Businesses want to make responsibility part of their core strategy. So what’s stopping them?

BITC Corporate Adviser Alasdair Marks explains what we’ve learned so far from helping businesses develop their responsible business strategy.

Alasdair Marks, Corporate Adviser, Business in the CommunityUs responsible business professionals are a selfless breed. We strive for that glorious day when responsible business principles will be truly embedded throughout the organisation we work for, or with, even though that's the day when our role becomes obsolete. 

The rewards for genuine integration are immense; from a reduction in future regulatory, resource and price risks (for the conservative among us) through to a reimagination of how value is created for both business and society (for those thinking big). But no one ever said it would be easy – and we know there are many unidentified barriers which are fundamentally hampering businesses’ progress.

A theory of change

At BITC we offer businesses a strategy review and development service through our core membership offer, with a special focus on how successfully a company is integrating responsible business throughout operations.  For the last year or so we’ve been developing a change model for this work.  It’s clear and straightforward, and starts from the premise that no strategic change will occur in an organisation without all three of the following factors being present:

  • a dissatisfaction with the current approach,

  • a consistent and compelling vision for where a company wants to be on any given element,

  • an understanding of the first steps required to achieve this vision.

Sitting behind this simple approach is a well-developed framework, which we call Degrees of Integration.  This is a comprehensive checklist of thirteen elements, covering a company's approach to responsible business, the mechanisms it can employ to support this, and the ways it can monitor and communicate it, which companies need to consider when developing and implementing their business strategy if it is to effectively support a responsible business approach. Drawing on thinking from many leading sources, we plotted indicators against four levels of integration (Starting, Accelerating, Leading and Shaping) for each element of the framework.

Using this we can start to identify how integrated or sophisticated a business is in key areas (the current approach), how clear its ambition is (the vision) and any significant barriers to change (the first steps).  

So, what are we learning about what’s stopping businesses from being responsible right to the core?

A year on, the process is giving us an insightful understanding of the common challenges faced by companies as they align their business behind a truly responsible approach. Here’s some of the barriers we’ve seen come up time and time again:

1) The company has a clear direction and strategy driven by the responsible business team and internal functions, yet frontline staff don’t consider responsible business in day to day work.  

Do colleagues across the company understand how the organisational vision and values link with their own responsibilities or how they should use them to base decisions and guidance on?

Ultimately, if the whole company isn’t behind it, a strategy will not succeed, so it’s vital to bring it to life. Regular guidance, training and real-life scenarios for every manager and employee are part of this, as is including vision and values in personal development plans.  This helps people understand and value their role in the company’s objective of being responsible.  There is a brilliant tale of a company that handed out business cards to all employees at an all-staff conference.  On every one, the job title read ‘Sustainability Manager’. This is spot on!   

2) The company has a set of commitments linked to responsible business with associated objectives and targets, but they are not clear or unified.

Vision and mission statements are designed to set out the long-term direction of an organisation as far as its business, markets, customers and financial objectives are concerned. If a company’s vision for responsible business or sustainability is separate from its financial or strategic vision, then alarm bells ring loud. 

Instead, a vision for responsible business should underpin the core business strategy (and relate to products and services), ideally providing a narrative that is specific and clear on the business’ contribution to a more sustainable future. It should be something every employee can relate to and get behind. 

3) The company has a clear set of commitments linked to responsible business with associated objectives and targets but its current outlook is very short-term.

Global trends – such as population growth, demographic changes, growing social division and inequality, extreme climate change and technological innovation – are rapidly changing the factors that determine a company’s long-term success. Many are accelerating so rapidly that there is an urgent case for more targeted, forward-looking plans to tackle them.  While most companies acknowledge this, it isn’t translating into long-term strategies, commitments or targets.

Yet understanding and assessing the risks and opportunities associated with these global pressures lets companies prepare for a future beyond the next financial cycle. Having assessed and understood how these trends will affect them, leading businesses develop strategies set targets and take actionto mitigate the risks and seize the relevant opportunities.

4) The company has a clear set of targets, but they are not driving progress.

It’s all too common to see risk-averse companies carefully selecting targets that they know they will easily reach. Often they bear no relation to performance against stated commitments or priority issues.

Businesses must aim to ensure KPIs are all of the following: aligned to the issue; relevant to a clear goal; operation-wide; specific and measurable, with the ability to demonstrate progress year-on-year; and suitably ambitious – the elements of effective indicators.  Setting stretching KPIs is beneficial as a catalyst for innovation and collaboration in tackling complex and challenging issues.

If a company reaches all of its stated targets, year after year, how can it be growing at full potential?  Even failing to achieve a suitably ambitious target has value, in the understanding of why it wasn’t reached, and what change is needed.

5) The company has clear commitments in the public domain, its strategy is clearly underpinned by responsible business principles and there is accountability and leadership at the top of the organisation. But, there is no clear link to performance or pay at exec and senior management level.

Linking reward to responsible business success is one of the most effective ways of driving non-financial performance.  It also sends a clear message, both internally and externally, about the value the company places on its social and environmental performance.

It's common to see one or two non-financial indicators that are loosely linked – frequently those based around safety and employee engagement. But to be a genuinely effective mechanism for integrating responsibility into a business, and a top-down message of its importance to the business, all non-financial indicators should be linked to performance and pay at a senior level, as appropriate to the business’ structure of leadership and accountability.

Sanctions should be rigorously applied if a board member or senior manager misses targets around doing business responsibly, as they would be with any other area of the businss. And, finally, to make them truly effective, information about these links should be in the public domain.

How integrated is responsibility in your organisation?

Contact us if you're interested in finding out how our flexible framework and services could support your organisation on its responsible business journey. The Degrees of Integration framework and our services around it are delivered as part of BITC membership.