Learn from the Gap, why boardroom opinions still influence philanthropy and how to improve gender equality
Engaging stakeholders, not policing factories
In the late 1990s, global US retailer Gap was represented by two websites: its official corporate site, and the very much unofficial “GapSucks.org”.
Legitimate concerns about suppliers’ practices overseas put the US clothing brand in the spotlight. Fast forward 10 years and Gap’s name was back in the headlines. The issue read much the same: one of its suppliers (this time in Lesotho) was dumping toxic waste into local landfills. This time public outcry was muted. Why? Because of a decade or more of effective stakeholder engagement by the company.
Engaging stakeholders is easier said than done. The process can be expensive, slow and complicated. For starters, companies must determine which stakeholders to engage and how. Those relationships then need managing. This paper crystallises the management process into five useful steps: draw a stakeholder map, identify material issues, define objectives, resolve issues, and embed engagement.
So what are the key lessons from Gap? First, call off the police. By the end of the 1990s, Gap had more than 100 auditors combing its factories. These still weren’t enough to catch every problem. Its experience in Cambodia highlights the problems of compliance. After years of civil conflict, most workers did not have official papers, making age verification difficult. It took the company several years to accept its legalistic risk-mitigation approach was “broke”.
The second major take-away from Gap’s experience comes at the end of the process. How would the company narrow down internal opinion (some of which saw engagement as “selling out to NGOs”) and opinions in the stakeholder world (many of which remained sceptical)? Gap’s approach was to hire in “boundary spanners”, individuals that were familiar with both corporate and civil society discourse. It worked, smoothing relations on both sides of the fence.
Issues of non-compliance may well continue to occur for multinational companies. Their supply chains are complex and multi-tiered. With the right stakeholder relations in place, however, not every issue has to become a crisis.
“How Gap Inc Engaged With its Stakeholders” by Craig Smith et al, MIT Sloan Management Review, Summer 2011.
Curbing C-suite social spending
The stereotype of corporate responsibility being little more than the chief executive signing off cheques for charity is (rightly) much maligned in these days. Today, companies prefer to talk less of charitable philanthropy and more of “strategic social investments”. All the same, the personalities and preference of board members still heavily influence the philanthropic contributions of the companies they govern. In this paper, Marquis and Lee examine 10 years’ worth of data for Fortune 500 companies to determine how such influence plays out.
The headline findings of the research are intriguing. Companies with new chief executives, for example, are likely to give more. Contributions also increase as the proportion of female senior managers in a company increases. And finally, the larger the board, the higher philanthropic spending is likely to be.
In these days of strategic philanthropy, the individual largesse of senior managers appears to run contrary to firm-level strategies. How to rein in arbitrary charitable expenditure remains a crucial question. Organisational structures, such as a corporate foundation, may well help. So too might internal processes. Regrettably, the paper falls short of any firm conclusions. A tantalising case of “more research needed”.
“Who Is Governing Whom? Senior managers, governance and the structure of generosity in large US firms” by Christopher Marquis and Matthew Lee, Working Paper 11-121, Harvard Business School, July 2011.
Negotiate through the glass ceiling
It’s a man’s world out there. Or is it? On the face of it, the statistics suggest otherwise. Findings from Catalyst Research show that women make up more than half of America’s management, professional and relations occupations (51.5%).
Look upwards, however, and the infamous glass ceiling seems more bullet-proof than ever. Only about one in every 13 (7.6%) top earners in Fortune 500 companies are women. As for the hot seat, the stats are even more dismal: a measly 2.6% of Fortune 500 chief executives are women.
This short paper summarises thoughts expressed by alumni of Pennsylvania University’s Wharton School. Companies today “are building on masculine norms”, participants contended, with environments that are not conducive to allowing women to “thrive and grow”.
So what would a female-friendly company look like? It doesn’t necessarily mean koi ponds and a farmers’ market at the head office, as retailer Anthropologie’s boasts (however nice). What’s needed is a total shift in mindset to one in which companies are genuinely “sensitive” to women’s family roles as well as their career progression.
“If women do opt out, it’s not because they can’t handle their families,” the paper argues. “It’s because they feel they really can’t advance.” One exacerbating problem is the general reluctance on women’s part to initiate negotiations. As work contracts become less fixed, women shouldn’t hold back in pushing for perks and work patterns that work for them.
“Masculine Norms: why working women find it hard to reach the top”, Knowledge@Wharton paper, August 2011.
Campus news
Three hundred speakers are due to address the annual conference of international campus network group Net Impact, scheduled for October 27-29 in Portland, Oregon, US.
The latest annual survey by MIT Sloan Management Review and the Boston Consulting Group finds that six in 10 of the large companies interviewed will increase their sustainability spending in 2011.