*Unit 4: Leadership in the Private Sector Flashcards
What role does the Cadbury Code play in private sector governance?
Makes corporations more accountable and activities more transparent. It laid the foundation for ethical behaviour and transparency in financial reporting. The Cadbury framework provides recommendations to ensure transparency, accountability, and ethical behaviour however participation is not mandatory.
CSR builds on the Cadbury Code; it additionally includes a focus on human rights, protection of the environment, labour issues, and anti-corruption measures.
Compare and contrast the concepts of CSR and social license. How are they similar? How are they different?
Both of these terms involve expectations of stakeholders to be socially and environmentally conscious. CSR is self-regulated practice (evaluation of success is self-defined) whereas social license must be earned and is given by a community/locality impacted by the project.
Both of these concepts contribute to the notion of businesses as corporate citizens which requires new forms of leadership such as values-based leadership and the concept of the servant-leader.
Critique the concept of the triple bottom line. How does it fit with the concept of sustainability?
The triple bottom line considers a corporation’s social, environmental, and financial impact. All three of these together lead to a sustainable future for a corporation with increased expectations of stakeholders and shareholders. Sustainable practices are important for the future of a corporation and for society as a whole in the face of increasing climate change, global conflict, and global inequities. An understanding that these practices all benefit one another - in particular for the private sector the positive impact on the bottom line or financial profit - is one important driving factor to sustainability in the private sector. However these three items do not always align and corporations often give more weight to profitability at the expense of one or both of the other two items.
How does the concept of servant-leader fit with the concept of authenticity and the changing paradigm of leadership?
The concept of servant-leader has a self-development application… It contributes to the transformation of organizational culture which cannot occur under the old paradigm of leadership (command and control model).
United Nations Global Compact
- With 12,000 signatories from 170 countries, the compact lists five things that companies can do to be sustainable and to support society:
(1) operate responsibly in alignment with universal principles and (2) take strategic actions that support the society around them. Then, to push sustainability deep into the corporate identity, companies must (3) commit at the highest level, (4) report annually on their efforts, and (5) engage locally where they have a presence (UN Global Compact, 2016).
The compact provides a forum for those business leaders who acknowledge their role in global sustainability and achieving positive change. - There is growing recognition that the private sector is key in addressing global concerns such as climate change, resource management, human rights, and labour issues.
- As with all other agreements, participation is voluntary.
Triple bottom line
- Social, environmental ,financial (people, planet, profit). A commitment to all = sustainability
- Sustainable practices are important for the future of a corporation and for society as a whole in the face of increasing climate change, global conflict, and global inequities. An understanding that these practices all benefit one another - in particular for the private sector the positive impact on the bottom line or financial profit - is one important driving factor to sustainability in the private sector.
“The triple bottom line illustrates the convergence of ideas, principles, and action in all of the sectors and the importance of the individual citizen in decision making” (course content).
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Sustainability
- The long-term ability to function/serve its purpose. The rate at which resources can be replenished and continue versus the rate at which they are used - depletion of resources.
- If attention is not paid to sustainability economies will fail in the long-term. Environmental and social degradation leads to global food and housing insecurities, increased poverty, mass migration, and global conflict. For corporations unsustainable behaviours and actions lead to the demise of the business itself, failure to meet the expectations of stakeholders, and can mean a great expense to shareholders.
- Despite all the evidence for sustainability, some corporations struggle to implement sustainable practices in the absence of mandatory national/international standards.
Sustainability is achieved through values-based leadership, authenticity, and relationships which are essential behaviours of leaders in the modern paradigm. The old hierarchal and authoratative model of leadership is not affective in achieving sustainability goals.
Troelsen & Weber (2013) “sustainability has developed as a unified way of addressing a wide array of business concerns about the natural environment, worker’s rights, consumer protection, and corporate governance, as well as the impact of business behaviour on broader social issues, such as hunger, poverty, education, health care, and human rights - and the relationship of all these to profit”.
Social license
- community approval of project legitimacy (not sel-regulated). Projects that require social license typically require consideration of the environment and future generations.
- Social license moves beyond both the corporate framework and the concept of corporate social responsibility as the driver of a project, establishing relationships with the various stakeholders to lay the foundation for the legitimacy of a project with respect to the long-term impact on social, economic, and environmental factors in the community.
- To gain social license leaders must have the ability to effectively communicate, collaborate, and consult with local leaders and community members. This necessitates a transformative and values-based leadership style.
Corporate Social Responsibility
- CSR encompasses activities above and beyond its regular operations by a company which takes into consideration social and environmental impact as well as profits. It is corporations acceptance of their responsibilities to society and the environment while seeking to take measures to ensure best practice of their operations.
- With increasing corporate influence and impact on social, economic, and environmental issues in the globalized marketplace, CSR is important to reduce the negative impacts and influence consumers to make better and more informed choices.
- Despite its importance, the operations of corporations still negatively affect global issues. CSR is a voluntary self-regulated practice and standards of practice differ in every country. Leaders need to take responsibility on the international stage to affect change in the private sector, the public sector is not capable (or willing) of doing this on its own.
In order for CSR to be effective/legitimized, it must be believable/credible, transparent, and align with stakeholder expectations.
” It is argued that there are many parties interested in the success and operations of commercial and charitable organisations – employees, customers, society and the environment etc. Accordingly, it is increasingly expected that all organisations should consider the responsibility they have to society as a whole and to their stakeholders in particular” (Martin, 2006, p. 4).
Cadbury Principles
- Guidance for how corporations should be governed, came into affect in 1993. Aim of the principles is to make companies more accountable and activities more transparent. Prompted by corporate scandals.
It laid the foundation for ethical behaviour and transparency in financial reporting. The Cadbury framework provides recommendations to ensure transparency, accountability, and ethical behaviour. Participation is not mandatory. - With increasingly large multinational enterprises some corporations financial wealth eclipses that of some countries. Where governments are held accountable by voters (in theory), no such control is applied to private sector corporations.
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Guiding Principles of Public and Private Sector Transformation (Not a Q in the study guide)
Public Sector: Seeks to reduce costs and increase range of stakeholders. Toward communication and collaboration. Principles: transparency, sharing info, community consultation, evidence-based decision-making.
Private sector: economic growth through efficient use of resources, accountability to shareholders, effective management (strong financial management) - adds new intent to make a positive impact on society.
