Wednesday, February 08, 2006

The Big Question ???

In a recent Global survey conducted for Business Executive by McKinsey on Business and Society got some insightful response on the role of corporation in societal issues. Here a brief look at the survey findings.

Executives around the world overwhelmingly embrace the idea that the role of corporations in society goes far beyond simply meeting obligations to shareholders, according to the latest McKinsey Quarterly global survey.

But executives also say that, for most companies, sociopolitical issues—such as environmental concerns and the effects of offshoring—present real risks. Indeed, finding ways to control them is so important, the executives say, that the effective management of sociopolitical concerns must start with the CEO.

Executives are far less certain, however, that corporations adequately anticipate which sociopolitical concerns will affect them. These executives also believe that the tactics—lobbying and public relations, for example—companies now use to meet such concerns are not the most effective ones. In addition, they think that the public will expect corporations to take on a significant role in handling the new pressures.

The McKinsey Quarterly conducted the survey in December 2005 and received responses from 4,238 executives—more than a quarter of them CEOs or other C-level executives—in 116 countries.

Business executives across the world overwhelmingly believe that corporations should balance their obligation to shareholders with explicit contributions "to the broader public good." Yet most executives view their engagement with the corporate social contract as a risk, not an opportunity, and frankly admit that they are ineffective at managing this wider social and political issue.

Findings highlight some of the key issues that businesspeople expect stakeholders, social and consumer activists, and the media to raise during the next five years. The responses provide striking evidence of the way environmental concerns, doubts about data privacy, the controversy around offshoring, and other sociopolitical matters have firmly inserted themselves into the day-to-day agenda of the executive suite.

Respondents are mostly upbeat about the broad impact of business on society: some 68 percent say they are either "generally" or "somewhat" positive about the contribution that large corporations make to the public good. The proportion jumps to 76 percent when executives are asked if their own companies make a positive contribution.

Executives believe that the solution lies in their own hands. Asked how adequately the respondents' companies anticipate social pressure—including criticism of their activities—46 percent say that they have "substantial room for improvement," and a further 24 percent admit to seeing "some room." Only 3 percent report that their companies are doing a "good job."

Judging by the survey, executives are hard-nosed about why companies are engaging in this new agenda. Only 8 percent think that large corporations champion social or environmental causes out of "genuine concern."

Almost nine in ten agree that they are motivated by public relations or profitability, or by both concern and and business benefits in equal measure.

These responses, from a group of largely private-sector executives, show strong global support for a wider social role. The most enthusiastic proponents are executives in India: 90 percent of them endorse the "public good" dimension. Executives based in China are the most lukewarm, with 25 percent saying that investor returns should be the sole focus of corporate activity.

With executives generally positive about the wider social role business plays, which specific industries make the greatest overall contribution to the public good? Health care, mentioned by 49 percent of the respondents, tops all other sectors by a notable margin . Despite the high-profile attacks of some interest groups, the pharmaceutical sector (buoyed particularly by North American support) also does well. More than a quarter of the respondents cite either agriculture, especially valued in China and India, though less so in Europe, or telecommunications, notably popular in developing countries, including China.

Such optimism is encouraging, since there is no sign that the new pressures on business will go away. According to the survey, 20 percent of the respondents believe that the public will expect companies to take on most of the added responsibility for handling social and political issues, while an additional 59 percent think the burden will fall equally on governments and companies.

No comments: