CSR: It’s the stakeholders, stupid

Is it me or is a sign of the times, that sense making and meaning tend to appear more often in academic literature? I had immersed myself into the subject of CSR and was surprised by  Hanke & Stark (2009) “Strategy Development: Conceptual Framework on CSR”. A concept which very simply states that CSR strategy development  has two main elements: Legitimization and sense making, where sense making here again is understood as “active, ‚negotiating expectations’ in collective and interactive processes”.

A CSR framework

If we look again at the model by Lips-Wiersma and Morris (2009) it could be very easy to avoid what Calvano (2008) calls “Stakeholder Perception Gaps” usually created by stakeholder power inequality. Stakeholder dialogues logically should be part of a viable CSR strategy process. The corporation “makes sense” to its internal stakeholders such as employees and management, but also to external stakeholders, such as the community or NGOs. One could even argue that this is a process of social integration. But what stakeholders should be approached and to what extend should their concerns be incorporated into the overall business practice without endangering the economic success of the company?

The Trade and Investment Division of UNESCAP writes 2009 in their STUDIES IN TRADE AND INVESTMENT 68 to ask the following questions:

• To whom do legal obligations exist?
• Who might be positively or negatively affected by the organization s activities?
• Who has been involved when similar issues needed to be addressed?
• Who can help the organization address specific impacts?
• Who would be disadvantaged if they were excluded from the engagement?
• Who in the value chain is affected?

Mitchel et al 1997 defined attributes of key stakeholders or salient stakeholders as being powerful, legitimate and urgent. However Calvano (2008) warns that stakeholders such as communities or NGO which might not be seen as powerful in the CSR strategy conception can develop certain dynamics when their interests are being infringed.  Longo et al, 2006 propose the following grid to what values stakeholders expect from the corporation:

The grid of values

Although the above values appear to be a bit anticipated, they very much demonstrate again how stakeholders make sense of a corporations action in the light of their own expectations. Above grid also shows how norms, values and culture of an organization impact CSR strategy. Corporate culture is thus in an interrelated web with values of the stakeholders, emphasizing that CSR is an activity which builds social capital.

The Values Web (McBain 2010)

This idea of a value web also demonstrates the necessity of the CSR effort to be authentically grounded in the organizational culture and be well linked with its core competencies to allow other actors to actually allow themselves to be associated with the corporation. Any sort of CSR effort should thus start with a careful audit of the company culture.

Sources:

Calvano, L. (2007) Multinational Corporations and Local Communities: A Critical Analysis
of Conflict, Journal of Business Ethics (2008) 82:793–805

CREATING BUSINESS AND SOCIAL VALUE: THE ASIAN WAY TO INTEGRATE CSR INTO BUSINESS STRATEGIES, STUDIES IN TRADE AND INVESTMENT 68, United Nations publication

Hanke, T. & Stark, W. (200) Strategy Development: Conceptual Framework on Corporate Social Responsibility; Journal of Business Ethics (2009) 85:507–516Copyright © United Nations 2009

Longo, M., M. Mura and A. Bonoli: 2005, ‘Corporate Social Responsibility and Corporate Performance: The Case of Italian SMEs’, Corporate Governance 5(4), 28–42.

Mitchell, R. K., B. R. Agle and D. J. Wood: 1997, ‘Toward a Theory of Stakeholder Identification and
Salience: Defining the Principle of Who and What Really Counts’, Academy of Management Review 22(4), 853–886.

If I had a house in Ramallah

My stay in Ramallah is almost over and I cannot refrain from writing something about it, let us say about economy, because in a wider sense it fits into this blog on leadership, management and consulting. When I arrived here I talked to my former landlord, a pharmacist, who lives across from the Muqata and after we had chatted for a while he said: “Honestly Luke, I don’t know where all the money is coming from. They are building there and there (pointing) and we don’t know who is behind it!” “And the building across the street is empty!” his wife interjected.  “It’s strange!” he exclaimed “And you know what, all people we know are in debt, it’s really scary!”.

One of the bigger construction projects

Yes, the economic activity and especially the real estate boom in Ramallah has been covered extensively by the press, some articles claiming that there was a raise of real estate prices in the last two years of 30%.  So I would be  fortunate, had I a house in Ramallah. Some articles hail this as sign of the successful Fayyad government reforms and others, being more cautious, pointing towards the continued dependency of regular aid inflows. The Jordan Times writes:

But experts warn that Ramallah’s new-found wealth does not in any way reflect the state of the economy in the occupied West Bank or the impoverished Gaza Strip.

Economic growth in the West Bank did reach 8.5 per cent last year, but much of that was the result of generous international aid, according to the International Monetary Fund.

In fact my brother-in-law said simply: “If the donors cut off the funding, everything will go down the drain within weeks. But this time things will be worse, because people will not wait, they will fight each other. They say we have a service economy! Hah!” It seems we have a lot of capable economists here in the West Bank, because the following graph by the IMF seems to support his viewpoint:

In my quest to understand where the money is coming from, I had read that the donors now provide credit guarantee funds to back local banks in lending to to small medium enterprises. Just like the Middle East Investment Initiative with its Loan Guarantee Facility:

Since the LGF provides $160million in guarantees, backing 70% of possible loan amount, over the medium term, LGF will guarantee $228 million in loans, generating tens of thousands of local jobs.

Some people I talked to could not believe this, but it really happening. “It is golden times for banks in Palestine!” I thought in my mind. Making more with less risk. And the Portland Trust seems to agree:

Palestinian banks recorded $42m of profits in the first quarter of 2010. This is over 50% higher than the same period last year ($25m profits in Q1 2009) and 5% higher than the previous quarter ($40m profits in Q4 2009).

At the same the supply of credit available was increased, because according to the IMF:

the Palestine Monetary Authority (PMA) lowered the limit on bank deposits placed abroad from 65 percent to 55 percent of total deposits.

And of course, as Haaretz points out these loans are not only given to SME but also for consumers:

Palestinian and Arab banks in the West Bank are offering loans making it easier than ever to own a new car. Anyone who has a job can pay 10 percent down and borrow 90 percent of a new car’s cost from the bank, payable with interest over five to six years.

The World Bank concurs:

Credit facilities to non-government resident customers at the end of December 2009 were almost 23 percent higher than in 2008.

And ho is now doing all that construction? Perhaps some international investment funds are involved in the bigger buildings, but I could not find any documentation. Perhaps some reader would like to help out? The Jerusalem Post , relying also on the World Bank report, writes:

The biggest jump in private business activity has been in the construction and real-estate sectors, with PA civil servants and nongovernmental organization employees forming the “backbone” of the market, the report said.

So going back to the beginning and trying to answer that question of my former landlord:  Where is the money coming from? It is coming from tax payers and banks and we could be witnessing some sort of speculative mini-bubble here, which could mean that for the next two years it would be good to invest in real estate in Ramallah, but let us not forget, this mini boom is fueled by easy access to credit, which reminds me lot of the trigger of the financial crisis.

Sources:

The Jordan Times: Ramallah property boom belies fragility of Palestinian economy Friday, August 6th, 2010

Fox Business, Ramallah building boom symbolizes West Bank growth, August 02, 2010, Reuters

Haaretz Mess Report / In the West Bank, new cars signal the good life, Published 02:20 16.07.10

The Jerusalem Post, World Bank report: PA economy needs more private investment, Bloomberg 04/13/2010

The Portland Trust, Palestinian Economic Bulletin, July 2010

IMF, Macroeconomic and fiscal framework for the West Bank and Gaza, Madrid, April 13, 2010

World Bank, Towards a Palestinian State:Reforms for Fiscal Strengthening WORLD BANK report April 2010

Investor Relations and Meaning

I had the pleasure of recently giving a training at the Palestine Securities Exchange and also introduced the below model of “Communicating the gap”, which I had mentioned in a previous post.   Of course I could not just let the  theory speak for itself – it appears to be very abstract – so I was happy to find a study by the University of St. Gallen and the German Association for Investor Relations (DIRK), very helpful people,  who also have a range of studies published on IR. Unfortunately most of the material is in German, so I see it as adding value to present main points of their joint study here in English, since it generated great interest in the PSE training. Back to meaning creation and “communicating the gap”:

The study emphasizes that the calculated value of an organization by mathematical models is not identical to the valuation of the capital markets, so other value drivers must be taken into account. In the study interview partners state that they take the quantitative data and correct by using qualitative data. However, they also state that – and this is important for IR practitioners – that relevant qualitative information is hard to come by and that

corporate communication delivers elementary information as input of “sense-making” efforts of investors.

As stated before, I had expanded on the sense-making process and was glad to see the concept in action. The study goes on to show that the perception of a public company on the capital market decides on its value and thus also on its strategic options. Qualitative factors of the corporation

• are used to contain risk
• allow a realistic assessment
• form “capital markets reputation”
• and shape the collective judgment of actors on capital markets

The study, which rests on qualitative interviews with European analysts and institutional investors. identified seven main categories of qualitative data  which are relevant to the respondents:

1. Corporate Communication
2. Quality of Management
3. Corporate Strategy
4. Corporate Culture
5. Corporate Governance
6. Customer- and Industry Relations
7. Public Affairs

The study goes on to identify another 46 sub-factors of above categories, and created a weighted ranking of all these. I do not want to give the comprehensive list of all the weighted factors and categories, but in the training we created a “Top Ten List”, which I want to present here, and which showed some remarkable results

1. Longterm  Strategy (Strategy)
2. Implementation of Strategic Plans (Quality of Management)
3. Complete Disclosure (Corporate Communication)
4. Shareholder Value (Strategy)
5. Comprehension of Top Management of Business (Quality of Management)
6. Leadership (Quality of Management)
7. Approachability of IR (Corporate Communication)
8. Attainment of Prognosis (Quality of Management)
9. Pro-active Theme Setting (Corporate Communication)
10. Continuity of Corporate Communication (Corporate Communication)

What was surprising to me, was that Leadership ranked so high with all factors, in fact “Quality of Management” is pretty dominant in the top ten as well with “Corporate Communication”.  It was good to see “Strategy”  in the top ten, after reading so much on the demise of strategy.Iit was good to see that analysts and investors  apparently see it as very relevant for their recommendations or decisions.

Of course the other 34 factors are also important and relevant for IR. Another common interest in  the course that an identical study for the Arab region would be of great interest and help to IR practitioners in the region. Would be an interesting survey to work on.

Source: DIRK Deutscher Investor Relations Verband e.V.  &  Universität St. Gallen (2007) Corporate Perception on Capital Markets

Online Leadership and Collaboration

As I am really fascinated by social media and how it might change our relationships and lives, I read with great interest a study by IBM on leadership in online gaming. How do groups of people coordinate themselves to accomplish difficult, sometimes in teams about 40 strong, without having physical contact? These quests need some sort of leadership which will coordinate the actions of players, ensure the communication and define roles, sometimes encouraging taking on other roles.

The study compared these qualities to leadership in a business setting and came away basically with one main point: that building trust and facilitation of collaboration in online games is more important than in a business setting, which points the way how in the future to deal with dispersed virtual teams. However, visioning seems to be more important in a business environment, where objectives remain more abstract.

The implications from the study for the virtual teams of the future are:

Take extra steps to overcome physical isolation, help employees see where their
strengths lie, get them the right training and project opportunities and remind them of their roles and importance to the team.

Provide frequent incentives to add some tangibility for those working together virtually,
offer status among electronically connected peers, and help them link their everyday
actions to corporate goals.

Take action more quickly by leveraging  new realtime communication channels and
virtual communities to bring individuals to a central “location” and enable participants to
collaborate, evaluate and execute.

Following this stream of collective problem solving, I read a paper called   “When Collections of Creatives Become Creative Collectives: A Field Study of Problem Solving at Work” by Andrew B. Hargadon, Beth A. Bechky.

The simplicity of the model really appealed to me. In this paper the authors look how creativity and problem solving can be enhanced in collectives.

Specifically they are interested in a

model of collective creativity that explains how the locus of creative problem solving shifts, at times, from the individual to the interactions of a collective.

The authors define four sets of interrelating activities that trigger moments of creativity:

• Help seeking
• Help giving
• Reflective reframing
• Reinforcing

Reinforcing means here signifies the organizational setting on how help seeking, help giving  and reflective reframing  is perceived and supported. In some organizations seeking help might be considered as a sign of weakness and incompetence, while help giving can be stifled by bureaucratic regulations on how engage with other departments or co-workers.

In my work as a consultant and trainer I see that help seeking is the only way to open the floor to find new approaches to a issues at work and that trust is needed to encourage employees to seek actively help from others, a process which according to the study relies more on the capacity to give help than the actual expertise. If respondents had the impression that certain organizational experts were too caught up in time constraints, they would rather turn to less experienced co-workers than the experts. Also evident from the study that although formal mechanisms, like regular brainstormings and meetings might be helpful, the preferred and more used channels are the informal ones or working through ones network. Again a point for organizational culture, which also supports “reflective reframing”, a process which includes mindful listening, building on the contributions of other and above all asking if not a better question could be asked.

The paper rounds this off by defining reinforcing as:

those activities that subtly (and sometimes not so subtly)reinforce the organizational values that support individuals  as they engage in help seeking, help giving, and reflective reframing; reinforcing happens as a direct consequence of engaging in these three activities (e.g., help giving as a response reinforces help seeking) as well as through more indirect actions within the organization (e.g., increased status or promotions for those who engage in these activities)

It would be very interesting to read more research if this model of creativity and collaboration also translates when dealing with virtual teams.

Sources:

DeMarco, M. et al  (2007) “Leadership in a distributed world -Lessons from online gaming”, IBM Institute for Business Value

Hargadon, A. B. & Bechky, B. A (2006),  When Collections of Creatives Become Creative Collectives: A Field Study of Problem Solving at Work, OrganizationScience, Vol. 17, No. 4, July–August 2006, pp. 484–500

Leadership is bridgebuilding

The irony is that today I crossed an infamous bridge: Allenby bridge. On my way to my training assignment in Ramallah.  As some tourists commented on the border facilities being like the Berlin wall, I replied by saying: Yeah, and I experienced the Berlin wall as a child, seems like making a full circle. Perhaps the spiraling movement one makes in life is something talked about in Cowan and Becks “Spiral Dynamics” and did I not make a nice bridging into the subject of Management and Leadership?

Before I left for Palestine  I was talking to a PR Manager about social media and when I quizzed him about how he defined his target groups he said: “You know what Luke, we don’t think like that anymore ‘Male, 45 years, living in a suburb’. What we do we define our target groups by keywords.” and then he went on how he posed a question to himself “What keywords would people use to find us?” and then ran those through Google Insight. Well that sort of struck me as novel. To define target groups through what they enter as words or string of words in a search engine. This makes them connected on much deeper level, the search for the explanation of something. And then I ran across this: “How Semantic Clustering Helps Analyze Consumer Attitudes“.  And from this article and I quote:

Crudely, semantic clustering is a software technique that allows computers to understand sentences and their meaning

Oh MEANING. Yes I loved it already, one of my biggest words in the tag cloud. Apparently the researchers let the software run across thousands of websites and blogs which then identifies key concepts and the connections between them.

Form this data they then are able to derive some relevant attitudes towards a certain issue, in this case the recession. It made me wonder how perhaps in the future our identity will revolve more about the bits and pieces of information we need at the moment to create meaning (See also my article on Communicating the gap.) In a discussion I had with my brother the other day, we talked about how we  will not define ourselves by belonging to a group but by engaging for periods of time in certain behavior related to a groups (or several groups) activity to bridge then over to another activity and part of our identity.

Perhaps a not totally unrelated I found this piece about communication: “The power of powerless speech.” I liked it because it stated that

Powerless speech is characterized by:

• Hesitation like “Well” or “Um”
• Tag questions like “Don’t you think?”
• Hedges like “Sort of” or “Maybe”
• Disclaimers like “This may be a bad idea, but … “
• Formal addresses like “Yes, sir” or “Yes, ma’am”

In situations where people are expected to work in a team, speech with these “powerless” characteristics is much more effective than a more assertive way of speaking. People who spoke less assertively in these situations were perceived as more likely to be promoted and to gain status and power …

I guess I liked it, because I make a lot of ah, um, and well, myself ( Just listen in to my interview with Mathias, if you understand German). But I found it also interesting because here the leader is using communication as  bridge builder. He or she is actually inviting the team to make sense of the situation as they see it.

And last not least in an interview with Management Consulting News, Dave Ulrich, a business professor at the University of Michigan said the following

…. Can people find meaning for themselves? A leader who is able to find meaning should help others find it.

Ultimately, what strengthens you as a leader is helping others grow and develop. That’s because they, in turn, will make your company more productive and make you a more successful leader. That becomes a virtuous cycle, which is what I think we want to see in organizations.

So if leaders build bridges to allow us to find shared meaning, would that not be great vision?

On an ending note I have to add something else which I found, which again relates again to another blogpost “Communicating the gap”, I found this model of social sense making in a PhD on Crisis Communication authored by Schulz (2000). Schulz calls this process “agenda setting”.

In it social actors fight for the interpretation and meaning of a certain event, in this case it was the sinking of Brent Spar, which was a great PR success for Greenpeace. In the end the mainstream thought that the sinking of the oil rig was ecologically unsound and it was dismantled onshore.

So sense making and meaning attribution seems to something which occurs on the personal level, the organizational level and on the societal level.

Sources: Schulz, J.  (2000) Management von Risiko- und Krisenkommunikation – zur Bestandserhaltung und Anschlußfähigkeit von Kommunikationssystemen, Dissertationsschrift Humboldt-Universität zu Berlin

Communicating the gap

So bear with me: I had to make somehow the link between the whole issue of sense making and communication, because next week I am booked to give a course on PR Strategy at the Palestine Securities Exchange and was asked to expand a bit more on the subject of communication.

Now I have to add that I find the communication concept given by Wolfgang Reineke and  Gerhard A. Pfeffer in  “PR Check-up” quite convincing and use a lot of it a basis. I found it very useful in my consulting work and really has enormous amounts of helpful material. A book by the way, which is now out of print, but I would really recommend to all those PR people out there: try to get your hand on it.  It is amazing how many tools and concepts are introduced in this book. Back to the communication model they introduce.

It consists of three levels: The polity level, which is responsible for corporate culture, corporate identity and corporate design and which through communication, creates the corporate image. Then the policy level of PR, Public Affairs and Internal Relations which impacts publics internal and external also on the level of corporate image and. On the third level all those marketing tools such as Sponsoring, Product Placement, Advertisement, Sales Promotion and Marketing kick in to finally create the Brand Image and have the emphasis on products on services. It sort of clarifies that a company cannot not communicate and that perhaps there is not necessarily congruence on how a corporation perceives itself and how it is perceived by the outside. So we come back to the culture issue here, but more of that later. I appreciate in any way, how this model attempts to show different layers of communication.

Of course the good old sender, encoding, decoding and recipient is presented as well.

But was never quite happy with this model, until I stumbled over this paper by Reijo Savolainen and recognized some things I have been working on lately.  He describes that since human beings are bound by time and space to solve problems and to shape their surroundings around them, the always take a step by step approach, called here “step-taking”, in a world which is characterized by “ultimate discontinuity”. In this “step-taking” process every step “Means an act of defining the situation emerging due to the continuous moving ahead”. This definition is what we can call sense-making. So what the wanderer does, he receives information being sent and uses it to create meaning to gap the bridge between the present into the future.

Savolainen: Sense-Making assumes that each individual is the expert on his in developing strategies for bridging his own gaps, each individual consciously or unconsciously theorizes why certain strategies are appropriate or useful for him.

Of course others confirm this point of view.

Communication is the process by which people interactively create, sustain, and manage meaning (Conrad and Poole, 1998)

But what it means for me and for the messages created by PR people is that they should somehow get an idea of what ultimately would make sense to the people there are addressing. In effect they would have to sit down with a journalist or a member of a public they which to address and talk about their perception of the meaning of life. One should not ask them what story they would like to hear or what they are working on, or what their responsibilities are, but rather ask them:

What does your work mean to you? What makes sense in your everyday experience? Describe a moment, when everything just fell into place.

To get someone to talk about the meaning of life might not be easy, and I d not know if is being done at all, but it sure would be interesting to find out. It needs empathy, courage and wisdom to do and to take this issue serious. To get some guidance, one can use the tool below.

Sources:

Conrad, C.  & Scott Poole, M.S. (2004) Strategic Organizational Communication: In a Global Economy , Wadsworth Publishing; 6 edition ISBN-10: 0534636217 ISBN-13: 978-053463621

Savolainen, R.  (2006)  Information Use as Gap-Bridging: The Viewpoint of Sense-Making Methodology , JOURNAL OF THE AMERICAN SOCIETY FOR INFORMATION SCIENCE AND TECHNOLOGY, 57(8):1116–1125

Reineke, W. & Pfeffer, G.A. (2000) PR Check-up , Stamm Verlag; Auflage: 1. Aufl.  ISBN-10: 3877730191

Paper review: Discriminating Between “Meaningful Work” and the “Management of Meaning” by Lips-Wiersma & Morris

Some papers deserve just more attention, because their simple  clarity and their will to create something helpful is just overpowering.

Lips-Wiersma and Morris (2009) have set out to see what people find meaningful. They clearly set out to distinguish between meaningful work in management literature, which looks at meaning creation as a tool to motivate people in a sense of vision and mission,  and the meaningful work humanities which looks at meaning in a more broader holistic sense.

First of all: All people strive to make sense of what they experience. it is part of the human condition  to create meaning. I am surprised how little this is discussed in the workplace. In what sense is our work meaningful?

Lips-Wierma and Morris present several themes of the humanities, such as authentic living, which underpins the wish of a life full of personal discovery and free choice as opposed to prescription and domination. Moral living deals with the question on “how are we to live?” and enacting virtues. Work becomes meaningful if it supports this wish for moral development. Dignified living deals with the inner wish to have just and diginifed work, the ability to resist and oppose. Finally Lips-Wierma and Morris mention living that serves an ultimate concern, a concern which transcends not only self, but also the organization to a “more universally beneficial legacy”.

These four cornerstones would be enough for every workplace to discuss and explore:

• Do we offer possibilities for being authentic at the workplace?
• Does our company enable our people to live up to higher moral standards?
• Do we ensure the dignity of employees and how?
• How do we serve an ultimate concern?

But Lips-Wiersma and Morris go a step further an uncover various elements of meaningful work and their relationship to each other.  They claim that there are four sources of meaningful work and life:

• Developing and becoming self: The ability to enjoy moral development, personal growth and staying true to one self.  I can maintain and develop  the identity of my choosing.
• Unity with others:  Belonging to a community, sharing values and working together
• Serving others: To make a difference and to meet the needs of humanity. I can see that my work is relevant to something bigger.
• Expressing full potential: Creating and achieving and influencing my surroundings.  I have impact with what I do.

Lips-Wiersma and Morris suggest the following framework to make “the various components of meaningful work visible”:

I would find it very interesting if any reader out there will one day work with this framework and perhaps can notify my what the results were.

In the classic view of leadership, it is the leader who shapes culture and provides meaning, through creation of a corporate identity.

This of course is a one-sided view as Lips-Wiersma and Morris put it  ” it is a condition of the being human to create meaning”

Coherence and wholeness are of prime importance as each individual creates meaning for him and herself subjectively by relating external events to an inner stock of values and experiences. Meaning thus is something very personal, it cannot be provided, but only be made. In this sense Lips-Wiersma and Morris follow up with  recommendations:

1. Meaning should emerge from the collective.
2. Tensions between vision and reality should be addressed openly because Because discrepancies  disrupt the individuals wish to find meaning in work.
3. Make commonality on our human aspirations, while respecting the differences.
4. Moral issues are just as important and should be engaged in just as actively as in the management of values.

Source:

Lips-Wiersma, M. & Morris, L. 2009, Discriminating Between ‘Meaningful Work’ and the ‘Management of Meaning’,  Journal of Business Ethics 88:491–511