Build trust by making and keeping measurable promises

Published: Mar 24, 2011

Corporate leaders seeking to fulfill their ethical obligations need to clarify their responsibilities, commit to improve and then find ways to capture value for shareholders and society, Thunderbird Professor Gregory Unruh, Ph.D., said March 3, 2011 during a free campus seminar for prospective students.

Unruh calls the three-pronged strategy of “clarify, commit and capture” the three C’s of corporate social responsibility. His presentation, “Ethics, CSR and the Pursuit of Sustainability,” was the first installment in a 2011 lecture series organized by Thunderbird Executive MBA faculty and staff.

Gregory Unruh, Ph.D., Thunderbird Professor
Gregory Unruh, Ph.D., Thunderbird Professor
The second installment in the series will be April 28, 2011, with a presentation on workplace incivility by Thunderbird Professor Christine Pearson, Ph.D., co-author of The Cost of Bad Behavior.

Unruh said many business leaders do not recognize any ethical obligations beyond their duty to create shareholder profits. He said leaders who think this way risk backlash from consumers, who increasingly expect businesses to give back to society in a variety of ways.

“Executives who confront these shifting social expectations first need to understand what their responsibility is,” said Unruh, author of Earth, Inc.: Using Nature’s Rules to Build Sustainable Profits and director of Thunderbird’s Lincoln Center for Ethics in Global Management. “They need to understand the expectations of society.”

Clarify responsibility
Many companies that come under attack for alleged unethical behavior instinctively turn inward to examine their own values and behaviors. “Looking inside is not a bad place to start,” Unruh said.

Companies benefit when they examine their missions, strengths and core values. Unruh said the problem occurs when companies stay within their own walls and never look outside to gage what society wants or expects.

“When you do that, you can get into some really big trouble,” Unruh said. “You also have to get outside the box and verify that your understanding of what social responsibility means is shared by society.”

Commit to improve
Once companies clarify what their ethical duties are, Unruh said they need to pledge to improve. He said companies build trust with society when they make and keep meaningful, measurable commitments.

Part of this process involves honest reporting on progress. “What you need to do to gain that trust and reputation in society is not just say it, but show people that you have delivered on it,” Unruh said.

Capture value

Unruh said the challenge for leaders as they clarify their obligations to society is to demonstrate progress without hurting the bottom line. He said sustainable business must be profitable.

“Just because you have gone out and assessed your new responsibility to society doesn’t mean you can ignore the old responsibilities,” he said. “One of the fundamental responsibilities of any for-profit company is the fiduciary responsibility.”

Otherwise, he said companies must subsidize their corporate social responsibility initiatives. This is a problem because anything subsidized remains at risk of elimination.

“It has to be a winning proposition for the company,” Unruh said. “Almost by definition, all subsidies are temporary. If the market shifts, if the company is taken over, if management’s interests change, the subsidy can disappear.”

To learn more about business ethics and sustainability, visit Unurh’s Huffington Post blog.

[This article has been reproduced with permission from Knowledge Network, the online thought leadership platform for Thunderbird School of Global Management https://thunderbird.asu.edu/knowledge-network/]

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