The
role of business in society has never been greater. The case for corporate
responsibility strategies like product innovation, resource efficiency and
diverse workforces grows ever stronger.
But where demands on businesses to take
responsibility for society and the environment was once the preserve of a
minority, today leaders are keen to become mindful managers.
Future business leaders are demanding
an education that prepares them for grappling with the intersection of
business, government and society, according to Jim Moore, managing director of
the Business, Society, and Public Policy Initiative at Georgetown’s McDonough
School of Business.
He argues that this is not just an
altruistic sentiment but a critical part of the formula for business success.
The traditional notion of corporate
responsibility is fast becoming outdated as companies refer to more innovative
means to make an impact – disaster relief, global development and impact
investment funds are a few common themes.
The barriers between public and private
sectors are increasingly blurred. Companies are working with business schools,
government and civil society to promote responsible business.
Honed focus on areas such as public
health systems and water conservation in both the education and business
worlds, is being driven by waning public trust after a stream of corporate
scandals.
The most recent Trust Barometer produced by Edelman, the
communications group, shows global public trust in the corporate sector has
fallen to levels not seen since the run-up to the financial crisis. This year,
trust in business is below 50% in two-thirds of the 27 countries surveyed –
including the US, UK, Germany and Japan.
The alarming evaporation of trust has been compounded by scandals in the
past 12 months – among them the foreign exchange rate rigging scandal that cost
six global banks including HSBC and Citi $4.3 billion in combined
fines, and high-profile cyber attacks on companies including Sony, and
JPMorgan, which compromised millions of customer accounts.
Richard Edelman, chief executive of
Edelman, argues that public distrust stifles business innovation. “Trusted
innovation can only be achieved when business adopts a new framework, rooted in
sharing information and fostering collaboration,” he says.
One way to combat this is by taking a
down-up approach. “Innovation is hard to teach. But it is taking and, will take
a more prominent place in the curriculum,” says Ian Macdonald, director of the
public management specialization in the MBA at Schulich School of Business in
North America.
Responsible management is already a focus for top MBA programs. A number
of schools have moved in this direction – including Cranfield School of
Management, and Copenhagen and Aston Business
Schools in Europe.
Dana Brown, director of the MBA program
at the UK’s Oxford Saïd Business School, says that business schools will focus
more on culture – its meaning and significance for political, social and
economic developments.
“Business students will find that they
need to understand the ‘rules of the game’ that shape business environments,
and the underpinnings of healthy business such as good education systems,” she
says.
One example is the rise in the number
of Master of Public Administration (MPA) programs. In the US, master and
undergraduate degrees in public administration have grown from 17,000 in 2010
to almost 21,000 in 2013, says Kathy Gamboa, dean of operations at the College
of Criminal Justice and Security at University of Phoenix.
The trend is global. The Indian School
of Business and the Indian Institute of Corporate Affairs (IICA) will offer a
certificate program in Corporate Social Responsibility Management in June. “CSR
[is] a buzzword today,” says Dr Bhaskar Chatterjee, chief executive of the
IICA.
SDA Bocconi School in Italy launched an
MPA this month. Greta Nasi, director of the Public Management & Policy
Department, says that managers are needed who can read their environment,
understand the demands and needs of citizens, and translate this into public
services.
Future leaders are pouring into these
courses. “There has been a significant increase,” says Peter J Robertson, associate
professor at USC’s Price School of Public Policy in California. The number of
international applications for USC’s MPA program has surged from 78 in 2009 to
340 in 2014, he says.
Entrepreneurship with a social edge is now a focus area for MBA students
and their schools. Spain’s IESE Business School, for example, last
year launched a new MBA elective that focuses on social entrepreneurship.
Professor Antonino Vaccaro, who teaches
the program, says that social impact has to go beyond corporate social
responsibility, and companies are beginning to realize this. “They’re also
discovering that a social focus makes them more competitive,” he says.
Student interest is powered by
increased job opportunity at social institutions. There is demand for
finance-savvy individuals and those with skills not traditionally focused on in
the development world.
Good managers are always needed, says
Henrik P Minassians, director of public sector partnerships at California State
University – Northridge. “Many local public sector departments are hiring now.”
Accenture Development Partnerships, the
international development wing of the management consultancy firm, now uses MBA
internships. It expects to have tripled its total employee base from 1,000 in
2013 to about 3,000 by the end of this year, Accenture says.
Salaries are lower at public sector
organizations but they have improved over the past several years, says Bill
Rivenbark, director of UNC-Chapel Hill’s MPA: “Employee benefits and the
prospect of stability are common recruiting tools for public organizations.”
Private sector responsibility
strategies have been widely praised at companies such as Unilever, and
Kingfisher and Marks and Spencer, the UK retailers.
Firms that are sustainable have been
shown to be more innovative and adaptive to their environments, and experience
less financial and reputational risk.
Total spend on CSR initiatives reached
$15 billion in 2013, according to EPG, an economic consulting firm.
Investors too are warming to social
responsibility. CDP – formerly the Carbon Disclosure Project – which asks large
companies to reveal their environmental risks and opportunities – represents
institutional investors worth $95 trillion in assets.
Pearson, Intel and Legal & General
have all set-up impact investment funds, and Institutional investors such as
Axa Group and Bridges Ventures are following suit.
MBA students at business schools –
among them Haas School, UNC Kenan-Flagler and Ross School – are using socially
responsible principles to lead funds worth millions of dollars.
Students running the social fund at UNC
will be able to test their hypotheses about what makes one company better than
another using the triple bottom line as the metric, says Carol Hee, director of
the school’s Center for Sustainable Enterprise.
However many investors remain against
companies that pay attention to CSR and problems that require long-term
investment, but do not necessarily deliver shareholder returns.
How much business schools’ efforts to
promote responsible management and social value will scale in business remains
to be seen.
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