Tuesday 29 October 2013

Addressing social issues can build a stronger business

In the October Harvard Business Review (HBR) there is a case study about how Walmart decided to address social issues and build a stronger business, i.e. they saw these two objectives as having synergies.Apparently they set goals relating to such things as sustainability, women (!) and more healthy food. The HBR article states that Walmart "has shown that taking on board social issues can be compatible with building a better business".

The key seems to be for organisations to just focus on genuinely being a better business, building up trust over the longer term, rather than the short-term focus of "greenwashing" PR.

Monday 28 October 2013

The organsiational cost of getting it wrong for customers

This is a direct quote from "utilityweek". "Following the revelation that Scottish Power mis-sold energy deals through door-to-door salespeople and telesales. UK regulator Ofgem has fined it £8.5m. Ofgem says "today's announcement is a clear sign to energy suppliers of the consequences of breaching licence obligations and of the importance of taking action to put things right for consumers when they go wrong".

This, and the £10.5m fine to SSE energy company earlier in the year, provides further evidence of the monetary cost of failing to instill genuine customer focus and commitment within organisations and the reputational damage (which is much harder to evaluate) to the organisations involved and their industry.There is clear need here for cultural change to improve ethical behaviours throughout the organisation.

Friday 25 October 2013

Responsible Business?

One of the main culprits of the PPI mis-selling scandal was Lloyds Bank representing one third of compensation claims (c£5 bn). In response to this scandal and the Parliamentary Commission on Banking Standards report it has introduced a "Responsible Business" strategy and it looks pretty promising. There is top level support for Responsible Business with a non-executive director chairing the Responsible Business steering committee. Staff (or colleagues as they are termed) have Codes of Responsibility to follow, to generate the correct behaviours. Their incentives focus on both a mix of rewarding low-risk culture as well as meeting the needs of customers. They state "we are trying to do the right thing based on the right judgements. Being legal is not enough". And they have independent assessment of their Responsible Business metrics.

What I find concerning is that the company undertaking the Responsible Business assessment is the Lloyd's bank auditor.  It is one of the "big four" accountancy firms which were criticised during the financial crisis for not doing enough to warn about company balance sheets or scrutinise banks' books in enough detail. It might have been far more reassuring for all of Lloyd's stakeholders and more of the "right thing" if they had looked to other companies outside the established "club" to conduct the independent Responsible Business audit. We can only hope that someone in that vast organisation is really accountable for the true "independence" of these various audits and that the previously criticised culture of the Board for "an indisposition to challenge" has now changed..