OPINION LEADERS Strategic Largesse

To give or not to give? The tsunami disaster and the resulting outpouring of donations both corporate and personal have put some focus on the politics of corporate philanthropy. I’ve heard many views that corporate donations to charities or causes is largesse that should only be done with shareholder approval, otherwise directors and management should dip into their own pockets. Or that donations are for show – bright window-dressing to obscure something less palatable.
This criticism is part of broader scepticism about the idea that companies have responsibility beyond making profit – the idea of corporate social responsibility (CSR). Organisations such as the Business Roundtable have articulated comprehensively their doubts about CSR; it reflects misguided and unnecessary guilt about making profit; distracts attention from that profitability. Additionally, critics say that particularly competitive environments – like banking in New Zealand – severely limit the scope business has to indulge in social activities not directly enhancing profitability or directly mandated by shareholders.
I can see the reasoning behind this viewpoint. But it assumes that, other than the level of competition, the operating environment within which corporate must pursue sustainable profit doesn’t change. It takes no account of any possibility that, regardless of the sceptics’ views of what should be, corporate’s customer base and the broader public might have evolving expectations of what is, and what is not, appropriate corporate behaviour, and fashion their consumption choices accordingly.
For Westpac, donations to charities and causes is fundamentally about the hearts and minds of our employees. In service industry like banking, how your people think and feel about the company they work for drives directly the way they represent the company to customers and within the communities where they live and work. And that’s two-way street, because customers – and others through the media – tell our staff about what they think of the place they have chosen to work.
This point is also relevant to another question I have seen asked about corporate philanthropy – if it’s truly from sense of ethics or conscience, why do you feel the need to bring attention to the act by publicising it? It’s good question. But again I answer this by referring to the hearts and minds of staff and the interactions they have with the community every day. Our staff like to know that there is news out there that is positive about Westpac, because it can influence the views and perceptions of the people they have to deal with.
Further, in those quite frequent cases when our staff have chosen to donate to good cause – as they did to the tune of $37,000 for tsunami appeals, an amount which Westpac matched under our Staff Matching Gifts Programme – why shouldn’t they get some public recognition and hear their bosses saying that they’ve done good job? The same applies for those staff who take advantage of the one day off year they get to do some charitable work: we like to spread the stories about what they did and what they got out of it. Reticence in both instances might be perceived as tasteful by some, but it doesn’t do much to let your staff know you appreciate and applaud their generosity.
You can see how the interests of staff and customers merge. Because our staff are at the coalface of dealing with what the community thinks of their employer, employees quite naturally would prefer it if that employer was not disliked or distrusted. They want to work for company displaying an ethical and responsible approach to all stakeholders, beyond our shareholders and profit-making – beyond even our employees – for those who have produced or purchased its products and services and enabled the business to be going concern in the first place. They want to feel that there is an organisational soul and it is because of this, and because it has incredibly deep and enduring benefits across any business, that it’s major – and enjoyable – part of my responsibilities as chief executive to establish and nurture that soul.
Donations to charities and causes are one way of doing this. Giving back, particularly to those organisations selected and personally supported by staff, is key way to appeal to employees on deeper level than their pockets. The world is changing. Communities want business to be more responsive – and this includes farmers, mums and dads, the well-to-do as well as students and activists. Our business futures rest on us managing expectations across much broader spectrum – impacts on society, the environment, economics, local and national – because those expectations are shaping consumption choices.
Westpac and other major businesses need social licence to operate, not just technical licence. Going beyond justifying company’s existence on the basis of its ability to make ongoing profits – as fundamentally important as that remains – goes hand in hand with having organisational soul. In people businesses getting this balance right is the art of the long-term strategy.

Ann Sherry is chief executive of Westpac New Zealand.

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