations really wish to achieve the outcomes that good citizenship offers, then the principles upon which organizations are founded need to change fundamentally. Instead of make profit and individuals will benefit, the clarion call should be doing good and being good citizens will make a profit. Organizations cannot operate separately from society. Not only are their employees part of the society in which the organization operates, but so too are the other stakeholders, the products and services provided, and the external costs of operation that may be unseen, but still impact on society. When organizations do not act as good citizens, there is no reason to expect that their employees, customers, suppliers, or the wider community will either. But how does doing good move beyond simple CSR policies, rather as a reflection of a whole attitude and spirit in which organizations operate in society?
Doing Good Is an Everyday Operation
For Temperatism, doing good is not limited to how an organization does its business in regard to mere processes, but what it does, the inputs and outcomes, when it acts, who it is acting on behalf of, and where it focuses its efforts. Outcomes are a result of everything that goes into an organization. If everything that goes into the day-to-day operations of the business is corrupted or misaligned with a doing good agenda, then doing good as an outcome is impossible. Today there is evidence that doing good is extending beyond simple policies and day-to-day operations. Andrew Savitz, formerly of PWC said, “A generation of people in search of deeper meaning in their lives is now taking over the corporate suites” (CQ Research, 2010). Boardrooms are being filled with individuals who believe that organizations have a responsibility that is wider than just producing bigger profits for their shareholders. Entrepreneurs are starting businesses that have doing good at the heart of their organizations’ mission and values, and which are in turn becoming very successful in the marketplace. A whole industry has developed that offers investors a different measure of organizational success, from funds that focus exclusively on organizations that have a good record of wider responsibility to indexes that are designed to measure the financial performance of organizations with a track record in good CSR. These examples are more than purely an acknowledgment that social responsibility is on an agenda somewhere but recognition that there are investors who believe that social responsibility and doing good matters and should have primacy. Organizations have realized that having a strong reputation for CSR helps them to combat negative PR when things do go wrong. But organizations need to go further than reputation management; they must see themselves “as an inherent part of the intricate fibre and DNA of the communities/societies in which they operate . . . acting as trusted custodian of the assets of the communities/societies in which they are embedded and operating” (Veldsman, 2015). Taking part in doing good allows for mistakes to be made, albeit not too often. The impact on reputation and investor confidence is therefore a critical component of good citizenship being good business. This recognition is essential if we are to consider a market with a different agenda. If Temperatism is to succeed in persuading organizations that they need to change their agenda to doing good, those same organizations must be assured that they can continue operating with access to an investment market, which is necessary for them to finance their operations. If investors did not exist and did not react, negatively or positively, to events pertaining to doing good, then Temperatism would be a nonstarter. But reputation can matter in equal measure to that of competitive advantage, when it comes to those who invest in organizations.
Measuring Doing Good
The difference that a doing good agenda has on the citizenship question is that judgment regarding good management of an organization’s resources goes beyond short-term finance reporting, but will be based on a long-term strategic viewpoint of whether the choices that an organization is making contribute to sustainability and doing good. This has implications for the governance of organizations in regard to the role of investors and their involvement in the long-term sustainability of organizational decisions. Investors will quickly establish which organizations are having a positive impact on their stakeholder group and will have confidence in an organization with a strong reputation for doing good, as well as the accompanying financial performance. Demonstrating a lead in social performance “infused with a sense of rightness, publically stated as doing the right (or good) thing for the right reasons, in the right way, at the right time” will become the new measure of good management practices, alongside the delivery of long-term financial performance measures (Veldsman, 2015). Stakeholder value is not an alien measure, as it has long been recognized there is a wider definition of stakeholder beyond the traditional financial investor. But Temperatism offers the foundation, in regard to basic goods, as to whether organizations are delivering as a good citizen with a wider doing good agenda.
However, Temperatism aims for organizations to establish doing good beyond simple CSR policies and reputational management. Instead, Temperatism wants to restructure the primary role of organizations to that of a doing good first and foremost. Good citizenship emphasizes a number of key areas for corporate responsibility from caring employee practices, enhancing the local and where pertinent the global community and wider society in which the organization operates, and positively impacting the environment and delivering shareholder value. Currently, CSR practices are supported as long as they can be shown to be good for business. However, too often the gap between what is good from a short-term profit perspective and what is good for society as whole and sustainable long-term profits is too great a gap for organizations to cross. Duty of care should first and foremost be to the wider society and profit second, if the full possibility and opportunity afforded by good corporate citizenship is to be fully realized. The hesitancy with embracing doing good is the difficulty many organizations have in measuring their success at improving wider stakeholder value, leading to questions as to how to measure whether an organization is or is not doing good. One of the reasons why monetization is so attractive to humanity is that it is easy to measure. A positive number on the bottom line is success, a negative number failure. But when it comes to doing good, finding a measure that would judge whether organizations are achieving a doing good outcome is difficult to measure mathematically or with concrete certainty. There has been much research on whether socially responsible firms deliver better return on investment than those who do not engaged in CSR, so the market already has mechanisms to decide who to include in socially responsible indices and who do not match that criteria.
It would certainly be a challenge for those embracing Temperatism to develop a consensus over what should be measured, how it is measured, and what the rewards should be to support organizations that embrace good citizenship.
Certainly, being able to demonstrate that the organization is contributing to the delivery of improvement in areas of basic goods would be a start point for how doing good might be measured. Suggesting that the economic targets are set for basic goods is easy to write on paper, but this, of course, begins with a need to answer the question of how much is enough in regard to basic goods. How much is enough is being explored by experiments in universal basic income, which are explored in various nations to pay citizens a basic income to unemployed citizens such as in Canada and Switzerland. In Finland “two thousand unemployed people will be given €560 every month for two years, without restrictions or conditions” (Kentish, 2016). The goal of such income experiments is to promote employment by removing incentive traps caused by social welfare payments, reduce inequality, and cut welfare spending. This might seem backward, giving people more to cost less, but giving everyone certainty of income removes the disabling impact of inequality. There would also be debate as to what measures are appropriate to address immediate issues of poverty, climate change, and specific social issues that need to be addressed. Having the end in mind in order to create a set of measures is essential to decide whether actions taken moves the society toward the goal or away from it. Once again there is a faith in humanity’s ability to invent and create methods to measure success. These measures already exist in many organizations and bodies who are seeking to extend their understanding of the outcomes of their activities.
The Temperatist model makes one significant swing in regard to economic ideology. Instead of relying on a process of tax and spend for redistributing wealth, it exposes the producers of wealth to their true position in society.
The market becomes the center stage in ensuring that basic goods and societal needs are protected. It becomes the goal of organizations to not just ensure that society flourishes, for the lucky few, but also to encourage the weak and dispossessed to be raised up by the rest of society. Decisions will need to be made on how best to ensure that the most good can be extracted from organizational endeavors. Rather than creating a position where avoiding responsibility and external cost creates winners and losers in the market, organizations will be the architects of a win–win between private and public gains. This is different from a hopeful trickle-down, but rather it is a sharing of success and responsibility; as society flourishes, so too will the organization. The organization will have the skills and knowledge they need for their operations because they will be investing in it, not at a cost to competitive advantage, but in advancing it. Societal problems and issues will no longer be the responsibility of someone else but in everyone’s interest to work together and collaborate in resolving. As organizations are already discovering with CSR initiatives, doing good also creates a space for innovation that minimizes waste, improves efficiency, and finds long-term solutions to scarce resources. Doing good offers the opportunity to create a society that is more stable and more equal, something necessary for a healthy market.
The final thought on good citizenship being good business is the current situation of expensive sticking plaster solutions to major problems in our society. Most issues faced by organizations are as a result of systemic problems in our society as a whole. Consider, if you will, the cost to organizations of theft and the cost that organizations have to pay for security measures required to protect the organization against theft, or the cost of absence and the cost of the processes and mechanisms required to manage absence in an organization. These two examples are just two of any number of organizational issues that are increasing and adding a significant cost to organizations, caused primarily by inequality. The cost of the savings organizations make in regard to paying minimum wages, lean workforces, and people costs in general have led, directly and indirectly, to additional costs and resource being committed to solve the unintended consequences of the cost savings made in the first place.
We are not richer for organizations avoiding doing good, but instead are forced to commit more resource and energy than ever before to fix the problems caused by bad citizenship behaviors. It will take time to clear up the mess of our mistakes and bring things back into balance, but the longer we continue to do the wrong thing, the bigger the mess will get. It’s not a case of whether organizations should be doing good; it is how long it will take for them to realize that being good citizens is good business.