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TALKING MANAGEMENT

Transcript: The tough slog of making a company agile and socially responsible Add to ...

KARL MOORE – This is Karl Moore of the Desautels Faculty of Management at McGill University, talking management for The Globe and Mail. Today, I am delighted to speak to [management professor] Ed Lawler from [the University of Southern California’s Marshall School of Business].

Ed, you are looking at the issue of agility and sustainability. A fascinating topic – what are some of the things you have learned thus far?

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ED LAWLER – In some ways, it’s encouraging. I think it is possible to design most organizations so that they are both agile, in a very dynamic and changing environment that we face, and behave socially responsibly and perform financially, but it is not easy.

Probably the most radical thing that we have found is that it really takes a total organization design – it’s not something where you have a program or a CEO giving speeches, etc., saying, “We have got to be more socially responsible and satisfy shareholders.”

You really do have to structure the organization in all of its elements, its measurement systems, its metrics, its public reporting, its board and its [human resources] function to do that – that is, to be able to perform in what seems like, at times, conflicting agendas and deliver on both of those agendas.

KARL MOORE – So Ed, why does it have to be holistic like that? Why can’t you just have a program and do part of this?

ED LAWLER – Well, a program can be part of it but our research certainly indicates that it’s such a radical change, it’s such a different way of doing business, that if you don’t change everything – the reward systems, the organizational structure, the leadership style, the metrics and analytics that you use – people don’t believe it’s for real, they don’t respond correctly to environments and it is also a tough issue around the identity of the corporation.

We have found that for an organization to really be effective, it has to have an identity as a socially responsible, financially effective organization that guides the behaviour of people, the decision making of people. If there are inconsistencies, then that identity doesn’t develop and people don’t have the guidance that they need to perform effectively under that new mandate.

KARL MOORE – It sounds great that they can do this and we think that companies should go there. Are there particular industries that seem to be more apt to do this and could you give examples of firms that have successfully done this?

ED LAWLER – We haven’t seen a really good analysis of particular industries but it does seem, though, that if you look at the data that’s available, that customer service and customer-focused organizations seem to be one strong candidate, and those that strongly affect the environment, like mining companies and natural resource companies, etc. It is easy to get them into the sustainability, the physical sustainability, area. Therefore, they are probably prime candidates to also go on and pay more attention to their social impact and to worry about the financial side of it. They do that already. So they seem to be leading to some degree.

Among the consumer products companies, they are hoping and I think there is some evidence beginning to build that it is true, that if they perform well and build an identity as a socially responsible yet effective organization, that can help with marketing and consumer attitudes toward them. That takes time because a big company like a Unilever, which is one of the leaders in this area, can’t easily change its image. And of course, it has millions of images in terms of its product line and all the areas that it is in, but there is some success there, certainly.

I think Unilever is a good example of a company, its CEO talks a good game but also delivers in terms of what he measure his people on, what they are rewarded for, and how they are organized and structured around different business units that supports the financial as well as the environmental impact issues.

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