As events con­tinue to un­fold in the United States with prom­i­nent US CEOs pub­licly de­fend­ing the rights of their mi­grant work­ers, what lessons can New Zealand busi­ness lead­ers take from how US CEOs are deal­ing with these seis­mic shifts? By An­nie Gray.

NZ Business - - CONTENTS - By An­nie Gray.

As events con­tinue to un­fold in the United States with prom­i­nent US CEOs pub­licly de­fend­ing the rights of their mi­grant work­ers, what lessons can New Zealand busi­ness lead­ers take from how US CEOs are deal­ing with these seis­mic shifts?

Busi­ness lead­ers glob­ally are grap­pling with the mas­sive changes afoot in the world's big­gest econ­omy and we are cer­tainly not im­mune here in New Zealand.

Dr Chris Gal­loway, head of pub­lic re­la­tions in the Busi­ness School at Massey Univer­sity, says that glob­ally what we are look­ing at is a move­ment against the kind of eco­nom­ics that that has dom­i­nated the way busi­ness has con­ducted it­self in the past. “It’s a seis­mic shift,” he says, not­ing that last year a num­ber of pub­lic re­la­tions com­pa­nies pro­duced rep­u­ta­tion re­ports some of which showed that peo­ple are more in­ter­ested in an or­gan­i­sa­tion’s lead­ers tak­ing a stance on so­ci­etal is­sues than they care about the fi­nan­cial de­tails.

He says the ap­pre­ci­a­tion is grow­ing that lead­ers of sig­nif­i­cant or­gan­i­sa­tions will have some­thing to say about is­sues wor­ry­ing so­ci­ety.

While Mil­ton Fried­man in the 1970’s said that the busi­ness of busi­ness is busi­ness, that is no longer seen as ap­pli­ca­ble to­day.

Gal­loway says peo­ple ex­pect CEOs to have re­gard for the well­be­ing of so­ci­ety both per­sonal, so­cial and en­vi­ron­men­tal. It’s not just about mak­ing more profit but do­ing it in a way that so­ci­ety sees as le­git­i­mate.

This is not new, but what is recog­nised now is that lead­ers start more ex­plic­itly tak­ing stances and are ex­pected to take re­spon­si­bil­ity.

“You now need to ar­tic­u­late that and to show one is aware of the broader so­ci­ety is­sues, such as hous­ing, tax­a­tion and the rich-poor di­vide.”

Gal­loway says the US sit­u­a­tion is very dif­fer­ent to that in New Zealand but he thinks we may have some of the el­e­ments here, such as anger over the in­come gap.

“We have that, but in em­bry­onic form, while in the US it seems to have to come to full flower. But some of the same themes are ev­i­dent with pri­or­i­ties for growth and de­vel­op­ment over preser­va­tion of the nat­u­ral en­vi­ron­ment. So for Gov­ern­ment and com­pa­nies it’s about how to find a bal­ance."

They need to ne­go­ti­ate bet­ter with key stake­hold­ers about what they want to do. That’s not to say rolling over to stop de­vel­op­ment but, while it might be tempt­ing to make the busi­ness de­ci­sion and then con­sult about it, Gal­loway says that is not the way to go about it if com­pa­nies want to get sus­tained com­mu­nity sup­port.

Trump is show­ing the ex­pec­ta­tions peo­ple have about where jobs will be based, how com­pa­nies op­er­ate in terms of their sup­ply chain and HR poli­cies and that there is a price to pay for pur­su­ing profit alone.

Gal­loway says New Zealand CEOs will also be think­ing about the new pro­tec­tion­ism and how they deal with that when it is en­coun­tered in this new era.

How do you jus­tify tree trade or free-ish trade when the mood of the mo­ment (in the US) seems to be to lock out everyone else?

This phe­nom­ena is not just in Amer­ica and Gal­loway points to the rise of the far right in Europe and the United King­dom and says one of the is­sues for busi­ness, more than ever, is rep­u­ta­tional risk, which he specialises in as the pro­gramme leader for Massey's Mas­ter of Pro­fes­sional Pub­lic Re­la­tions de­gree.

In the cur­rent en­vi­ron­ment rep­u­ta­tional risk is re­lated to con­cerns about the sup­ply chain and the way you deal with in­ter­na­tional part­ners.

Key ad­vi­sors can help lead­ers keep abreast and iden­tify is­sues as they arise. He says en­vi­ron­men­tal scan­ning prepa­ra­tion has never been more im­por­tant with lead­ers need­ing to keep their eyes and ears on so­cial trends and be adept at in­ter­pret­ing the sig­nals.

Se­nateSHJ chief ex­ec­u­tive Neil Green sees CEOs en­ter­ing into so­ci­etal de­bates as an emerg­ing space and says it seems many of the CEOs in the US tak­ing a pub­lic stance against Pres­i­dent Trump’s im­mi­gra­tion moves were from the tech sec­tor and were con­cerned about their abil­ity to re­cruit the best.

In New Zealand Green thinks we are see­ing more CEOs get in­volved in dis­cus­sions but not al­ways tak­ing an ac­tive stance in the pub­lic arena.

He points to re­cent Health and Safety leg­is­la­tion with many CEOs pub­licly be­hind work­ing party rec­om­men­da­tions and in­di­cat­ing Gov­ern­ment should go fur­ther in en­act­ing these rec­om­men­da­tions.

“That is prob­a­bly one of the first times we have seen a num­ber of CEOs across a num­ber of busi­ness sec­tors stand up and re­act on a so­cial is­sue.”

He also points to con­cerns around food, soft drinks and sugar and salt lev­els.

Com­pa­nies are tak­ing a much more ac­tive pub­lic stance, bring­ing in new prod­ucts, work­ing with Gov­ern­ment and bring­ing in vol­un­tary codes for ad­ver­tis­ing and pro­mo­tion.

Op­pos­ing groups may say it’s some­what self-serv­ing but Green says we are see­ing CEOs un­der­stand that if they are not part of the dis­cus­sion and driv­ing the dis­cus­sion then reg­u­la­tions will be im­posed. They recog­nise suc­cess is of­ten when com­mer­cial and so­cial in­ter­ests align – cre­at­ing win-win sit­u­a­tions.

Green notes too that more and more peo­ple are get­ting in­for­ma­tion from sources or so­cial me­dia chan­nels that think like they do and on one level are fil­ter­ing out po­ten­tially op­pos­ing in­for­ma­tion. They are link­ing with those that align closely with their own be­liefs

Glob­ally he sees a con­tin­ual de­crease in trust and con­fi­dence in gov­ern­ments, cor­po­ra­tions and the me­dia and New Zealand is no dif­fer­ent.

He says the Trump phe­nom­ena and Brexit are chang­ing CEO per­cep­tions.

“If a com­pany does not take a lead and is not re­spon­si­ble for its own nar­ra­tive, then some­one else will take the lead.”

Re­search out of the US has found peo­ple who voted for Trump said they never be­lieved he would do what he said he would, but they wanted to dis­rupt the sta­tus quo. It’s not about 'do I be­lieve this', it’s about be­ing dis­en­chanted and want­ing some­thing to shake things up. “Believ­abil­ity is about peo­ple trust­ing some­one like them.” Raphael Hil­bron, the gen­eral man­ager at Se­nateSHJ Welling­ton, said there have been some CEOs ac­tive on so­ci­etal is­sues for many years, such as The Ware­house’s Sir Stephen Tin­dall, and more re­cently Pure Ad­van­tage, the brain­child of Phillip Mills, which was formed by a group of suc­cess­ful lead­ers “who want a greener, wealth­ier fu­ture for all of New Zealand”

and re­cent top level dis­cus­sions around gen­der di­ver­sity on boards.

Hil­bron says while there is such as a thing as “en­light­ened self-in­ter­est” these causes are good for so­ci­ety and for the com­pa­nies as they all want healthy work­ers, healthy cus­tomers and a well­func­tion­ing so­ci­ety.

Green and Hil­bron say the big­gest dif­fer­ence be­tween NZ and the US is the cul­tural con­text – here we only have two to three de­grees of sep­a­ra­tion and lead­ers group to­gether quite early and quickly if an is­sue arises.

Ear­lier this year Se­nateSHJ pub­lished its an­nual pre­dic­tions for the is­sues and trends that will shape the year ahead, fore­cast­ing fur­ther trans­for­ma­tional change for or­gan­i­sa­tions in 2017.

One of the five main forms they high­lighted which, they say, off­sets this ‘post-truth’ re­al­ity, was val­ues and ethics. “There is a strong de­sire for our lead­ers and our in­sti­tu­tions to en­gage trans­par­ently and au­then­ti­cally. This year busi­nesses and gov­ern­ments need to work in­creas­ingly hard to plug the trust deficit with the ma­jor­ity of the com­mu­ni­ties they serve.”

Green and Hil­bron say con­sumers have lost in­ter­est in wait­ing for large multi­na­tional cor­po­ra­tions to do what is right around in­ter coun­try tax pay­ments and politi­cians around the world have lis­tened.

“There is no ques­tion of just do­ing some­thing that is le­gal, you must do some­thing that is morally right.”

If you want peo­ple to be­lieve what you say, they want to know what you are go­ing to do. You have to be open and be trans­par­ent.

New Zealan­ders have al­ways given com­pa­nies the ben­e­fit of the doubt, but when some­thing goes wrong now, that pe­riod of doubt is a lot shorter. Peo­ple do not have the lev­els of trust they used to have.

Green says we are in an era now where the em­pha­sis is on peo­ple and the en­vi­ron­ment we live in, the food we eat and com­mu­ni­ties are ask­ing busi­ness lead­ers to be more re­spon­sive.

Fun­da­men­tal to this is crisp com­mu­ni­ca­tion and Green and Hil­bron say that busi­nesses are now judged on what they do, not on what they say. On­line con­nec­tiv­ity means the level of trans­parency rises as busi­nesses are held to ac­count. In turn this means the level of con­trol firms have over some­thing is not as great as it once was and they have to col­lab­o­rate a lot more with dif­fer­ent stake­hold­ers to reach the de­sired out­come.

An­drew Dick­son, Massey Univer­sity Se­nior lec­turer in Or­gan­i­sa­tion Stud­ies, is proud to say he is a left­lean­ing aca­demic and be­lieves the rea­sons US CEOs stood up against the im­mi­gra­tion ban, and have not, so far, on en­vi­ron­men­tal is­sues, is be­cause im­mi­gra­tion is of ben­e­fit to com­pa­nies as a ban would im­pose lim­its on the po­ten­tial pool of labour while the en­vi­ron­ment lim­its a busi­ness’s abil­ity to cre­ate a sur­plus.

He does not be­lieve New Zealand would face the same political sit­u­a­tion as in the US but that said he doesn’t be­lieve CEOs in NZ speak up enough.

“Am I in­ter­ested in hear­ing from them? Some­what, but I am more in­ter­ested in see­ing them change pro­ce­dures and change the busi­ness around the en­vi­ron­ment. I want to see the change, the redis­tri­bu­tion of re­sources.”

“If a com­pany does not take a lead and is not re­spon­si­ble for its own nar­ra­tive, then some­one else will take the lead.”

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