The Business Ethics Exchange
March 2012
Bi-monthly news from the Center for Ethical Business Cultures
The Hershey Company … Chocolate and Beyond!
Leadership Insights

By Ron James

How does one of America’s most iconic brands answer the challenges of corporate responsibility and sustainability in its supply chain? Andy McCormick, vice president of public affairs for the Hershey Company in Pennsylvania, spoke to a sold-out audience in a public forum sponsored by the Center for Ethical Business Cultures at the University of St. Thomas Opus College of Business.

With the nations of Ghana and the Republic of Cote d’Ivoire accounting for almost 60 percent of the world’s cocoa production, the cocoa industry faces the challenges of declining yields, political unrest, poor financial or credit access to farmers, price instability, and human rights issues such as child labor. What is the responsibility of business beyond its own bottom line to help in creating solutions to the challenges?

McCormick argued this is the time to put your values into action. With a history of giving back to the community through programs such as the Hershey School serving disadvantaged youth in the United States, Hershey has also been investing in improving the social conditions in Africa. Hershey has developed a framework for corporate social responsibility with measurable goals focused on how it behaves in the environment, the marketplace, the community and the workplace. In Africa, it has made a five-year, $10 million commitment to training farmers to increase farm family income, expanding mobile communications via CocoaLink, reducing child labor and improving cocoa supply.

It is a virtuous cycle of investing to improve social conditions, which ensures supply, leading to increased yields and farmer income. McCormick was clear that business has to be careful to not impose its own value systems onto other countries. Rather, it must begin with following the leadership of the local government and defining how it can work collaboratively with a variety of partners to make a difference.

Watch streaming video (Windows Media format) of the event »

CEO’s Report: Center Update: Ethical Business Cultures and Corporate Responsibility

Ron James

Over the last few months, CEBC has sponsored two webinars and participated in a panel discussion hosted by the National Association of Corporate Directors (NACD). In reflection, three themes were highlighted: the importance of transparency, trust and truth in building high standards of ethics and integrity.

First, Kathleen Edmond, Bests Buy’s chief ethics officer, was featured in a webinar describing her journey in utilizing social media in creating transparent dialogues on ethics issues. She publicly blogs about ethical dilemmas faced by Best Buy as a means of encouraging conversations about these issues while providing some insight into Best Buy’s approach in addressing the issues. And yes, these conversations are viewed internally and externally. She found experts along the way to help her overcome her own limitations in using the medium and sharing its content. While she acknowledges disclosing ethical issues through social media isn’t for everyone, her key takeaway: transparency matters! (In the spirit of transparency, I serve on the Best Buy Board of Directors.)


Chad Brinsfield

Vince Therrien

Next, Chad Brinsfield, Ph.D., assistant professor in the Opus College of Business, and Vince Therrien, director of Communication and Learning, Ethics and Compliance at Blue Cross Blue Shield of Minnesota, were featured in a webinar examining whether or not trust in an organization is overrated. They explored research examining declines in trust in society; the myths and realities of trust; and how to measure, repair, build and maintain trust. Their conclusion: Trust is essential for leaders, groups and organizations. It is the bond that forms the basis of relationships and it can be a source of competitive advantage.

Finally, I joined a panel discussion hosted by the NACD featuring a top CEO focused on ethics, a former federal prosecutor turned ethics educator, a former judge now working on criminal justice reform and a former marketing executive now a felon convicted of fraud. We examined what causes companies, boards and executives to go wrong. A loss of one’s true ethical compass is often to blame. An individual - or an organization - can become so fixed on goals and recognition and rewards that follow, that it loses sight of the truth about integrity. The antidote: Tell the truth and surround yourself with people who will do the same.

Upcoming Events

Corporate Board Member Conference
Wednesday, April 4
New York Stock Exchange, New York City
Ron James joins a panel discussion in New York on executive compensation.

19th Annual Stakeholder Dialogue
Tuesday, April 10
University of St. Thomas, Minneapolis
Can happiness be bought or sold? James Roberts, author of Shiny Objects: Why We Spend Money We Don’t Have in Search of Happiness We Can’t Buy, is the keynote speaker.

Business Ethics Summit
Tuesday, April 17
University of St. Thomas, Minneapolis
Ron James moderates a panel discussing strategies and tactics for integrating ethical behavior into businesses. The summit is hosted by the Opus College of Business and the Better Business Bureau as part of its centennial celebration.

CEBC 7 Part Series - Beyond Compliance
Friday, April 27
University of St. Thomas, Minneapolis
Strategies and Practices for Sustaining an Ethical Culture: Part V, Creating a Long-term Perspective

Minnesota Business Ethics Awards
Wednesday, May 16

Register today to attend the 13th Annual Minnesota Business Ethics Award (MBEA) luncheon featuring Brian Dunn – CEO of Best Buy




CEBC Membership

To learn more about becoming a member, please visit the Center's website at
www.cebcglobal.org

Corporate Responsibility: A View from an NGO, Business and Academia

“The purpose of business is to serve people” was the mantra of one of the center’s founding members, David Koch, the former CEO of Graco Inc. Following four years of research from prominent academics from around the country, the center is nearing the publication of a landmark book, Corporate Responsibility –  An American Experience,  that speaks directly to the question of “to whom and for what is the modern corporation responsible?”


James Harkness

Mark Murphy

Christopher
Michaelson, Ph.D.

A distinguished panel of respondents joined Andy McCormick of the Hershey Company in providing insight into the question of corporate responsibility in a CEBC public forum. Panelists included: Jim Harkness, president of the Institute for Agriculture and Trade Policy (the voice of a non-governmental organization); Mark Murphy, assistant vice president of Cargill responsible for Corporate Affairs, Corporate Responsibility and the Cargill Foundation (the voice of business); and Christopher Michaelson, Ph.D., associate professor of Ethics and Business Law in the Opus College of Business (the voice of academia).

Globalization and the explosion of information technologies have brought about a market transformation introducing another layer of complexity when addressing business’s key stakeholders: suppliers and the human rights afforded to their workforce, and the impact of business on the natural environment. Organizations should be guided by their values in determining an appropriate course of action when addressing these challenges, recognizing that profit is not the sole purpose of business; it has a responsibility beyond the bottom line.

Audience questions brought out sharp differences among the panelists and there simply was not enough time to explore the potential areas of common ground. Is child labor a business responsibility or that of the host country’s government? Does business have a responsibility to address social issues on its own? If it does, is it capable of doing so, or are non-market solutions necessary? Is the business case for sustainability justifiable … how does one determine how much to invest?

One point all agreed on … transparency is essential in doing business globally. Business must engage with its stakeholders and be transparent about establishing a set of goals and measuring progress in the areas of corporate responsibility and sustainability.


CEBC Continues Seven-Part Series of Conversations on Ethics

On March 9, CEBC conducted its fifth session in the series Beyond Compliance: Conversations about Strategies and Practices for Sustaining Ethical Cultures, focused on the role that balancing the interests of stakeholders plays in shaping and sustaining ethical cultures. Member company representatives from a range of disciplines participated.

Our conversation starter was Kenneth Goodpaster, Ph.D., holder of the Koch Endowed Chair in Business Ethics at the Opus College of Business. Ken traced the evolution of the role of the corporation from the classic Milton Friedman “stockholder management” approach to a more contemporary “stakeholder management” approach favored by leaders in the academic, business and non-government communities.

Goodpaster then stretched the group by exploring what lies “beyond stakeholder approaches” with a number of provocative questions. Are there deeper societal needs and interests that business shares a responsibility in addressing? Does a sole focus on the organization’s existing stakeholders create gaps that do not take into consideration these emerging societal needs and interests? What is the responsibility of business in defining and addressing these emerging societal needs and interests? Is business a collaborator with others? If so, who else sits at the table? Who convenes the meeting?

A lively debate ensued examining a range of views. One view underscored the important role that business plays in society today with “beyond stakeholder” thinking a natural evolution. Another view questioned whether business should be imposing its views in the identification and determination of societal needs and interests. Yet another perspective questioned the practicality of introducing a “beyond stakeholder” discussion into business when it is focused on the realities of the current economic environment.

At the heart of the discussion was a recognition that the purpose of the corporation has continued to evolve. The group departed thinking about the challenges, the opportunities and possibilities of moving “beyond stakeholder management.”

In our upcoming session on April 27, we will explore the next area of the CEBC model for building and sustaining ethical culture … creating a long-term perspective.

Members of CEBC, register to join us for the next session »


Double Your Money in the New Year!

You can double the impact of your contributed dollars by investing in the Center for Ethical Business Cultures which is included in the current Opening Doors Capital Campaign at the University of St. Thomas. To date, the Center has raised $2.2 million dollars toward a $5 million goal.

Generous anonymous donors have committed challenge grants to the University and offered to match every gift of $1,000 or more. So a gift of $1,000 is immediately matched and becomes $2,000. The more you give, the larger the match.

But this continues to be a limited opportunity in which we compete with many other priorities. So if you are inclined, please act fast by contacting Ron James at rjames@cebcglobal.org  or Brendan Bannigan babannigan@sthomas.edu. If you support the work we are doing and want to be a part of perpetuating the legacy, please respond.


Research Spotlight

Center’s Research Receives 2012 Cutting Edge Award from the Academy of Human Resource Development

On March 2, 2012, Douglas Jondle, Ph.D., James Mitchell and Alexandre Ardichvili, Ph.D. received the 2012 Cutting Edge Award from the Academy of Human Resource Development for a paper entitled “Development and Validation of the Ethical Business Culture Construct and Survey Instrument.”

Cutting Edge Awards are made to authors of up to 10 scholarly papers published in the annual conference proceedings of the prior year’s Academy of Human Resource Development.

Papers are awarded based on new knowledge contribution to the HRD field; theoretical or practical importance of the problem; approach and methodology used; links between the results and conclusions; and quality of the reporting.

The paper builds on qualitative research previously reported (See May 2011 Business Ethics Exchange Newsletter) with a three-part quantitative study aimed at identifying dimensions of ethical business culture.

The five dimensions are:

  • mission  and values-driven – values and mission are an integral component of the organization’s strategic focus;
  • stakeholder balance – the responsibility of an organization to its numerous stakeholders and their interests;
  • leadership effectiveness – ethical culture starts at the top and is conveyed by example;
  • process integrity – the institutionalization of an organization’s mission throughout its business functions;
  • and long-term perspective – balancing the long-  and short-term.

All five dimensions are closely interconnected, and an organization cannot be said to have an ethical business culture if one of the five elements is missing. The areas of emphasis of the five elements may vary based on the unique culture of the organization, but they are still present. However, the study results suggested that the mission and values-driven characteristic could be regarded as the keystone of the model, “the lifeblood of the organization.”

For more information on the research, contact Doug Jondle at djjondle@cebcglobal.org.


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