4 ways to avoid becoming the next Facebook or Australian Big Bank

Sitting in the hot seat can be a lonely place

It’s not been a great month or two for big business – from the Facebook/Cambridge Analytica scandal to the Royal Commission into Big Banks in Australia – we seem to have another procession of companies, their leaders and employees, who have completely missed the mark with what could be considered acceptable behaviour.

Businesses are often able to identify the gap between their behaviour and society’s expectations after-the-fact, but many do not seem aware that it is something that can be proactively understood and managed in an objective way. Here’s some easy steps you can follow to avoid finding yourself in the hot seat:

1. Everyone has a social licence – its time to find out where yours is at

Although the terminology was born out of the mining industry, large footprint industries are not the only organisations that a have a social licence. A social licence can be broadly described as the level of alignment between community expectations and values; and the values and behaviours of an organisation. Social licence can operate at any level – organisational, industry or even sector.

So what does yours look like? Social licence is something you can measure - Boutilier and Thomson talk about establishing legitimacy, credibility and trust with stakeholders – each one achieving a new level of support. They also talk about the fact that there are several facets to social licence – and justifying your organisation by claiming it creates jobs and investment is only the first rung on the ladder. To move up, you also need to consider and actively manage how your organisation interacts with the macro environment (contribution to society, alignment with social expectations) and the micro environment (direct interactions with customers, employees and community). The CSIRO built on this work to prove that the recipe includes perceived fairness of interactions and distribution of impacts, and the robustness of the regulatory environment to act as a safety net (enthusiastic lobbyists take note).

2. Take a critical look at how you are building trust and delivering net positive value across value chains

Over the years two main factors have been identified that influence the overall quality of relationships a company has with its stakeholders – levels of trust and tangible impact. From old-fashioned one-way PR and philanthropy, we have seen this work evolve into current emerging practice such as shared value and purpose-driven business. Too often we hear of organisations ‘who don’t want to toot their own horn’ or who believed that a generous donations programme would ‘offset’ some of their more hard-nosed customer and employee practices. Based on a range of theories,I developed the matrix to help understand where organisations sit in terms of social licence (see below). Take ten minutes this week to reflect where your organisation sits; by stakeholder, product category or as an overall company; and where work needs to be done.

3. Having a meaningful discussion around values – internally and externally

Organisational values, values-based leadership, values-based decision making. Unfortunately, these are all terms organisations use often enough, but rarely think deeply about, or put into practice on a daily basis. When you start with the understanding that every conflict has a difference of values at its heart – it’s easier to understand why it’s time to have a meaningful discussion around what are the values of your stakeholders, what are the true values (not just the ones printed on the wall) of your organisation and where are the areas of alignment and conflict. For example, if you want to work successfully with an Australian there is a good chance your organisation’s products, culture and systems are going to need to be caring, family-orientated, honest, friendly and respectful (check out your country’s here).

4. Address the elephants in the room

For all the effort, investment and good intentions that come out of companies, they often fail to achieve credibility, trust and real connection with stakeholders. Why? Because they fail to openly address the elephants in the room. These are the obvious issues which are often seen as ‘just the way we do business’ or ‘the too hard basket’ to change. Deep in the detail of the Edelman Trust Barometer Report is the definition they use for trust - “to act with integrity and with [stakeholders’] best interests in mind”. Until your organisation can deeply reflect on the issues which are preventing it working with the stakeholder’s best interest in mind, social licence will always be at risk. Need some help thinking of some? Let’s start talking about tax minimisation strategies, executive pay, price increases that outstrip inflation, inflexible work arrangements, unhelpful and difficult customer service practices, lobbying efforts to reduce regulation and dancing around the edges of large environmental footprints (just to name a few). Check out how Patagonia took on their elephant by encouraging customers to avoid buying new products through the Worn Wear programme or when Philip Morris famously quit tobacco in the UK earlier in the year.

While everyone has a different approach to risk-management there is gathering momentum that businesses need to take a more proactive and genuine approach to aligning the way they work with society's expectations and values. In this digital, disruptive, sharing economy doing this work is increasingly becoming a matter of not if but when. Your choice is whether you start doing it behind the scenes by your own making, or as part of response to a crisis that makes headlines across the world.

To learn to more contact Laura Harkins-Small, Principal Many Small Things - laura@manysmallthings.com.au