Role of corporate citizenship in high performance organisations

Our contributor contends that combining high performance with high integrity can help address pressure felt by those within high performance cultures and help manage risk exposure.

High performance organisations are defined as those that have strong, sustained economic growthwhile producing superior products and services to shareholders and to other stakeholders, including employees and communities that surround the organisations. Organisations like these rarely have issues with attracting the best and brightest talent.

These organisations typically put significant financial pressures on their employees to increase net income, cash flow, stock price while reducing costs. They offer substantial rewards and opportunities for employees to grow. However in return the highest standards are expected to ensure the high performance culture is perpetuated. These pressures can often encourage unethical behavior in the relentless push to achieve and even surpass the “stretch” targets.

Increasing stakeholder expectations, tightening of laws and regulations as well as media scrutiny over the past decade can now make a major integrity lapse not just damaging but totally devastating to the ongoing operations of an organisation.  Millions if not billions of dollars are lost with the firing of senior members of management,  funds are wasted on paying fines , penalties  and defending lawsuits , and invariably stock prices are affected.

Significant effort is spent to ensure the strategic and financial performance of organisations are addressed, with regular monitoring and review  as well as corrective and improvement actions being put in place. Special task forces are set up to monitor company risk exposures, covering financial and operational risk areas but often the reputational risk dimensions are not given as much attention or importance. The main reason for this is because often there is inadequate knowledge about this dimension of risk and there is a lack of comfort as to how to define and quantify the risk exposure.

Combining high performance with high integrity can help address the pressures that are regularly felt by those within these high performance cultures and therefore help manage risk exposure. Strong signals must be sent out from the most senior levels of management in terms of what is acceptable and more importantly what is not acceptable.

This is especially required in economies that have traditionally operated in environments that have had a weak rule of law and where corruption is viewed as an almost acceptable business practice. These are the same economies that are now a critical source of growth for global corporations and therefore pose a potentially significant risk area if not properly managed.

But it’s not only about managing risk. Ensuring that the highest standards of integrity exist within high performance organisations fosters “corporate citizenship”. When properly managed this can create corporate benefits, both within the organisation, in the marketplace and in the communities that are impacted by the organisation. There are three interrelated elements or corporate citizenship*:

  • strong and sustained economic growth,
  • adherence to the spirit and letter of all relevant financial and legal regulations, and
  • the establishment and adherence to global standards (beyond legal requirements) that are in the organisation’s best interests because they promote its core values, enhances its reputation and advances its long term outlook.

The fundamental ingredient to ensure this is made possible is the existence of an employee culture that is committed to the values of honesty, fairness, trustworthiness and reliability, in other words – high integrity.

High integrity results in many tangible and intangible benefits to an organisation. Internally it empowers employees to speak up on performance and integrity issues while helping attract and retain high caliber talent. It allows for a culture that is built on trust. It leads to employment practices that are built on merit which contribute to high productivity.

Brand reputation is enhanced due to the integrity of the products and services put out.  Customer loyalty is gained due to the transparent, open and honest manner customer complaints and issues are dealt with.

The organisation’s reputation is viewed positively by society. The relationship with regulators and media is positive allowing industry thought leadership in public policy debates. This in turn augments brand and reputation and helps achieve the high performance that is so much sought after.

by Vimal L. Kumar

The views expressed here are the personal opinion of the columnist.

Photo credit: Flickr user kk+

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