Ethical management and corporate governance are about balancing the competing needs of all of the organisations stakeholders, balancing long and short term goals and being socially responsible (CSR or Corporate Social Responsibility). The good news is empirical studies consistently show organisations that focus on these objectives also consistently out perform those seeking short term and excessive profits. This sort of long term, sustainable success is not achieved by the simplistic win-lose scenarios favoured by many MBAs. It needs mature, pragmatic governance and a focus on win-win. Successful organisations survive and thrive because they understand the only effective long term strategy is to help their customers succeed in their ambitions. So when the customers win and society wins, the organisation wins.
Focusing on customers and society at large may seem at odds with the first and fiduciary duty of the directors and managers of any commercial business which is to optimise the long term benefit of its investors/shareholders. The key element though is ‘long term’. GM and the other big US car manufactures seem to have spent most of the last decade responding to short term imperatives such as the quarterly share price and executives bonuses at the expense of the health of the business and the long term wealth of their stock holders. The net result, GM stock holders lost everything, and stock holders in other US vehicle manufacturers have lost almost everything. In contrast, Toyota’s stock holders are probably quite pleased with the long term strategic decisions their management made.
The difference between Toyota and GM was the topic of my post, Short termism -v- long term survival – Toyota had by far the better strategy for its business survival. Similar debates also surround corporate social responsibility (CSR – statistically organisations that embrace CSR do better then those that don’t) and the organisations attitude to its stakeholders (the topic of my new book, Stakeholder Relationship Management: A Maturity Model for Organisational Implementation).
I may be biased but my feeling is the touchstone that facilitates an effective focus on both CSR and excellence in client services is the way organisations engage with their stakeholder community. A mature, balanced and pragmatic approach to stakeholder relationships seems to be the underpinning needed to allow the optimum balancing of competing demands and opportunities leading to long term, sustained growth. What do you think?