Coherency Management

An Alternative to CSR in a Changing World

Ivan Hilliard

• Publisher: Palgrave Macmillan
• Year: 2019
• Print ISBN:
  9783030135225
• eBook ISBN:
  9783030135232
• Topic: Business
• Subtopic: Business Ethics
• Index: Business

This book presents a new approach to corporate responsibility based on the concept of coherency, permitting better understanding and management of the conflicting forces that strive to create value across the stakeholder spectrum. In doing so, it provides an alternative to the limited and ineffective role currently played by Corporate Social Responsibility (CSR), and offers an approach more in line with the needs of a sustainable society. Hilliard introduces several new concepts in management philosophy and presents an innovative and original framework for managing organizational responsibilities in a coherent manner.

© The Author(s) 2019

Ivan HilliardCoherency Managementhttps://doi.org/10.1007/978-3-030-13523-2_1

Begin Abstract

1. The Limitations of Corporate Social Responsibility (CSR): A Philosophy at Odds with Its Surroundings

Ivan Hilliard¹

(1)

School of Social Sciences, Universidad Europea de Madrid, Madrid, Spain

Ivan Hilliard

Email: [email protected]

Keywords

CSR originsNon-financial reportingStakeholdersNegative impactsCoherency

End Abstract

1 The Why of CSR

It is a truth universally acknowledged that companies which do not adapt to their environments die (Burns and Stalker 1961; Duncan 1972; Emery and Trist 1965). It is also true that the world we live in has experienced in recent years a wave of change almost unprecedented in human history. Among these changes are unheard of levels of globalization in markets and production systems, mass customization of new technology, market liberalization policies, environmental destruction, climate change, and a significant increase in social inequality.

All of these changes affect directly how companies are managed and run. In fact, companies are key drivers behind some of these changes, such as globalization of production systems, and play a major part in generating others, such as environmental destruction and climate change. Moreover, many of these changes are exponential, meaning that regardless of whether companies are active or passive contributors to them, their role in generating impacts that affect society is greater today than ever before. The consequences of all this are that the responsibilities of any business, and particularly large multinational organizations, have grown substantially in recent years. In a changing world, managing these responsibilities in an effective and efficient way is both complex and ever more important.

As a result, companies have begun to pay more attention to the impacts they generate, be they positive or negative, and do so under a broad umbrella known most commonly as corporate social responsibility (CSR). Yet it is increasingly clear that CSR, despite its advances, is not capable of genuinely reducing the considerable negative impacts companies generate. When important decisions need to be taken, the economic objective is nearly always dominant, and all other considerations play a secondary role (Rifkin 2014). This view is supported by the increasing evidence of environmental and social damage, driven by the actions of mass consumerism and the endless search for new markets. The failure of CSR and the desire to replace it with something more coherent is the underlying ambition of this book.¹

The principal argument against CSR is that, in its current form, it is incapable of achieving its stated aims of making the world’s corporations more responsible and responsive to the demands of multiple stakeholders. Much of what is done in its name is disjointed, and actions that create gains in one area of an organization’s zone of operations are offset by policies that create the opposite effect in another. There is a glaring unwillingness to consider these actions in a holistic manner and evaluate them accordingly. In addition, and perhaps most importantly, when social and environmental responsibilities are set against financial performance, the latter is inevitably prioritized.

This inconsistency in responding to different corporate responsibilities goes to the heart of what is wrong with CSR. It should be possible to create organizations that act economically responsible, without doing so at the expense of the environment or society. However, this would require a fundamentally different way of thinking about how organizational priorities are fixed, and how the value creation proposal is defined. In essence, it calls for a more articulate and balanced approach to CSR, one sufficiently different to current practice that it requires a separate name—coherency management.

The book will be divided into two sections, each with a different aim. In the first section, coherency as a concept for managing responsibility is defined, followed by an analysis of current CSR theory and practice. An assessment is made of different management philosophies that drive incoherent responsible management practices, and several new concepts are introduced regarding how an effective and truly responsible organization should behave, and what it should look like. The second section will provide a series of tools to enable organizations to move from current inefficient CSR to a more coherent way of behaving and offer different approaches toward improving performance. These two blocks will be interspersed with a series of case studies to demonstrate how incoherent practices lead to suboptimal responsibility performance.

2 Origins of CSR

Both theorists and practitioners of CSR deserve a lot of praise for the work that has been done up to now. They are to be credited with substantial progress made in terms of conceptualization, application, and dissemination (see Bowen 1953; Carroll 1979; Freeman 1984; Garriga and Melé 2004; Mitchell et al. 1997; Waddock and Graves 1997; Wood 1991). Yet most credit is for their persistence and determination in promoting a message of equality, justice and fairness, and for a need to find an effective balance between business and society. Their determination and passion is all the more noteworthy considering that many of their arguments have been blithely accepted by business leaders, while the work of driving financial performance at any cost continues apace.

Despite the progress CSR has made, it cannot be considered as having had any genuine impact of how our economies work, in the way that says, Einstein’s theories of general relativity and special relativity did for the field of physics, setting the scene for the atomic age. If anything, its impact has been theoretical, a concept whose time had come, driving an understanding among a growing number of people that current business practice simply cannot continue, and that change is urgently needed.

Although some works on CSR start out by identifying the field’s origins as a management and academic discipline, such an approach does injustice to the broad foundations underlying the concept, which have been prevalent throughout history. If we search for ‘CSR origins,’ we are implying that the idea that companies have responsibilities (outside the narrow economic responsibility to run a business effectively and make a profit) is something new. Yet this view is both incorrect and misleading. For example, Rivas (1999) argues that the ideas which today are associated with the field of corporate responsibility are in fact as old as the act of doing business itself.

All major moral traditions have considered the relationship between business and society in some detail and in many cases have been quite explicit. For example, the Judeo-Christian tradition speaks of issues such as transparency in business practices, whereby ‘a false balance is an abomination to the Lord, but a just weight is his delight’ (Proverbs 11:1, English Standard Version). There are also passages on acceptable working conditions, whereby ‘if your brother becomes poor beside you and sells himself to you, you shall not make him serve as a slave’ (Leviticus 25:39, English Standard Version), and a need for social equality, so that ‘there should be no poor among you’ (Deuteronomy 15:4, English Standard Version).

Saint Thomas Aquinas, in a clear reference to the conflict between the common good and the narrow interests of the investor, described the fundamental role of business in society, as the ‘definite purpose.’ When comparing the merits of economic activity and society’s needs, he argued strongly that seniority should be given to the good management of households (Eberstadt 1977).

Islamic law is explicit on norms and responsibilities, and scholars have laid down clear guidelines on a wide range of business practices. On price-fixing, it states that ‘Allah is the One Who fixes prices, withholds, gives lavishly, and provides, and I hope that when I meet Allah, none of you will have any claim on me for an injustice regarding blood or property’ (Tirmidhi, Hadith 1235). Other instructions are clear in stating that using asymmetrical information to gain advantage is unacceptable, stating that ‘A town dweller should not sell the goods of a desert dweller’ (Bukhārī 1951). In a more general sense, it demands honesty in transactions, declaring that ‘The truthful merchant [is rewarded by being ranked] on the Day of Resurrection with prophets, veracious souls, martyrs and pious people’ (Tirmidhi, Hadith 1130). Besides these, there are the well-known exhortations on the application of interest to loans, which state ‘Allah has permitted trading and forbidden Riba’ (Khalidi 2009).²

In Hindu scripture, the Vedantic tradition with its emphasis on a holistic worldview and a necessary balance may be considered to provide a base for responsible business practices. One of the four Vedic scripts, the Atharvaveda, makes specific reference to the need to take into account the wider community and consider the common good in wealth creation (Muniapan and Dass 2008).

Much later on, Adam Smith dealt extensively with such issues, particularly in The Theory of Moral Sentiments (Smith 1776), where he argued that human morality requires a sense of empathy, and that people become aware of the morality of their behavior through the empathy they experience for others. While Smith’s teachings have always invited debate (in particular on what he meant by the invisible hand, a term he used on several occasions in different works and different contexts), some of his ideas can be stated with clarity.

By the time The Wealth of Nations was published, his views on the negative effect of unproductive labor were clear. He argued strongly against monopolies or cabals and warned people to be extremely skeptical of cozy relations between the business and political communities, or of attempts by the former to influence the latter for their own ends. He was also an explicit supporter of a progressive tax system.

While Smith believed in selfish self-interest and a society that allowed business to satisfy this self-interest, he also argued that such behavior would lead to virtuous communities and be molded by the moral parameters of society. As Herbert Stein (1995) argued, while Smith was interested in uncovering the workings of the free market and thought it often functioned best without government intervention, he also felt that there were moments that required this same intervention. In Steins view, this would justify environmental protection laws, social security, consumer protection, health benefits, banking regulations, and a host of other initiatives.

The phrase social responsibili...

Table of contents

• Cover
• Front Matter
• 1. The Limitations of Corporate Social Responsibility (CSR): A Philosophy at Odds with Its Surroundings
• 2. Coherent Organizational Responsibility
• 3. The Interdependent Business: Understanding Value Creation
• 4. Organizational Autocracy: How the Democratic Wave Passed Over the Organization
• 5. Stakeholder Politics: Why Knowing More Can Also Mean Doing Less
• 6. Organizational Squares: How Straight Lines Limit Vision
• 7. Employee Worth: Why Every Hour Worked Doesn’t Add Value (but Counts)
• 8. The Tipping Points of Organizations: Why They Are Not Fed Correctly
• 9. The Pillars of Coherency
• 10. Getting to CORE
• 11. Systems Thinking for Coherency
• 12. Coherent CSR
• Back Matter