DOING GOOD BUSINESS

DOING GOOD BUSINESS - Recent polls demonstrate that the apparent arrogance of some companies and the greed of directors alienate the public, especially the young. Des Wilson wants to see corporate peer groups calling their more selfish brethren to account.

by Des Wilson
Last Updated: 31 Aug 2010

Recent polls demonstrate that the apparent arrogance of some companies and the greed of directors alienate the public, especially the young. Des Wilson wants to see corporate peer groups calling their more selfish brethren to account.

It's usually estate agents and politicians who bear the brunt of public opprobrium. Yet increasingly the chairmen, directors and chief executives of private businesses are assuming the mantle of the group that we most love to hate. Anti-globalisation protestors, shareholders angry at fat-cat payouts, the corruption exposed within corporations such as Enron and Andersen - all have served to make the private sector a target of public loathing. In a survey for BBC TV last year, 65% of those polled said they thought company directors could not be trusted to tell the truth, while 75% thought they were overpaid - figures recently exceeded in a Mori poll for the FT.

I tried to tackle these views in a column for the New Statesman in defence of business. Aware that many of its readers worked in public services, I pointed out that four-fifths of employees - more than 20 million - worked in the private sector. Not only did they support themselves and their families, but they generated the wealth to employ the remaining five million in the public sector.

And what about profit - the left's equivalent of the F word. Where do profits go? Not always into the pockets of businessmen. Generally, a FTSE-100 company gives 25% of its profits back to its shareholders. And who are the shareholders? Overwhelmingly, ordinary people, investing via pensions or other savings schemes. About 30% goes directly to the public sector via the taxman. Much of the remainder is reinvested in the business and so in the economy. In other words, without company profits there would be no employment, no tax revenue, no investment in infrastructure. We would be living in a third world country.

Those aren't the only contributions the private sector makes. The aviation industry makes global travel available to millions.

Supermarkets provide huge choice at a price everyone can afford. The pharmaceutical sector develops treatments that have transformed and saved millions of lives. I could go on.

Perhaps it is time for citizen action groups, environmentalists and the political left to stop characterising business as the single-minded pursuit of profit for an elite few, and to see it for what it is - the provider of an unprecedented quality of life for the many.

I was amazed that I received not one offensive letter in response to my New Statesman article. Perhaps the role of business as the underwriter of our quality of life is more widely understood than anti-business rantings in the media might suggest.

I have myself crossed the public-private divide, moving to BAA after nearly 30 years in the public sector. A few accused me of selling out, but most were supportive. I felt that my argument, that business was not essentially a bad thing but that it sometimes did bad things, was accepted, and at BAA I had the opportunity to make a difference.

And I believe I did. Nearly 10 years on, the BAA board has won permission for airport expansion at Heathrow, Gatwick and Stansted with minimal public opposition and, in the case of the last two airports, after negotiating environmental packages with the local communities. The company has adopted a sustainability approach to aviation and is consistently winning awards for corporate social responsibility and environmental reporting. All this was achieved not by attacking the company for its earlier insensitivity to the community, but encouraging and inspiring it to operate in a way that made it both a better neighbour and a more satisfying company to work for.

So private business can behave responsibly when it puts its mind to it.

Yet the anti-business headlines remain. The Chancellor last year felt able to hit business with measures he knew he would not have to defend to popular opinion. And the CBI chose as its conference theme 'Improving the reputation of business'. Why does the problem persist, and how should it be addressed?

First, although business has changed its relationship with the community dramatically over the past decade and is increasingly 'doing the right thing', it is slow to say so. Worse, it seems afraid to condemn the wrongdoing of other businesses. The sins of the few have a disproportionate impact on the reputation of the many.

There are still top business figures who demand remuneration out of all proportion to their performance, let alone their employees. There are still firms that treat smaller business partners unfairly, who pollute or waste finite resources, who prefer behind-the-scenes manipulation to public accountability. True, there are fewer of them these days. Yet others in business are unwilling to slap them down. The CBI, for instance, calls on business to adopt best practice and reflect the highest of values, but it won't name or criticise individual companies that tarnish business's reputation. Individual business leaders seem reluctant to break ranks and criticise their peers, no matter what the justification.

Yet businesses condone by their silence. Few things would enhance the reputation of business more than for business organisations and personalities to speak out when any of their number are guilty of unacceptable greed, dishonesty, environmental irresponsibility or social injustice.

Second, the adoption of corporate social responsibility (CSR) must be genuine and not cosmetic. It's sickening to those of us who passionately believe in CSR, and discouraging to companies who are properly practising it, to see, for example, tobacco companies advertising their 'good works' and claiming to be good corporate citizens when their behaviour is frequently despicable. One advertisement claimed that the company sold cigarettes 'with a demonstrated sense of responsibility and responsiveness to the issues surrounding smoking and health', then went on to say that 'it supports a wide range of charities without seeking public recognition or reward'.

Such claims damage the credibility of CSR and undermine the advances being made in business behaviour.

Similarly, companies that believe CSR is no more than a PR concept calling for glossy brochures and cynical commercial sponsorship programmes (such as the tobacco companies promoting healthy sports activity), do more damage than good, giving anti-business campaigners the evidence they need.

CSR is a practical way for companies to position themselves constructively in relation to their stakeholders and the wider world. It should reflect real and strongly held long-term values, not be a superficial response to short-term needs. The rewards for the business will follow.

Third, business should do more to excite and involve the young. More and more graduates leave university saying that they don't want to work for a large private-sector company. Why does it have such low standing?

Partly, of course, it's because they rebel at its failings. But it's also because it's perceived as boring. Yet it isn't. There's another challenge for the CBI - a 'Business can be fun' campaign aimed at the young. They are tomorrow's management and workforce.

Setting standards that appeal to their idealism has to make sense. All in all, being good and doing good has to be good for business.

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