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Corporations are a class of life on planet Earth, along with humans, the animal species, the vegetal world and the planet itself (with its own sub-classes of seas, mountains, wind, oxygen and whatnot). Life on the planet should not be a zero-sum game. On the contrary, it is definitely, or it should definitely be, a non-zero-sum game, where the gains of one stakeholder should also mean gains for all others. Hence, gains for the corporate class should also imply gains to individuals and to the ecosystem as a whole.
Sustainable success is success in the long run. To maintain the long run, we need all stakeholders—not only those who are involved but those that are involved with good health and in high spirits. It is not possible to have long-run success just for one of the classes if that success is to the detriment of one or all of the other classes. Sooner or later, this “success” will collapse, because all the classes depend on each other.
Some of the classes mentioned previously (e.g., animals, plants, the planet) have an automatic behavior towards sustainability. An imbalance can occur if solely generated by human intervention, either as individuals, corporations or governments. These kinds of imbalances are due to the illusion of gains on a very short run.
Corporations have an interesting behavior of their own as well. Corporations are made and run by individuals, but their overall behavior is different from the sum of those individuals. Corporations have their own culture, which tends to be absorbed by the individuals that work there. This is the reason why it is so difficult to change the behavior of large corporations and the reason for international recognition for those individuals who have successfully changed it, with clear gains for doing so.
There are stakeholders that have to do with corporations, such as employees, customers and shareholders, but maybe more or less obvious, the environment is a stakeholder of us all. Now, this is where the plot thickens: When we talk about corporate responsibility, to whom is the corporation responsible to? Obviously, the corporation must be responsible to all the stakeholders, but what is the priority and the weight of each of the stakeholders?
With the exception of some honorable corporations and even considering the existence of a trend towards a balanced distribution of corporate responsibility, the fact is that a majority of corporations will place the responsibility to their shareholders (gains at any cost) above all others, as recent scandals in the automotive industry clearly demonstrate. Profits at the end of the quarter is the sole objective. This is very worrying because, at the end of the day, corporations are behind individual lives and surely behind government policies. Governments and individuals do not make money; corporations do, so to speak. At this moment, money rules the world, so corporations have their say. This is why corporate responsibility is the foundation to sustainable success.
Corporations may not want to mess with their stock value, but the fact of life is if they follow only profit (zero-sum game) at the cost of everything else, such as employees, customers and the environment, they will collapse in no time. So, corporations need very practical and down-to earth CEOs that are not afraid in defining the appropriate priorities and respective weights when considering their own stakeholders. What is fascinating is that we do have such CEOs in the world, managing giant, successful corporations, but for some reason, their message is not being understood as fast as one would imagine.
Corporations must be the cradle for “responsibility” in the broader meaning of the word—the meaning that involves all mankind and all of the planet. Corporations must be the cradle so that their employees, their customers and their shareholders are proud of it. In the proper context, “responsibility” will mean a win-win situation, and therefore, a non-zero-sum game will be on the table.
We arrive now to the technicalities of corporate responsibility. To start with, corporations must be responsible to their employees. A happy employee is a loyal and dedicated one. This is what will bring profits down the road. Employees will want to stay and will do their best to improve business. What does it take to make employees happy? Well, it may vary, but it is not necessarily the money at the end of the month. One could mention concepts such as empowerment, personal care, family care, mobility, fostering creativity, fun at work, etc.
Corporations must be the cradle for “responsibility” in the broader meaning of the word—the meaning that involves all mankind and all of the planet. Corporations must be the cradle so that their employees, their customers and their shareholders are proud of it. In the proper context, “responsibility” will mean a win-win situation, and therefore, a non-zero-sum game will be on the table.
We arrive now to the technicalities of corporate responsibility. To start with, corporations must be responsible to their employees. A happy employee is a loyal and dedicated one. This is what will bring profits down the road. Employees will want to stay and will do their best to improve business. What does it take to make employees happy? Well, it may vary, but it is not necessarily the money at the end of the month. One could mention concepts such as empowerment, personal care, family care, mobility, fostering creativity, fun at work, etc.
Then, we have responsibility towards customers. Basic knowledge keeps telling us that it is cheaper to maintain existing customers rather than acquiring new ones. Yet, keeping them is not what it used to be some years back, because, as with employees, it is not only about money but mostly about attitude and care. In regard to what concerns the shareholders, it will be necessary that they look beyond the quarter results, if the quarter is still going to be used as the time metric. Big, strategic changes will not reflect profits within the same quarter. Eventually, they will need more than one quarter just to be implemented.
Last, but not least, corporations will need to consider environmental impact. In the long run, the impact will affect us all. If the impact is such that it will eliminate life on Earth, then there will be no sustainable success, will there? Success, yes, but for a couple of generations only. The next generation will perish reading in the history books just how “successful” their predecessors were.
Corporate responsibility in not only a foundation to sustainable success. Corporate responsibility is the only way out for life on Earth.
Joao Penha-Lopes specializes in document management since 1998. He holds two postgraduate degrees in document management from the University Lusofona (Lisbon) and a PhD from Universidad de Alcala de Henares (Madrid) in 2013, with a thesis studying the economic benefits of electronic document management (EDM). He is an ARMA collaborator for publications and professionally acts as an advisor on critical information flows mostly for private corporations. Follow him on Twitter @JoaoPL1000.
Corporate responsibility in not only a foundation to sustainable success. Corporate responsibility is the only way out for life on Earth.
Joao Penha-Lopes specializes in document management since 1998. He holds two postgraduate degrees in document management from the University Lusofona (Lisbon) and a PhD from Universidad de Alcala de Henares (Madrid) in 2013, with a thesis studying the economic benefits of electronic document management (EDM). He is an ARMA collaborator for publications and professionally acts as an advisor on critical information flows mostly for private corporations. Follow him on Twitter @JoaoPL1000.
