Author: Ben Debski

The global economy remains bleak. Yet a distressed global economy does not stop large swathes of people retiring, beginning new pension plans, moving to new jobs or being rewarded properly for their outstanding contributions to their employer. Yes, the employee benefits market place has been shaken by the downturn, but it’s also increasingly responding to it in new, dynamic ways.

“In fact,” says Margrit Schmid, “a financially challenging environment increases the demand for appropriate solutions as deficiencies in state and private systems become even more obvious and accentuated.”

Certainly the need for practical, innovative employee benefits packages also increases when interest rates plunge and returns on savings – be it in cash or the stock market – diminish. It’s also a time when increasingly employers turn to benefit providers seeking security and reliability.

These qualities remain deeply ingrained into Swiss Life Network’s values from the start. “We continue,” says Schmid, “to focus on meeting clients needs with sustainable, top-quality solutions. With our multilingual organisation of highly experienced professionals in Zurich, Luxembourg, and several satellite locations we remain always physically close to our customers and active as their partner worldwide, for every aspect of employee benefits.”

You don’t have to look far to see how Swiss Life Network’s portfolio of products will support your own needs.

Multinational pooling options
Its range of highly competitive solutions include cover for death, disability and as well as illness and accident. These are available for both local and mobile employees. Depending on size you could opt for a company-specific plan allowing you to change the parameters of this arrangement as your own circumstance change while optimising the costs of your employee benefit coverage around the world. Or you can start via a multi-client pool supplying you with many of the advantages of pooling. Both choices mean huge levels of transparency on both global and local levels – plus the ability to gain a wealth of valuable information in the process about your employees and your own cost base.

Expatriate solutions
An ex-pat package can be demanding to be put together. No individual is quite the same, and most ex-pat solutions need to be highly tailored. Every multinational has its own very distinct needs and requirements. However Swiss Life Network has huge experience in developing and designing a package that is right for all your expatriates. We’re the right partner to explore and develop packages which also communicate clearly to your employees that they are indeed hugely valued.

Pension solutions
Swiss Life Network has a wide a range of innovative and highly flexible pension plans – including European pension solutions under the EU IORP Directive. Needless to say Swiss Life Network are experts at designing efficient and cost-effective plans to suit your own requirements. It’s also of huge importance that any pension plan is compliant with the fast-changing legal compliant environment. Says Margrit Schmid, “We leave nothing to chance. Ever.”

A bespoke relationship from the start
For Swiss Life Network the client is its centre of gravity – and the two parties are in constant exchange. “Our solutions reflect what our clients tell us, as far as it is economically viable,” says Schmid.

Whenever Schmid has a conversation with a client she is always learning something new – every time. And she always gets feedback on how solutions and products could be further improved and tweaked. But Schmid knows it’s tricky to always get the balance right, especially between off-the-peg solutions and a bespoke approach that always matches client needs exactly. “Swiss Life Network offers the ability to fine-tune product offerings to specific client requirements.

“For many years we base our value proposition on a set of modular solutions that are continuously adjusted to our clients’ needs. This ensures each client gets a reasonable customer specific bespoke solution, combined with high efficiency and top-quality service.”

Some employee benefits are still often seen as a welcome cost factor to some corporates. But when they look again says Schmid, more and more employers appreciate the added value of employee benefit solutions for their employees. “Added value is not just restricted to increased staff loyalty and retention,” she says. “Making sure employees don’t have to worry about the future leads to improved performance and hence contributes towards the employer’s bottom line. It also enables employers to prove their appreciation of their employees by providing benefits even in economically challenging times. Appropriate employee benefits are also, I would say, a very strong HR tool.”

Cost-effective solutions
Margrit Schmid knows all too well the huge emphasis and pressure on cost-control – which directly results in price pressures on benefit solutions. “We are constantly working on improving our cost-benefit ratios – however prices must still be sustainable from the provider point of view. Our modular system lets us determine with each client which solutions are most appropriate. And by using pooling, our clients can directly improve their cost outlays for pure risk solutions.”

Swiss Life Network’s success is built on three main foundations:

• Its long-term relationships with their own selected Network Partners, who are all industry leaders in their respective markets;

• Flexible and modular offerings for clients, their brokers and consultants. They always listen carefully to their clients and business partners and are constantly developing new solutions;

• Long-standing relationships with clients who continue to entrust their global employee benefit solutions to Swiss Life Network’s organisation, without whom they would not be where they are today.

Times they are-a-changing
How might employee benefit models change over time however? Schmid says financial service regulation is increasingly adding considerable pressure on providers and distributors. “This regulation will probably influence benefit design and our approach to clients, while transparency requirements will force clients to ask for more information and demand more transparent solutions. We are well-positioned to meet these needs thanks to our modular solutions, which already offer extensive information and transparency.”

Based on annual rankings, Schmid knows Swiss Life Network to be the leading provider in the global employee benefits market. “And we’re continuing to experience year-on-year increases in new business, and new global relationships. Our services are clearly in demand. We also regularly ask our clients for feedback, in order to keep improving our offering.”

Did you know?
Swiss Life Network is an association of more than 50 leading life and pension insurance companies worldwide, each in its own market a leading player of employee benefits. With this global presence the Swiss Life Network is the ideal partner for multinational companies for employee benefit solutions worldwide.

The Swiss Life Network is operated by Corporate Solutions, a transnational business unit of Swiss Life, a leading European life and pension insurer.

Swiss Life Network’s multi-lingual staff spread across all the main regions where multinational companies operate. Clients’ always have one main point of contact and access to worldwide expertise and professional experience in employee benefit solutions systematically developed over more than 40 years.

Further information:www.swisslife-network.com; www.swisslife.com

British Airways saw its shares rise by 5.3 pence to 131.8 pence after announcing that 7,000 of its airline staff have agreed to accept voluntary pay cuts. The company hopes that this move, which includes 800 staff who will forego their salary entitlement for one month – effectively working for free. Thousands of members of the beleaguered airline’s staff volunteered to take unpaid leave or work part-time by late June 2009. BA hopes to save £10m and forestall any action that would lead to redundancies. The company reported an annual loss of £375m, caused by higher fuel costs and the slump in demand created by the recession. In spite of this initiative, the losses led to 2,500 job cuts.

Although chief executive Willie Walsh and other senior executives within the company are taking part by foregoing a month of their own salary, and in spite of thanks given by Walsh himself, not everyone is so pleased by the initiative. Some members of the cabin crew were furious. Unions like Unite aren’t so happy about the deal too, which will see members of staff on around £11,000 per annum having to go without any means to pay their bills. In stark contrast Walsh earns £740,000 a year, and therefore a £61,000 pay cut isn’t going to hurt his wallet too much.

The airline’s pilots have nevertheless been urged by their own union, Balpa, to accept shares in the company in return for the pay cuts. To accept these shares could be risky, particularly the firm’s shares tumbled at one point when Virgin Airlines boss, Sir Richard Branson, suggested that BA was no longer worth anything. Pilots will also be required to increase their working hours, which will spark health and safety concerns. If any fatal or injurious accidents were ever to be caused by this, BA could be prosecuted under legislation, ranging from legislation such as the Health and Safety Offences Act 2008 and perhaps even the 2007 Corporate Manslaughter and Corporate Homicide Act.

There is also no guarantee that jobs can actually be saved. Walsh recently predicted at a conference in Paris, according to the Financial Times, that “the worst of this recession is still ahead of us.” Therefore the pay cuts can’t promise BA’s survival, nor will they necessarily prevent any need for further compulsory or voluntary redundancies from happening.
Curt Finch, CEO of ‘time-tracking’ software company Journyx, believes that the “natural result of this strategy is that you will lose your most talented people and all of the losers will stay.” He suggests that an across the board eight percent pay cut would be more successful, “but perhaps the unions make that impossible.” Citing Warren Buffet, he says, “The airline industry as a whole has never made money in a single year since the Wright brothers invented powered flight: when have they not been whining?”

Anyway, what is the legal position? Can BA and other companies really expect staff to work for no pay? There is nothing to stop them in law, providing their staff members agree to the offer and are not forced to accept it. The UK government seems to accept that drastic times lead to radical measures. “It is for businesses, employees and their representative to decide how they respond to the current economic climate”, says Department for Business, Innovation and Skills spokesman Alex Hamilton. He warns that employers should nevertheless comply with current employment legislation, including the National Minimum Wage.

To force an employee to work without pay would be unlawful, according to Jacqui McGuigan of TMP Solicitors. Employment contracts don’t usually have a clause that allows an employer to reduce the pay of that particular member of staff involved in the agreement. To force someone to take a pay cut would not only be bad for employee-employer relations, but it could also lead to a rise to a claim under the Employment Rights Act 1996. Such an unlawful action would also be a breach of contract. So with the consent of its employees, British Airways is fully entitled to lay off staff on a temporary basis or “offer short-time working as a means to avoid making staff redundant and saving costs”, she explains.

Consideration should also be given to the Working Time Regulations, and the Information and Consultation of Employees Regulations. Companies need to ensure that they comply with any existing laws, consult and gain the consent of their employees and their representative to avoid what could otherwise create a situation where costly legal action is begun against them.

“To impose a pay cut would leave an employer open to an employee bringing a case of unfair dismissal”, says David Morrison – a partner of The Khan Partnership. The law is on the side of the employees, but they would most probably have to resign to bring a claim to a tribunal. They could then claim for “constructive dismissal within a reasonable period”, he explains. However, this would mean having to find a new job and that’s not an option for many people during this recession. So in many cases, most people wouldn’t have much of a choice when faced with an offer of a pay cut or redundancy. Most employees of any company facing the same situation as BA’s staff will elect to keep their jobs – no matter what it takes.

Greed is officially passé. Once celebrated as the engine that fuelled a booming global economy, greed is now blamed as a root cause of crash and recession.

Next to go could be vindictiveness. Not because in our new downturn economy we all want to be nicer to each other. Rather, as research from the universities of Bonn and Maastricht suggests, being nasty to other people is not in our own self interest.

People who live by an “eye for an eye” philosophy just don’t do as well in life, the researchers found. They experience more unemployment than other people, they have fewer friends, and they are generally less satisfied with their lives.
Social scientists talk about reciprocity. If you respond to a kind act, such as an invitation to dinner, with a kind act in return, then you are displaying what’s called positive reciprocity.

And if you avenge a perceived unfairness with something nasty in return, then that’s negative reciprocity. Some people incline to being positive, others negative, and some do both.

The researchers used data gathered by the German Institute for Economic Research to find out about attitudes to reciprocity.

They asked a selection of Germans to state, for example, to what extent they would repay a favour or, on the other hand, an insult on a tit∞for∞tat basis. These answers were then matched with other data in the survey that described how happy people were, their employment experiences and so on.

They found some interesting patterns. People who tend to be positively reciprocal are very sensitive to workplace incentives, for example.

Offer them a good pay rate, and they will be more likely to work overtime than people who are negatively reciprocal. That means they tend to earn more money.

This is in stark contrast to vindictive people. With such people the equation “more money = more work” does not always apply. Even pay cuts are not an effective means of bringing negatively reciprocal people back into line.

Ultimately the danger arises that they will take revenge – for example, by refusing to work, or by sabotage. “On the basis of these theoretical considerations it would be natural to expect that negatively reciprocal people are more likely to lose their jobs”, says Professor Armin Falk of Bonn University.

“Consequently, negatively reciprocal people experience a significantly higher rate of unemployment”.

The message seems to be this: in tough economic times, avoid greedy vindictive people. No wonder investment bankers are so unpopular just now.

Reputable business schools offering accredited MBA programmes rightly point out that there have been significant changes in the design and delivery of the MBA over recent years. The qualification has retained its relevance, value and continuing appeal precisely because it has adapted and responded to changing business needs and practices.  

However, there are some who argue that, in the current climate, a more fundamental review of the MBA is called for if it is to deliver business leaders with the skills, knowledge and capabilities required for the future. Ten years ago the MBA might have been described as a qualification primarily for young high-flying executives working in finance or consulting. Originating in the US, MBA full-time programmes were typically delivered over two years and teaching methods relied heavily on ‘chalk and talk’ and the case study approach. The focus was on the core functions of business such as finance, economics, accounting, strategy, marketing, operations and quantitative analysis. But this scenario has changed.  

Through its research, the Association of MBAs, which accredits 167 leading business schools around the world to offer MBA programmes, has demonstrated the changing nature of the MBA and the increasing diversity of students enrolling for the qualification. The average age of an MBA student is now 33 and these students come to business school with a significant amount of work experience and practical skills. Roughly 70 percent of MBA students are enrolled on part time courses or other ‘flexible learning’ options. Part-time and distance learning courses attract a higher number of women students – a group which business schools have historically found it hard to attract to the MBA. And typically these days the full-time MBA is delivered in one year rather than two.

The curriculum has also changed, with most of today’s courses including topics such as change management, business ethics, sustainability and leadership skills. Learning tends to be in groups with students working on real business projects and, at the same time, discovering the challenges of working in multi-cultural teams. And today’s MBA students are far more diverse, coming from a range of employment sectors and with wider career horizons. Now over 70 percent of MBA graduates are working outside the traditional fields of finance and consulting, and a significant proportion are choosing to work in small businesses.   

When we ask students and graduates about their motivation for doing an MBA and what they got out of their investment, most talk first about their self development, new learning and the experience of working with other intelligent, experienced professionals. The impact of the MBA on their career and salary is still a key benefit, but this is no longer the sole motivation or the most valued outcome.

So what next for the MBA? In 2009 the Association of MBAs conducted a global survey of MBA alumni, employers and accredited business schools in a major project to assess the impact of the economic downturn on the MBA. We wanted to identify the skills, competences and knowledge that MBAs need in the context of world economic events in order to be successful future business leaders. The report’s findings confirmed that the MBA already delivers more than just career advancement.

Alumni particularly value the ability they have acquired, through their learning, to understand the complexity of business, to apply strategic thinking and to manage change in organisations. Not surprisingly, given recent events, there was a view amongst those surveyed that the MBA needs to place more emphasis on areas such as sustainability, ethics and risk management. In fact the dominant view expressed by respondents was that the MBA should focus more on stakeholder rather than shareholder value and that the course content should be much broader. There should be more coverage of areas such as entrepreneurship, creativity and innovation as well as the CSR-related subjects.

One of its leading faculties, “Business, Economics and Statististics” is going to celebrate 250 years of existence in 2013.

At present, about 85,000 students are enrolled at the University of Vienna, in 182 courses, of which 54 are Bachelor programmes, 112 Masters programmes, five Diploma programmes and 11 PhD programmes. The University of Vienna is also the largest teaching and research institution in Austria with close to 8,600 employees, 6,500 of which are scientists and academics.

The University has always been strongly orientated towards international research and teaching and today continues to maintain strong relationships with other countries, having formed ERASMUS alliances with all 311 partner universities involved in the scheme. Thanks to this partnership agreement, students from approximately 130 countries attend more than 10,000 lectures at the University of Vienna every year.
 
An outstanding faculty
At the heart of this revered institution lies the Faculty of Business, Economics and Statistics. Building upon a track record of excellence in research, this Faculty has established a range of prominent PhD programmes, which serve  to bolster the University’s status as one of the top research institutions in Europe.
 
The achievements of the Faculty of Business, Economics and Statistics are most visible in its league table rankings. In 2009 the Department of Business Administration secured first place in the Handelsblatt league table, while at the same time its researchers in the field of business administration achieved three places (1st, 2nd, 4th) out of the first four in the ‘life work’ category.
 
In addition to this, in previous years the Department of Economics within the Faculty had been placed seventh in the Handelsblatt ranking 2008, and the same place had also been reserved for the University of Vienna in the THES-QS World University Rankings 2008. The discipline of Economics is catered for by the Vienna Graduate School of Economics, a newly-founded graduate school. The school is a collaboration of the University of Vienna and the Institute of Advanced Studies and it is financed by a research grant provided by the Austrian Science Foundation. The school will take in a first batch of students in autumn semester of 2010.
 
Such glowing accolades are testament to the quality of the doctorate programmes, and graduates of these programmes boast some reputable names. Joseph Schumpeter, an Alma Mater of the University of Vienna, was a leading light in the development of economic analysis at the beginning of the 20th century. He obtained a PhD at the University in 1906. One of the most notable alumni of recent years is Peter Löscher, the president and CEO of German corporate giant Siemens, who holds an MBA in economics from the University.
 
The single attribute of a PhD programme that distinguishes it from any other academic programme can be summarised in a single word: Research. A PhD degree requires extended study and intense intellectual effort. The Faculty of Business, Economics and Statistics at the University of Vienna aims to recruit PhD students from among the best in the world; those who are the best qualified, the most motivated and who are dedicated to performing research.
 
The Faculty promotes a scientific mode of working and thinking, based on critical queries in the relevant contexts, rather than the mere reproduction of commonly accepted knowledge. PhD programmes are offered in the research fields of Economics, Finance, Logistics and Operations Management, Management, and Statistics and Operations Research.

The Economics Department accepts around ten candidates per year, and the Department of Finance just five or six. The Management and Operations Management Department takes on around 30 scholars.
 
Raising the bar
So what sets the University aside from other leading European institutions? One key attribute is the rich history of the university. Born in an age when social enlightenment was sweeping across Europe, the university provided a new form of education to the rapidly-changing Austro-Hungarian Empire. Today the university, located at a pivotal point between Eastern and Western Europe, caters for the developing needs of former ‘Eastern Bloc’ countries, and in this way is proud to continue to offer education on the back of social reform.
 
English is the language of choice within the university, not merely because it is the international language of business but because it acknowledges that the best professors are found internationally, not locally.
 
Furthermore, political developments over the last decade have contributed to the university’s development. In 2002, with the election of a new Conservative government, the university got under private law but is still financed by public authority. One of the key benefits of this new arrangement was that the government took a greater interest in the management of the university, and set in place a three∞year development plan, which is reviewed every three years. This goes a long way to ensuring that the university’s business targets and educational objectives are monitored and achieved.
 
Being under private law, the university has more flexibility in  terms of pay, and is able to secure the services of some of the world’s leading professors with the offer of lucrative contracts. Previously, wages had been based primarily on the age of the academic and their length of tenure.

The new public funding/private ownership arrangement has also allowed the university to obtain new equipment and to embark on the construction of a new 40m euro Research Faculty to complement the Faculty of Business, Economics and Statistics, which, in addition to having the convenience of being located in the centre of Vienna, offers improved library and computer facilities and is helping to pioneer the new branch of Experimental Economics.
 
A further result of this partnership has been the establishment of an institution that can roughly be translated as the University of Applied Science. Adhering to a model similar to the UK’s former Polytechnic system, this offers students a more practical and slightly lower level of education than the main University itself.
 
Another key differentiator is the active encouragement of interdepartmental collaborations. As an example, the department of Economics has formed active partnerships with a number of its departments. In addition to creating new research groups with the Mathematics department it works closely with the department of Psychology, creating the new discipline of experimental economics and a new Masters programme of quantitative economics. In real terms, this means that rather than merely discussing economics, the department is able to reach real numerical conclusions.

For those exceptionally talented, research- focused students contemplating on embarking on the next stage of their academic careers, the Faculty of Business, Economics and Statistics offers an unparalleled educational experience, within an outstanding academic institution that has a unique blend of Austro-Hungarian heritage and a progressive approach to education.

The HSG has shown itself to be highly successful, having been consistently ranked among Europe’s leading business universities. The University of St.Gallen is partner of the CEMS Master’s Programme in International Management, ranked number one worldwide by the Financial Times in 2009.

Its holistic education, which meets the highest academic standards, has earned it the seal of approval of the EQUIS and AACSB accreditations. Academic degrees can be obtained at the Bachelor’s, Master’s and Doctoral levels. In addition, the University of St.Gallen offers first-class and comprehensive courses in executive education. Thanks to an increasing number of programmes taught in English, the HSG has shown itself to be
attractive to international students.

The focal points of research at the university
of St.Gallen are crystallised in its 40 institutes and research centres, which constitute an integral part of the university. The institutes, which are largely autonomous and mostly self-financing, still remain closely connected to university operations.

HSG Alumni, the organisation of former students of the University of St.Gallen, consists of more than 19,000 members and 90 clubs.

Commitment with an international reach
HSG students do not merely pursue their studies but also devote their time to a wide variety of activities in more than 80 student associations and initiatives. One of them, the St.Gallen Symposium (ISC), is of international significance. It is organised annually by students, provides the forum for a dialogue between 600 top-class decision-makers from trade and industry, academia, society and politics, as well as 200 selected students from around the world. The 40th Symposium dealt with the topic of “Entrepreneurs – Agents of Change” and took place at the University of St.Gallen on 6th and 7th May 2010.

Executive education at the HSG
The University of St.Gallen has always understood executive education to be one of its central tasks besides basic education and research. The integrative  approach of the Executive School of Management, Technology and Law (ES-HSG) and the St.Gallen Management Model help practitioners to better master their responsibilities and to practice holistic management. The diverse system of institutes and chairs at the University of St.Gallen forms the platform for a comprehensive range of executive education programmes. It is implementation∞ and practice∞oriented and meets the highest academic standards.

The Master’s Programme in Strategy and International Management (SIM)
The SIM is the flagship management programme for tomorrow’s global leaders at the University of St.Gallen (HSG). As one of the leading providers of outstanding education in management, it generates exceptional value for students, employers and society. Graduates are equipped with the necessary competencies for outstanding careers as respected and responsible managers, business consultants and entrepreneurs in the global marketplace. Most students sign professional contracts before completing their studies. SIM students are an exclusive and diverse group of highly motivated and ambitious personalities. They clearly differentiate themselves from peers through a convincing track record, exceptional career prospects and the benefits of an inspiring worldwide community network. Students enjoy a first∞class learning environment allowing small interactive classes featuring high cultural diversity and taught by experienced faculty, that combines academic rigor with managerial relevance. The famous St.Gallen Management Model forms the heart of the curriculum and allows for an integrative approach to studying management.

Further information: www.unisg.ch; info@unisg.ch; www.stgallen-symposium.org; www.es.unisg.ch; executive.school@unisg.ch; sim@unisg.ch

The association of corporate social responsibility (CSR) with government might seem counter-intuitive. Milton Friedman’s critique of CSR, that business managers are neither accountable nor trained for taking responsibility for public policy issues and thus should focus on responsibility to shareholders, suggests a dichotomous view of government and business. Moreover, it has been traditionally assumed in liberal democratic systems that CSR reflects corporate discretion over company investments and activities beyond those required by the law or by governmental regulation. The implication here is that CSR is a form of self-regulation which sits alongside a functioning system of government.

An alternative view, however, goes that CSR is embedded in wider systems of governance reflecting, complementing and linking with governmental and other non-governmental institutions. Certainly, over the last quarter of a century evidence of this embedded view appears to be on the increase, particularly in the UK, but also elsewhere. This can be seen in four types of relationships which go beyond that of CSR as self-regulation.

First, governments have increasingly endorsed CSR as an appropriate activity, be it by Michael Heseltine in the early 1980s context of mass unemployment and urban unrest or, more recently, by David Miliband in describing education as a ‘joint enterprise’ to which business can valuably contribute. Labour’s creation of the ministerial portfolio for CSR has been yet greater endorsement.   

Secondly, governments can facilitate CSR. A long-standing means is through tax expenditures for corporate charitable giving, which have recently been broadened. In the 1980s, the Conservative government provided subsidies to companies who took on the unemployed in training and work experience programmes.  Governments of both hues have subsidised CSR activities led by business organisations.  

Thirdly, governments have entered into CSR partnerships with companies and business organisations (and often civil society organisations too) in which they combine resources and objectives. These can range from the local level (e.g. local economic partnerships in the 1980s) to the international (e.g. the Ethical Trade Initiative).

Finally, governments can use their power of mandate to further CSR. I do not refer here to regulations which coerce and punish but rather to the ability of government to use its authority to encourage CSR. One example is through public procurement requirements for responsible business (e.g. concerning workforce composition, environmental sourcing).  The UK government has introduced provisions for reporting social, environmental and ethical impacts under the Pensions and the Companies Acts. No guidance is given as to what constitutes appropriate reporting, but the aim is to create new norms and to encourage best practice to evolve.

Two broad motivations appear to underpin these new government-business relationships. On the one hand, CSR offers a means of drawing business into the task of addressing wider governance issues from unemployment to environmental sustainability. On the other hand CSR offers a less coercive approach to the regulation of business.  

Both these motivations reflect broader changes in societal governance in which national governmental powers have been moderated (e.g. in national macro-economic policy, welfare) or are essentially limited (e.g. in globalisation). In this context governments have used incentives and partnerships in much more networked and consensual models of governing, be it with civil society or business organisations. At the same time, companies  have become much more politically and socially conspicuous as a result of their responsibility for erstwhile public utilities and their roles in the consumer and communication revolutions and global supply chains. Thus, individual companies have been called to account for their impacts and to take greater social and environmental responsibilities by civil society.
 
A number of fears have been raised about the greater role of business in governance and the less coercive use of government’s power to mandate business behaviour.  The first echoes Friedman’s concern that business is not politically accountable in the same way as democratic governments – a criticism shared on the political left. Certainly, companies are not subject to electoral and parliamentary accountability – and, sadly, most governments in the world are not either. However, there is evidence that companies are increasingly accountable to their own stakeholders, be they investors, consumers and employees, as well as to civil society institutions, often as part and parcel of their CSR (e.g. the increase in social responsibility investment criteria, social and environmental reporting, fair trade, employee surveys). In some ways these offer closer and more deliberative accountability opportunities than governments are susceptible to. It could reasonably be countered that this tends to only reflect companies in the public eye, and that short-comings here are not judiciable.  

A second criticism is that the growth of CSR in societal governance is merely one facet of a corporate takeover of politics. Certainly, the growth of business in public life would lead us to expect that companies would need to exercise considerable self-restraint in order to maintain their legitimacy. However, as noted above, companies are as much in the NGO firing line as are governments and the prevalence of multi∞sector partnerships in new governance could be expected to temper excessive business power.  

Fears of the corporate take-over are most acute in a further sort of government∞business relationship, when CSR becomes a form of government – or companies act as if they were governments. This was the case in company provision of education for workers’ families prior to the welfare state and appears to be the case in some education initiatives of the Labour government. It is worth noting though that the contemporary role of business in secondary education is subject to greater regulation than was nineteenth century industrial paternalism.

In other circumstances, however, critics often expect corporations to act more like governments, particularly in developing countries with low governmental capacity or in cross-border activities.  Thus corporations are enjoined to contribute to social welfare in sub-Saharan Africa and to enforce environmental and employment practices through their international supply chains which are above those of, for example, the respective Asian governments. Even the most active CSR companies would doubtless prefer that governments took their responsibilities in these cases more seriously.

Governmental role
It is telling in this context that the United Nations Human Rights Commissioner, John Ruggie, has recently concluded that it is not possible to set binding human rights norms for companies, but rather that the focus should be upon the role of governments. Ruggie nevertheless sees a role for companies and employs the language of CSR when he recommends that they improve their due diligence and add grievance procedures to such business-led initiatives as the Voluntary Principles on Security and Human Rights.

In summary, CSR is an increasing feature of national and global governance. Governmental institutions tend to encourage this and other company stakeholders tend to expect it. Many companies do not regard this as simply a defensive investment in their legitimacy. They also see it as bringing a host of company benefits (e.g. greater understanding of their business environment, consumer and employee satisfaction, risk minimisation, marketing, innovation) that translate into enhanced company value. Issues of accountability and appropriate use of business power remain. But recognising these should not be a reason to retreat to Friedman’s dichotomous view in which companies would turn a blind eye to the social and environmental challenges facing societies and governments.

About the author
Jeremy Moon is Professor and Director, International Centre for Corporate Social Responsibility, Nottingham University Business School.