A combination of corporate governance and social responsibility can strengthen organisational commitment
Corporate governance and social responsibility is now in process of being integrated into both business planning and academic research, a trend reflected in a conference of the same name held in July last year that was co-hosted by the ASEAN CSR Network and the National University of Singapore. Governance practices and socially responsible initiatives are proving successful in enhancing the overall internal perception of a firm’s reputation, and can thus cover “both sides of the same coin”.
The integration of the two is also gathering momentum given the trend towards multi-stakeholder engagement among top management, the firm, and its internal and external constituencies from the organisation to customers and communities. It also effectively bridges the divide among academics who make a distinction between Corporate Governance (CG) and Corporate Social Responsibility (CSR), perhaps to achieve scholarly focus in research, and the heads of business firms. CEOs prefer to link the two concepts possibly based on the practical experience of combining the seemingly stricter requirements of adapting governance measures of performance and compliance together with the “feel-good” aftermath of socially responsible initiatives. The process is attractive as it also includes the measurement of outcomes using periodic interviews of top management and employee survey. In addition, there are also firms seeking to build their reputations that globally subscribe and adhere to the Global Reporting Initiative (GRI) covering CSR and the Asian Global Governance Scorecard (GSC) covering CG.
Applying GRI and GSC in research
Our team explored this further and conducted research on five corporations in five ASEAN countries using their published GRI and GSC submissions. However, only one family-controlled diversified conglomerate in the Philippines agreed to discuss their internal surveys to monitor governance and responsibility. The firm is registered with both the GRI and the GSC. In 2009, it decided to explore in depth its own responsibility and governance initiatives within its organisation. The firm recently completed a second round. The results should not be statistically generalised, but offer insights of the organisation’s perceptions of the firm.
In the second round, 50 senior officers and board members were interviewed. An employee survey was administered to 1,645 respondents, equal to 76 percent of total employment in the firm’s six facilities. The interviews and survey covered perceptions on five themes: culture, ethics, organisational values, leadership and governance, and community relations. In addition, four small group discussions were conducted among employees.
Examples of Questions and Responses
The 57-question survey used a five-point scale that ranged from Strongly Disagree to Strongly Agree with a “Don’t Know/Not Applicable” checkbox.
Three examples of the statements used in questions on governance include:
- The company is committed to implementing good corporate governance practices.
- Top management has clearly communicated that unethical behaviour will not be tolerated.
- Misconduct is adequately penalised, regardless of the perpetrator's position.
The resulting computed net ratings were +89, +85, and +70 respectively.
With respect to the interviews, the most cited specific practices on governance were: (1) a proper investigation process by the internal audit team even if the misconduct involves a long-serving “tenured” employee, (2) regular investigations followed by the corresponding disciplinary actions, such as termination or court cases when warranted.
Two examples of answers given to the questions on Responsibility include:
- The Company contributes directly to the welfare of the people in the communities where it operates, with a +93 rating.
- Social responsibility as one of the organisational values demonstrated in the company, with +92 rating.
The interviews cited (1) the consistent use of multi-stakeholder engagement and (2) commitment to the firm’s sustainable energy objectives, and (3) regular reporting that includes accountability measures, to reflect good governance in the firm’s social responsibility initiatives.