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:

Risky (social) businessND


Robert Berkman, MIT Sloan Management Review, 30 August 2012

The most commonly identified social media risk is that it may leave one's organisation vulnerable to posts, discussions and unauthorised information releases that could be potentially damaging. Findings of a new study into social media risk mitigation by Altimeter include: two thirds of companies surveyed say that social media is a significant or critical risk to their brand reputation; the biggest concerns revolve around brand reputation; and the major sources of risk that companies say they are most concerned about are the “big three”: Facebook, Twitter, and YouTube. The research was based on interviews with professional in the functions such social media managers, compliance officers, lawyers and chief security officers. In general terms, the suggested risk mitigation process involves identifying, assessing, managing and then monitoring the risks. For more information see www.sloanreview.mit.edu

Customer experience should be part of your businessND


Harley Manning, Harvard Business Review, 29 August 2012

The author identifies three main strategies for optimising 'customer experience'. The first is creating a specialised enterprise-level customer experience team, placed outside of any silo. Through a research process that focuses on understanding customer journeys, the team identifies opportunities for improvement. Then they plan improvement projects, and engage the relevant business owners in their efforts. Second, the author stresses the importance of uncovering and mapping customer journeys. The maps visually illustrate the series of events that make up a customer's interactions with a firm over time. They help companies find problems that occur in the "white space" as a customer passes from one channel to another. The third and final strategy is appointing a Chief Customer Officer (CCO), who drives change that needs to cut across channels and business units and leads management efforts aimed at improving customer experience. For more information see www.blogs.hbr.org

Today's consumer cares about corporate reputationND


Richard Warnica and Tim Shufelt, Canadian Business, 28 August 2012

Consumers know more than ever about where products come from. As a result, their expectations of the provider have risen dramatically. Today, consumers want to know what a company stands for, what its values are and why. They care about what a company is doing, not just what it’s selling. The author argues that corporate scandals over the past decade, from the sub-prime mortgage crisis to the BP oil spill, have produced 'default skepticism' among consumers. However, there is a suggestion that the pendulum has swung too far in favour of reputational marketing, and that marketers have become consumed with corporate image. The issue is that when every company is trying to develop deeper bonds with the consumer, consumers’ attention is distracted and diluted. For more information see www.canadianbusiness.com

Why remote workers are more (yes, more) engagedND


Scott Edinger, Harvard Business Reveiw, 24 August 2012

The author has observed that team members who work in a different location to their leaders were more engaged and committed, as well as rating the team leader higher, than team members sitting right nearby. The author suggests several reasons why this might be the case. The first is that proximity can breed complacency - that even within offices people are using technology like emails as their primary mode of communication. The second is that many leaders make an extra effort to stay connected to those they don't ordinarily run into. It is also suggested that leaders of virtual teams make a better use of tools. The final reason is that leaders of far-flung teams often filter out distractions and maximise the time their teams spend together. For more information see www.blogs.hbr.org

Social media compliance isn't fun, but it's necessaryND


Ryan Holmes, Harvard Business Review, 23 August 2012

For highly regulated sectors like finance, government and pharmaceuticals, social media can be a legal minefield. Firms can be held liable for tweets from an employee's iPhone, outside the office, and after working hours. The good news is that implementing an effective social media compliance process isn't rocket science, but the combination of the right policy and the right technology is required. The first step is developing a social media policy in collaboration with front-line employees, and then providing training for employees - particularly those in sales and marketing divisions. Adopting technology that keeps pace with regulatory requirements is equally important, for example implementing pre-approval for Facebook and Twitter content. For more information see www.blogs.hbr.org

Pinning your marketing hopes on social mediaND


Guardian Professional, The Guardian, 20 August 2012

Networking site Pinterest has nearly 12 million users, and reached the 10 million-user milestone quicker than any other site in internet history. The US-founded network uses imagery as the core of its network system, thus creating a clear point of difference from existing social media sites Facebook and Twitter, which are word-based. Many US businesses have begun to use the site to support their own marketing work. The visual nature of Pinterest lends itself to businesses whose goods and services can be presented well, and food companies in particular have been early advocates of the site. Businesses using Pinterest most effectively are those who understand the networks' 'product life cycle' and its demographics. In the US, Pinterest's core user profiles are 25-34 year-old women within the upper levels of income, while in the UK, the typical user profiles are males aged between 25-34. For more information see www.theguardian.co.uk

Social media shift in businessND


Julian Lee, Sydney Morning Herald, 15 August 2012

As yet another large company feels the heat from social media, marketers are weighing up whether the benefits of being on Facebook outweigh the risks. Last week a landmark ruling threw the responsibility for monitoring the thousands of comments posted on corporate Facebook pages back to companies, which now have to ensure posts are not racist, sexist or inaccurate. Marketers must be forgiven for asking, why are we here in the first place? Gabriel McDowell of Res Publica, an adviser to corporations on social media strategy, said the wrong people running company Facebook pages had compounded recent missteps. Control should be taken from advertising and marketing agencies, who are used to pushing a message, and handed to public relations people, who are better equipped to deal with fallout. For more information see www.smh.com.au

The size and scale of Chinese social entrepreneurshipND


Andrea Krause, The Guardian, 15 August 2012

FYSE has conducted an annual 'Chinese Social Enterprise Survey' survey among social entrepreneurs in China for the past two years. 95% of respondents got involved in social entrepreneurship after 2006, with the Sichuan earthquake of 2008 being a major driving force for participation. The recent interest in social enterprise is reflected in the youthfulness of enterprises: 54% of them are under three years old and only 38% are more than five years old. However, many NGOs striving to become social enterprises struggle due to inadequate business and market expertise, institutional challenges, an unclear business model and inefficient income generating strategies. Therefore they often revert back to grants and donations to cover costs or are unable to expand. For more information see www.guardian.co.uk

Aussie challenge for Facebook advertisersND


April Dembosky, Financial Times, 12 August 2012

International advertisers are grappling with renewed concerns over the hidden costs of advertising on Facebook, after an Australian standards board ruled that companies are responsible for policing defamatory of misleading comments posted by ordinary users on Facebook pages. There could now be a chilling effect on advertisers' willingness to use social media sites, and the result could be damaging for Facebook, which is already struggling to prove the effectiveness of its advertising model. In the US, laws are more strictly formed around truth and accuracy, rather than decency. And advertisers are protected from liability for content posted to their website by third parties. However, pharmaceutical companies and the financial industry have still been particularly reluctant to adopt social media in the US. For more information see www.ft.com

Corporate ranks start to divide on bonusesND


Ian Verrender, The Age, 9 August 2012

BHP CEO Marius Kloppers has decided to directly link his pay to performance and to shareholder returns. This stands starkly at odds with the trend in corporate ranks during the past decade and a half where the opaque calculations of bonuses have become a source of frustration for shareholders and the broader community. In Australia, the two strikes and you're out rule - where a board is dumped if more than 25 per cent of shareholders vote against the executive remuneration package two years running - is now entering its second year. That has helped focus the minds of directors on their responsibilities, although a surprisingly large number of companies last year incurred the wrath of shareholders on the issue. What Kloppers and some other executive have done is kept it simple. If shareholders have suffered, then they get no bonus. For more information see www.theage.com.au

Human Rights and guiding principles – managing risks and impacts in AsiaND


Michelle Brown, CSR Asia, 8 August 2012

It has been over a year since ‘Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework’ were endorsed by the United Nations which provide a framework for how companies can understand and manage their responsibilities in the complex area of Human Rights. Human Rights are universal, but assessing the corporate impact on human rights will be affected by different country contexts and the different operating environments that a company faces. For Asian companies operating in Europe and for European companies operating in Asia it will be important to consider their operations in light of the rolling out of the Guiding principles. Part of the challenge for companies is the lack of publicly available impact assessments and sharing of practices in the area of human rights. For more information see www.csr-asia.com

Mitigate the risk in social media sellingND


Barbara Giamanco and Kent Gregoire, Harvard Business Review, 7 August 2012

Sales reps now have the ability to participate in global conversations about their products, their field, and their expertise. But some companies are so worried about potential mistakes or loss of control that they don't allow participation. That's a bad idea. Choosing not to be present in social networks puts your company and your salespeople at a competitive disadvantage. Instead, acknowledge the risks and mitigate them. Potential risks of social media usage include false representations, unguarded disclosures, and copyright violations that could bring legal exposure. These risks, however, can be managed with well-crafted guidelines. Policies at IBM, Nordstrom, and the U.S. Air Force, for example, highlight the importance of exercising good judgment, showing respect, refraining from disclosing confidential information, avoiding conflicts of interest, and representing opinions as purely one's own. For more information see www.hbr.com

If the name gets in the way, change itND


Nicole LaPorte, The New York Times, 4 August 2012

There are various reasons to rename a business, such as: making the name easier to pronounce, a desire to rejuvenate a brand or to do away with negative associations. However, there are risks involved. Companies always face the challenge of telegraphing a new name in a way that doesn’t alienate loyal customers, and undermine 'positive brand equity' that the company has built over time. Nonetheless, many large companies have undergone name changes, including: Datsun to Nissan; the Computing- Tabulating-Recording Company to the International Business Machines Corporation, or I.B.M.; and BackRub, the precursor to Google. For more information see www.nytimes.com

Goldman creates first US ‘social’ bondND


Tracy Alloway, Financial Times, 2 August 2012

Goldman Sachs has teamed up with New York City to create the first significant “social impact bond” in the US, providing a test case for the experimental financing method aimed at helping cash-strapped local governments fund public projects. The investment bank will loan $9.6m for a programme designed to reduce the number of young men in New York who reoffend and end up back in prison. However, Goldman’s ultimate return will be linked to the success of the programme in preventing reincarceration – a key component of such social impact deals. Under the leadership of its new public relations chief, Jake Siewert, Goldman has been attempting to rehabilitate its own public image – including the launch of a Twitter account to help broadcast its charitable efforts and philanthropic investments. However, the bank remains controversial among some local governments. For more information see www.ft.com

Business, CSR and sportsND


Esther Teh, CSR Asia, 1 August 2012

Sports have always been an influential channel in terms of reaching and engaging people from across the entire social and demographic spectrum. A growing number of organisations have implemented CSR initiatives that use sports as a means for social development. Sport emphasises the bond which sport can create between businesses and the communities they work for, and can involve employees and suppliers. This can enhance community connections and help to strengthen a sense of institutional belonging in addition to highlighting the sport itself. In Malaysia, the Government is enthusiastic about encouraging companies to adopt sports as part of their CSR through initiatives such as sponsorship to encourage participation in sport. However, in many cases, the CSR aspect is lost, as companies treat the opportunity more as a marketing ploy with little consideration for real social impact. For more information see www.csrasia.com

Remapping your strategic mind-setND


Pankaj Ghemawat, McKinsey Quarterly, 1 August 2012

Senior executives need better mental maps to navigate our unevenly globalised world. Although a wide variety of metrics show that just 10 to 25 percent of economic activity is truly global, executives disproportionately embrace visions of unbounded opportunities in a borderless world, where distances and differences no longer matter. A special kind of 'rooted' map can correct a common misperception: that the world looks the same regardless of the viewer’s vantage point or purpose. In the real world, geographic distance and differences in culture and policy matter. To better reflect this reality, rooted maps depict the world from a specific perspective and with a particular purpose in mind. They do so by adjusting the sizes or positions of countries in relation to a specific home country, while otherwise maintaining familiar shapes and spatial relationships, which can help fit these maps into our existing mental models. For more information see www.mckinseyquarterly.com

European lenders take Libor scandal hitND


Patrick Jenkins, Financial Times, 31 July 2012

The spreading scandal over the manipulation of key lending rates and the downturn of Europe’s economy took their toll on two of the region’s leading investment banks, Deutsche Bank and UBS, which both revealed increased provisions and sharp profit falls. The dual impact of recent banking scandals, including the Libor affair, and struggling profitability has led to a crisis of confidence in the sector. Sentiment has been particularly bleak in Europe, amid growing anxiety that the eurozone crisis will worsen over the coming months. Though Deutsche made clear that no senior manager had been implicated in the Libor probes, Mr Jain said he would put renewed emphasis on ethical standards throughout the bank and “root out bad behaviour”. He also promised to be “at the forefront” of reforms to investment banker pay. For more information see www.ft.com

Claims, purpose-drive marketing and consumer trust – where are we in Asia?ND


Rikke Netterstrom, CSR Asia, 25 July 2012

The misrepresentation of many products and services as ‘green’, ‘ethical’, ‘sustainable’, including mis-selling and misleading claims is a major issue in Asian markets. However, in China, India, Indonesia and Singapore and Malaysia, 65% or more still trust business to ‘do the right thing’ – this is much higher than the global average of 53%. Implications for businesses who want to avoid losing trust and tap into the ethical and consumer- conscious market are two-fold: purpose-driven marketing require new products and services, and businesses need to step up accountability for claims. For more information see www.csrasia.com

How the forest product industry performs on CSR in China?ND


Brian Ho, CSR Asia, 25 July 2012

A conference was held in Beijing on 24 July to discuss how CSR should be promoted in the forest product industry in China. The China National Forest Product Industry Association (CNFPIC) was the organiser and five leading companies jointly released their first CSR reports during the conference. The reports have their own characteristics but also commonalities. They cover important issues such as ensuring the interests of investors, caring for employees, engaging with suppliers for development, meeting customers’ demands, protecting the environment, and promoting community development. They also mention the expectations and aspirations of various stakeholders, as well as how business communicates and responds to those expectations. The China Forestry Industry Association also attended the conference, and emphasised how its progress in social responsibility is significant to the overall healthy development of the forestry industry in China. For more information see www.csrasia.com

The odd ways we calibrate our outrageND


Michael Skapinker, Financial Times, 25 July 2012

Why are some more outraged about corporate scandals than others? Skapinker argues that while Barclays’ attempted Libor manipulation was ‘disgraceful’, GlaxoSmithKline’s behaviour was surely far worse. He suggests that there was more outrage over Libor as many felt it uncovered an insiders’ secret world. Hidden corporate misbehaviour comes to seem ‘normal’ to those engaged in it. Skapinker suggests that if everyone else is doing it, management seems to encourage it and it takes a brave soul to ask: ‘what would happen if the outside world knew what we were getting up to?’ For more information see www.ft.com

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