Actions speak louder than words
This article was originally published in the 2016 Winter Edition of AQ.
Good business has to be ingrained in every aspect of the organisation, not bolted on, says Eva Elmstedt, professional board director and winner of Women's Board Award 2016 in Sweden.
Companies have to keep 'good business' top of mind, but it is not something you 'bolt on' - the right values need to be embedded in the company's DNA. I've always been a bit annoyed by 'CSR departments', because they imply that CSR is something that only one part of the business 'does', and can mean that the rest of the company takes no responsibility for behaving well. In many cases CSR departments have seemed like a bit of a façade - particularly if they are headed by a woman, because that allows the company to 'tick the gender box' too. However, I wonder if we would have made as much progress as we have on corporate responsibility had we not had these CSR departments. CSR has got companies talking.
Leaders set the tone
Leaders - particularly the CEO and the board - are very important in creating the right culture and ensuring that good business practice happens throughout the organisation. I went to an event recently where a CEO was awarded 'leader of the year'. Since he took on the role 14 years ago shareholder value has risen 1,500%, and it seems no accident that he set out his intentions at the start to increase the gender balance, turn the company into 'a great place to work', be a respected brand and so on, and that the company has lived by those values ever since. Among other things, this company is the most popular choice for university graduates looking for a career in technology.
My role is to represent the shareholders' interests - but that is not as simple as it sounds. If you don't treat all your stakeholders well it will affect shareholder value. Recent corporate history is littered with examples where bad practice in one part of the business comes to light and creates immediate and dramatic falls in shareholder value. It takes years to build a good reputation, and you can lose it overnight.
Being a good business and creating strong shareholder value are entirely compatible. Short cuts, designed to boost profits in the short term, are likely to damage the brand in the medium to long term. There is greater recognition of this now, and things have changed for the better - not least because of the growing consumer power afforded by the internet and, in particular, by social media. People will share their experiences and/or knowledge of a company instantly, and that has forced better practice. It seems that consumers may be prepared to pay a bit more for goods from a company with a good reputation, whereas if a company is found to be using child labour, for example, that affects perceptions and influences buying behaviour.
I think good business is perhaps more ingrained in the Nordic approach because of our tradition of social welfare, equal opportunities, good education and healthcare systems, and so on. We have a very good platform to build on. This is built into our culture, and it feeds into the way our companies operate. We're not perfect though. For example, despite the current focus on gender diversity, I still see organisational charts where there are no female names at senior levels.
Making the business case
For me, it is very important that good business is on the board agenda, that we discuss it, set targets for it and measure our progress against those targets. Being a good business is not about being 'nice', but about good business sense, and because money is the language of business, you have to make the business case to the board. Money talks.
Eva Elmstedt has been an independent board director for 12 years, and has held a series of senior executive roles in IT and telecoms companies including Nokia and Ericsson.
Posted on March 21, 2018 7:34 AM | Permalink