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Time for companies to invest in good citizenship

By Bradley K. Googins, 8/25/2002

As President Bush's corporate fraud task force readied to convene for the first time, the debate continued over the state of corporate America. Depending on whom you talk to, we've either got a couple of bad apples or the entire tree is rotten. Either way, the president's proposed remedies aren't enough to persuade a wary public to bite.

What will win back our confidence in big business is not the sight of a chief executive behind bars, but a solid record of companies practicing good corporate citizenship.

Years of working with hundreds of companies as they develop their citizenship strategies has taught me what citizenship is - and what it isn't. Corporate citizenship is not about how a company gives money away. It's about how it makes its money, and how it manages its money. Good corporate citizenship is fiscal transparency, the demonstration of a corporate social conscience, and evidence that corporate values are more than pretty words on a framed plaque. Look at Enron. It had an ethics program, standard accounting practices, and a code of conduct. It even invested $18 million in minority- and women-owned businesses in what was a truly laudable community economic program. Yet, all of that was choked off by corruption at the core of the company.

Many good people have been hurt because of the greed of corporate executives who confused short-term gains with long-term success. One of the biggest mistakes of companies such as Enron and WorldCom was believing their shareholders would be lulled into a blissful ignorance by the sound of soaring stock prices and the sight of philanthropic donations. They should have been paying attention to the opinion polls, which show that the public's distrust in large corporations has been growing.

The Millennium Poll on Corporate Social Responsibility found that a majority of 25,000 people interviewed in 23 countries want companies to contribute to society beyond making a profit. The 2001 Cone/Roper Corporate Citizenship study found that 76 percent of consumers said they would take into consideration a firm's reputation when buying holiday gifts. Then there's the rise of social investing, which now accounts for $2 trillion - or one in every eight dollars invested in the United States.

If you think of the nation's consciousness of corporate responsibility as a slow-burning fire, the spate of corporate scandals is like a bucket of gasoline. Companies that don't act quickly are going to get burned. Now it's up to individual companies to prove to a skeptical public that they are responsible corporate citizens. The firms now under fire may have had the trappings of social responsibility, but they lacked the substance:

1. Strong leadership at the top who provide the vision and voice on the values that drive a company's citizenship. 2. A well-developed strategy that ties principles and profit into a cohesive corporate citizenship. 3. An integrated citizenship that is owned by every employee and widely understood and adopted as an essential part of what the company is and how it does business. 4. A commitment to measure success and communicate the company's strengths and weaknesses as a corporate citizen.

Genuine and sustainable reform has to ultimately come from within, not legislated from outside. Corporate leaders, most of whom are thoroughly ashamed and embarrassed by the current scandals, are faced with an enormous set of challenges as well as opportunities. If they commit themselves to an honest and deep self-reflection, they will recognize the downsides to the narrow brand of capitalism that has marked much of the past several decades. In open dialogue with the very stakeholders who hold the key to the sustained success of the company, they can create a new corporate citizenship that will continue the successful ride of economic growth while discovering the real meaning of the value codes and standards that adorn their corporate walls and board rooms.

Bradley K. Googins is executive director of The Center for Corporate Citizenship at Boston College.

This story ran on page E4 of the Boston Globe on 8/25/2002.
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