Total Responsibility Management: Keeping Stakeholders Happy?

As someone with experience trying to influence corporate behavior, I found Total Responsibility Management (TRM) to be a fascinating model. Though TRM outlined an excellent model for maintaining responsible corporate practices, the business case for implementing those practices seemed to be entirely about avoiding outside pressure. Chapter 2 is a laundry list of sticks with few carrots: pressure from investors, rating agencies, the government and various citizen’s groups. It’s reassuring to hear that corporations consider themselves accountable to these external groups and are intersted in implementing systems like TRM to address those group’s concerns. The implication here is that responsible businesses require a range of external groups working to hold them accountable.

This makes a certain amount of sense. Socially responsible business becomes a lot harder if no one is around to turn socially irresponsible business into a liability. Even if a company has a strong moral compass it is impossible for them to comprehend all of the impacts that they’re work will have. Good communication with stakeholder groups seems vital, even when those groups use “unfriendly” tactics to generate leverage. A system of stakeholder accountability also has serious downsides. Companies risk becoming responsive rather than responsible, beholden to whichever stakeholder groups are best able to generate leverage against them. (Think about anti-gay groups targeting Disney.) 

This can be a complicated balancing act, as hinted at in Deloitte’s Trust-Building process. Deloitte puts good relationships with stakeholders at the center of the auditing process, emphasizing dialog with stakeholders and reporting geared at their interests. But even Deloitte’s model failed to recognize the complicated interplay between stakeholder groups working for leverage to create change and companies working to respond to that leverage as best they can. On page 161, Deloitte complains that “it is difficult initially to have stakeholders understand that, to the extent that they receive information [during trust-building exercised with companies], it is confidential.” This makes perfect sense: in order to enter in an open dialog with stakeholders, companies must be comfortable sharing confidential information. Unfortunately, getting stakeholders to respect that confidentiality may take more than achieving a clear understanding.

Say I’m a stakeholder group, and enter a conversation with a company where I learn in confidence that their products leak toxins into the groundwater if left out in the rain. I can ask them to change the practice, but the company is free to ignore that request. Betraying their confidence and leaking the information to the press may be the best way for me to get the company to change, even if it ruins our friendly relationship. When engaging stakeholder groups it is important to respect that those groups strike a complicated balance between working with companies and generating leverage to hold them accountable.

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