Knowledge Centre:
News Digests

Stay abreast of what’s happening internationally with developments in corporate public affairs. Here is news that you may find useful and interesting:

China uses prison visits to scare officials straightND


Charles Clover, Financial Times, 25 May 2015

China’s President Xi Jinping has embarked on the biggest anti- corruption crackdown in China’s recent history, in an attempt to clean up the enormous Communist party bureaucracy. More than 100 senior officials have been placed under investigation for corruption since 2012, and tens of thousands of lower-level officials have been arrested. Now, in an attempt to instill fear, officials are being sent on prison visits in a new approach to constrain the acceptance of bribe taking. Earlier this month 70 officials from central Hubei province spent a day touring the local prison and met with former colleagues whom are currently incarcerated. For more information see: www.ft.com

Sustainability supporting Unilever’s growthND


Unilever, The Guardian, May 2015

The commitment made by Unilever to minimise its environmental footprint and enhance its social impact is achieving considerable success. Unilever has reported that it is realising success in terms growth, cost efficiency and business resilience. Unilever brands attaining notable success on sustainability are also the brands achieving the best growth, while reducing waste, water use in manufacturing, and CO2 from energy use, and simultaneously creating cost efficiencies. More than 55 percent of Unilever’s agricultural raw materials are currently sustainably sourced, with its target being 100 percent by 2020. Unilever brands that contribute to one or more of its sustainability goals, termed sustainable living brands, have grown at twice the rate of the remainder of the business. Its latest report indicates that it is on track to achieve nearly all of its goals. For more information see: www.theguardian.com

5 facts about the BP oil spillND


Seth Motel, Pew Research Center, 17 April 2015

The explosion at the Deepwater Horizon drilling rig on April 20, 2010 in the Gulf of Mexico killed 11 workers, and by the time it was capped had sent approximately 5 million barrels of oil into the Gulf. Data collated by Pew Research Center surrounding the incident makes for interesting reading. The 5 facts the article uncovered were; support for offshore drilling plummeted after the 2010 spill, but has largely recovered since; the months-long BP story was one of the two biggest stories of the year in terms of news interest; public interest went hand-in-hand with the vast amount of news coverage of the spill; the public trusted news organisations more than the federal government and far more than BP for information about the leak; and while support for offshore drilling has largely rebounded, many Americans also support investments in alternative energy. For more information see: www.pewresearch.org

Should the CEO be social? ND


Dionne Lew, Smart Company, 14 April 2015

There is increasing awareness of the importance of social media among senior executives but participation remains low and there remain disagreements as to whether CEOs should use it or not. Socially active CEOs are viewed positively. Eighty-one percent of executives want the CEO to be social while two thirds of customer’s have increased trust in a company if the CEO is social, and 82 percent of employees think a social CEO helps shape reputation. Being social amounts to much more than whether the CEO should post or tweet, which is where much of the debate sits right now. Being social has broader advantages and has been shown to help with strategic development, executive team development, risk management, leveraging opportunities and creating an engaged and productive culture. For more information see: www.smartcompany.com.au

Changing the nature of board engagementND


Bill Huyett and Rodney Zemmel, McKinsey and Company, April 2015

Company directors are required to adapt to an ever evolving business environment. They remain under pressure from numerous stakeholders, regulation is increasingly demanding, and businesses are becoming more complex. Research by McKinsey and Company shows that the most effective directors are rising to these challenges by spending twice as many days a year on board activities than their peers. Board members and executives at Prium, a New York based forum for CEOs, discussed these issues. The ideas that surfaced, while not conclusive, provide helpful advice for boards. A prevailing theme is that boosting effectiveness is not only achieved by spending more time; it entails changing the nature of the engagement between directors and the executive teams they work with. This paper offers five enlightening tips for directors and CEOs striving to make the most of their limited time. For more information see: www.mckinsey.com

How much does customer social media angst really matter?ND


Morra Aarons-Mele, Harvard Business Review, 3 April 2015

In 2013 just 30 percent of brands had a dedicated customer service handle on Twitter, and only 10 percent of those brands with customer service handles reply to more than 70 percent of their mentions. Most brands operate “social listening” programs, ranging from merely observing software to the scanning of feeds to actively minimise bad feedback and magnify positive feedback. The efficacy of these methods is not always clear and the high rate of unanswered feedback should be seen as a missed opportunity. For more information see: www.hbr.org

Digital hives: Creating a surge around changeND


Arne Gast and Raul Lansink, McKinsey Quarterly, April 2015

This article offers a new take on employee engagement and the use of social media to improve problem solving, unlock previously tacit knowledge, and speed up execution in the workplace. A prerequisite to comprehensive engagement is an understanding of organisational culture and its social dynamics, an emotional interest in what prompts new behaviour, a willingness by management to encourage a non hierarchical structure, and an ability to demonstrate how digital activities complement off-line or other real-world events. If these fundamentals are achieved maximum utility can be gained from social media platforms. The specific approaches offered by this paper are; engaging the workforce in better strategy; connecting silos with a social chain; enlisting key customers to improve the proposition; and uniting a dispersed sales force to drive higher sales. For more information see: www.mckinsey.com

Calculating the market value of leadershipND


David Ulrich and Allan Freed, Harvard Business Review, 3 April 2015

Traditionally investors have examined financial reporting of earnings, cash flow, and profitability to define the market value of a firm. However, financials alone have been found to predict just 50 percent of a firm’s market value. To gain greater insights into a specific firm, investors increasingly focus on intangibles like strategy, brand, innovation, systems integration and collaboration. Investors are also working to measure and track such intangibles. The next step for investors is an increased focus on leadership. Intelligent, long term investors are aware that leadership affects a firm’s performance. The authors of this article have created a leadership capital index by interviewing and surveying investors and by amalgamating dozens of studies of the impact of leadership. The leadership ratings index has two dimensions: individual and organisational. Each dimension has five factors. For more information see: www.hbr.org

How a private-sector transformation could revive JapanND


Georges Desvaux, Jonathan Woetzel, Tasuku Kuwabara, Michael Chui, Asta Fjeldsted, and Salvador Guzman-Herrera, McKinsey & Company, March 2015

Japan’s manufacturing industry currently lags behind comparable US and German sectors in labor productivity by almost one-third. Its productivity growth has stalled below 2 percent for much of the past 20 years, its working age population is shrinking, and a continuation of current trends would see annual GDP growth of only 1.3 percent through to 2025. A recent McKinsey Global Institute report, ‘The future of Japan: Reigniting productivity and growth’, highlights potential avenues for growth and renewal, emphasizing areas where the private sector can take the lead. The report determines that if Japan can double its rate of productivity increase by acutely focusing on increasing value added and cutting costs, it could boost annual GDP growth to around 3 percent. For more information see: www.mckinsey.com

Power to the new people analyticsND


Bruce Fecheyr-Lippens, Bill Schaninger, and Karen Tanner, McKinsey Quarterly, March 2015

The management of HR talent in business typically revolves around personal relationships or decision making based on experience, rather than deep analysis. Advanced analytics uses advanced techniques to recruit and retain those who excel at innovation and have accomplished leadership capabilities - those who drive superior value in companies. Advanced analytics has contributed to major achievements in several organisations. A major healthcare organisation for example attributes these techniques to it saving over $100 million, while at the same time making gains in employee engagement. Another corporation attributes the use of predictive behavioral analytics for it reducing retention bonuses by $20 million and employee attrition by half. For more information see: www.mckinsey.com

Harvest of FearND


Anne Hyland, Financial Review, March 2015

A recent public health scare involving frozen berries, led to fear of a Hepatitis A epidemic in Australia. Some experts quoted potential exposure rates at around 450,000. Known cases, attributed to the contamination, are yet to reach 20. Crisis management expert Ross Campbell, chief executive of RCA Crisis Management says managing such an event is about speed. “The public expresses their view very, very quickly about incidents like this, and start to talk to each other on social media, with social media and with traditional media and start to paint a picture very quickly. If you're not ready for that, you're really not ready to protect your brand." Having a crisis management plan ready to go that has been tested regularly and which assumes the worst is essential, according to Campbell. He highlights four steps in responding to a crisis — assess the incident, acknowledge the problem, determine the response and then implement it. For more information see: www.afr.com.au

The truth about CSRND


Kasturi Rangan, Lisa Chase, Sohel Karim, Harvard Business Review, February 2015

Many companies have long managed their corporate social and environmental responsibility programs with the broad goal of contributing to the improvement of the societies in which they operate and depend. Many companies also feel obliged to dress up their CSR programs as a business discipline that delivers business results. This article argues that to ask this of a firm is demanding too much from CSR programs. The authors claim it distracts from what should be a company’s primary objective which is to align a company’s social and environmental activities with its business purpose and values. This article examines why firms should be refocusing their CSR activities and it also provides a systematic process for conveying consistency and discipline to CSR strategies. For more information see: www.hbr.org

In Times of Corporate Troubles, Altruism HelpsND


J. Wesley Judd, Pacific Standard, 11 February 2015

A recent scandal engulfing HSBC, the world’s second largest bank, found it to be facilitating the avoidance of tax totalling hundreds of millions of dollars. This has surprised few due to the pervasive public mistrust of the sector. The bank now faces charges in the United States, France, Belgium, and Argentina. HSBC was quick to respond, claiming it had “fundamentally changed”. It would appear that the public would deem any immediate philanthropic or community investment initiative established after such an event to be merely a rush to salvage reputation. The efficacy of such a move is not without merit. A recent study from Stanford Graduate School of Business professor Ed deHaan has found that companies see more encouraging results when their philanthropy arises in response to scandal, than when it comes in the form of genuine altruism. For more information see: www.psmag.com

The 50 percent clubND


McKinsey Quarterly, Martin Donnelly, February 2015

Female workers make up 53 percent of The British Civil Service but hold just 38 percent of leadership roles – which is better than the average at FTSE 100 boards or the UK judiciary, however still insufficient. This article, written by Martin Donnelly, the permanent secretary for the Department of Business, Innovation & Skills, explores his successful quest to achieve full gender balance on his leadership team. Donnelly became permanent secretary for the Department of Business, Innovation & Skills, in 2010, determined to make gender equality a priority. Donnelly’s success at achieving gender equilibrium is a move in the right direction which is not unique to his department. In 1996, just 17 percent of the country’s most senior civil servants were women. While that proportion has more than doubled, there is still some way to go. For more information see: www.mckinsey.com

Corporate social media needs to be a two-way communicationND


ABC news, Andrew Robertson, 19 February 2015

Companies continue to grapple with how best to use social media to engage their stakeholders. A recurring error is to approach social media as a means to push information, much like television and newspaper. Laurel Papworth, social media expert from the University of Sydney, offers these 5 tips on what makes a good corporate social media strategy: • Know the purpose and value of channels like Twitter and Facebook and understand why you use them; • Keep marketing and customer service separate. Marketing and PR people should not be answering customer service questions; • Know your target audience (e.g. is it retirees or teenagers?); • Be where your customers are (i.e. if they are on Facebook, that is where you should be); • The best marketing and public relations is fantastic customer service. For more information see: www.abc.net.au

The corporate gift that keeps on giving ND


Business Spectator, Peter Baines, 27 February 2015

Businesses implement a CSR program for a variety of reasons, like believing it is the right thing to do, because it is what is expected of them, or it’s what their peers are doing. The most effective CSR programs are those that provide a return to business. When a return to business is established, people with the business offer it attention, and subsequently inject resources into the area. Increasing donations is not the key to success. There is no correlation between the size of a donation and benefits back to the business. It is important to understand the nature of the relationship you have with your partners, implement measures on the commitment you make and to attach KPIs so benchmarks are established by which performance can be measured. For more information see: wwwbusinessspectator.com.au

Shell, Audi, BVN and Australia Post discuss their policies towards sustainabilityND


Glenda Korporaal, The Australian, 19 February 2015

A roundtable, recently hosted by The Australian’s Deal Magazine delivered insights from leading sustainability practitioners, Paul Zennaro, head of media relations, Shell Australia; James Grose, national director, architectural firm BVN; Andrew Sellick, head of environmental sustainability, Australia Post; and Anna Burgdorf, general manager of corporate communications, Audi Australia. The discussion focused on distinct approaches from divergent fields, diverse opinions from the experts, and remarkably similar sentiments with regard to best practice approaches to tackling pressing sustainability issues. The article provides a comprehensive insight into the progress these companies have made and are set to make in the near future. For more information see: theaustralian.com.au

Big firms face crisis of trust, business lobby group saysND


BBC, 9 February 2015

Criticism of big business has risen significantly over the last few years. The squeezing of suppliers, tax avoidance and the deliberate forcing of firms out of business have gained the public’s scrutiny. A UK lobby group has said that large firms face a “crisis of trust” and the government must prioritise better ethics. The Forum of Private Business (FPB) found that over three-quarters of respondents think big firms put profits before ethical standards. The survey also found that 74% of respondents agreed that the majority of big businesses have no concern for small business owners in the UK, while 76% agreed that the next government should penalise big businesses that act unfairly towards small businesses. The CEO of FPB, Phil Orford said: "The view of the British public is clear: we are facing a crisis of trust in big business and the UK wants the next government to respond accordingly, safeguarding the UK's small business community”. For more information see: www.bbc.com

Sustainability now key selling point for business schools attracting studentsND


Mike Scott, The Guardian, 9 February 2015

As many people are aware, sustainability is a pressing business issue, dealt with at the highest levels of an organisation. Until recently sustainability didn’t receive much attention from many boardrooms. Business schools were also unworried by not devoting too much attention to the issue either. While businesses have moved ahead, the majority of business schools have not, choosing to maintain focus on maximising shareholder value, short-term profits, and the constricted interests of individual businesses, rather than society and the economy as a whole. The last 10 years has seen a drastic change in student attitudes toward sustainability and this subsequently has driven many business schools to greatly increase focus in this area. For more information see: www.theguardian.com

Promoting gender diversity in the GulfND


Tari Ellis, Chiara Marcati, and Julia M. Sperling, McKinsey and Company, February 2015

Throughout Gulf Cooperation Council member states (GCC), female participation in business is minimal, however according to this article by McKinsey, steps are being taken to improve this. The shortage of women in leadership roles is highlighted by data from the GCC Board Directors Institute showing that women hold less than 1 percent of executive-committee and board positions in the region. A recent study by McKinsey suggests that things may be improving. Close to two-thirds of survey respondents indicated that women in leadership was on their organisations strategic agenda. There is divergence within the region, with some states performing better than others. However, 74 percent of female respondents indicated that they felt the role of women in business was improving and would “absolutely” be increasingly important on their organisations strategic agenda over the next five years, versus just 51 percent of male respondents. For more information see: www.mckinsey.com

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