UK: THE GAWP FACTOR.

UK: THE GAWP FACTOR. - Even the busiest of business people find the invitation with the royal seal hard to refuse. Is it the chance to rub shoulders with royalty or does acceptance bring some more tangible benefits?

by David Smith.
Last Updated: 31 Aug 2010

Even the busiest of business people find the invitation with the royal seal hard to refuse. Is it the chance to rub shoulders with royalty or does acceptance bring some more tangible benefits?

It is a cold, forbidding evening in winter, when most sensible folk are at home in front of their firesides. But not this particular evening. The scene is the grand King's gallery in Kensington Palace and sitting in semi-darkness are senior businessmen from most of Britain's blue chip companies. The occasion is not an obvious draw - a presentation on behalf of the rather obscure Area Studies Monitoring Group. The attraction, however, is obvious - a rare opportunity to see the inside of one of Britain's most historic and impressive royal palaces and, perhaps more importantly, to rub shoulders with the evening's host, the Prince of Wales.

The guest list reads like a roll call of British business, with directors or senior personnel from Amersham International, Barclays, Booker Tate, Boots, British Airways, Johnson Matthey, Marks & Spencer, Mercury Communications, Morgan Crucible, Shell, Tarmac, Thorn EMI, Unilever, United Biscuits, Zeneca, and many more. And when the wait is over, their host appears, kicks off with a joke, says how important he regards the evening's business and, after a short speech, passes the ball to his fellow speakers, who give a brief insight into area studies - basically what different parts of the world have to learn from the lessons of economic development in others.

It is afterwards, however, as the guests are invited to meet the Prince, that the evening acquires a purpose and momentum. Even the busiest individual will make room in his diary for a royal occasion, and businessmen are no exception. The power of royal patronage, even with the monarchy supposedly in the throes of an identity crisis and the frequently heard charge that in the late 20th century it has become an anachronism, is as strong as ever.

Nor are there any royal illusions about this. Prince Charles, who had been interested in area studies for a number of years, suggested the evening, knowing that such a reception offered a better chance of raising the profile of the subject at hand, and getting British business interested, than a dozen stuffy reports. The 'gawp factor' is known and recognised in royal circles. The trick is to use it to best advantage. For there is something about the gilt-edged invitation, and the royal seal on the envelope, that is irresistible.

'By royal appointment' means something more these days than that the Queen is prepared to own to enjoying a particular brand of marmalade or patronise a certain top people's store. Just as Prince Albert harnessed business nearly 150 years ago to mount the Great Exhibition of 1851, a showcase of manufacturing might - at a time when Britain really was the workshop of the world - so modern-day princes have taken up and built on this tradition.

The Prince of Wales Business Leaders Forum celebrates its fifth birthday in February. And a very grand set of business leaders it can boast, too - not just from Britain. Under the presidency of Prince Charles, its deputy chairmen are Livio DeSimone of 3M, Lord Sheppard of GrandMet, Peter Woo of Wheelock and Company, and Lord Young (formerly of Cable & Wireless). Also on the board are Bernd Pischetsrieder of BMW, Sir David Simon of BP, David Davies of Johnson Matthey, Percy Barnevik of ABB, Joseph Gorman of TRW Inc, Jan Leschley of SmithKline Beecham, Neville Isdell of Coca-Cola and Minoru Murofushi of Itochu Corporation. Dr Carl Hahn of Volkswagen is an adviser. The forum can also count among its council members companies ranging from Abercrombie & Kent, Allianz and American Express, to the Tokyo Electric Power Company, Toyota and US West International, taking in Levi Strauss, McKinsey & Co, the Perot Group and Robert Bosch along the way.

Since its first gathering - in Charleston in the US - in February 1990, it can boast a number of successes in line with its aim of 'raising awareness of the value of corporate responsibility in international business practice, demonstrating that business has an essential and creative role to play in the prosperity of local communities, particularly in economies in transition; and encouraging partnership action between business and communities as an effective means of promoting sustainable economic development.' It is involved in projects in 17 countries ranging from management development programmes in India, promoting best environmental practice in South Korea, fostering sustainable rural development in Mexico, to the conversion of an old Red Army barracks in Hungary to provide accommodation for 20 new enterprises. The Forum has been particularly active in eastern Europe where, with the possible exception of the Soros Foundation, it has been the most active co-operative body promoting market-oriented economic development. In this it has called on the expertise of its members in, for example, the development of modern distribution systems (GrandMet and BMW), upgrading tele-communications (US West International, Cable & Wireless and Deutsche Telecom), the introduction of western retail concepts and networks (Coca-Cola, American Express), improved energy management (British Gas), new health and safety standards (BP, Johnson Matthey and 3M), and modern business methods (McKinsey, Allianz, Coopers & Lybrand and KPMG). Management training and enterprise assistance - described by the Forum as social investment by business, the so-called 'Marshall Plan of the mind' - has also been given strong emphasis.

But why do the businesses do it? After all, most international businesses worth their salt would have explored partnership and business development opportunities in eastern Europe and elsewhere even without coming under the umbrella of the Prince of Wales Business Leaders Forum. Many are separately involved anyway. Why the royal connection, and do the shareholders of those businesses whose top men devote time to the good works of 'social investment' do well out of the deal? Could it be, to put it crudely, that the motivation for businessmen is that the royal connection provides a giant ego trip, including the prospect of a gong or other forms of recognition?

Robert Davies, chief executive of the forum, denies this strongly. 'We see a very clear business benefit,' he says. 'Most of the companies we work with don't do it because the Prince of Wales is involved. It is because they see a duality of benefits. We don't believe that international business would sustain its support unless it saw this clear balance of benefits, in terms of a good corporate name, providing opportunities for their own employees and improving the overall business environment.' Part of this benefit, he suggests, is that through their involvement with the Prince of Wales, businesses can more easily overcome suspicion of their activities in countries in which capitalism is in its infancy. A survey of ordinary people conducted by the forum in Hungary found that 73% of the population thought that businesses looked after their own interests and did not take sufficient account of their social responsibilities. The royal connection, in other words, allows international businesses to present themselves as good corporate citizens, and overcome such doubts.

According to Davies, therefore, philanthropy is low on the list of corporate motivations. Involvement with the forum, he says, is a broadly-defined social investment by companies which has a payback in terms of business benefits. Social investment is defined by the forum as contributions by business to development 'through application of corporate resources and business skills in ways which provide an optimum spin-off for broader social development - which contributes to sustainable development of the business through improvement of the business environment, enhancement of corporate reputation and relations with society'.

So does this mean that royal involvement is irrelevant, that it might as well be the Joe Bloggs business leaders forum? Well, no. 'The Prince of Wales has the ability to get people to meet who would not normally meet,' says Davies. 'He has a remarkable catalytic effect, as anyone who has seen him in action would testify.' There is also evidence that those companies which signed up to the forum are enjoying additional advantages in some of these emerging capitalist economies. Others now want to join up, says Davies, although there is concern about adding too many international companies to the present total of nearly 50, thus making it unwieldy.

GrandMet, which spends 1.5% of its worldwide trading profit on 'community involvement', the bulk in projects which have no royal connection, shares Davies's view of the business benefit. 'Customers are looking through the front door of the companies they buy from,' says Lord Sheppard, GrandMet's chairman. 'If they don't like what they see in terms of social responsibility, community involvement and equality of opportunity, they won't go in.' He also stresses the role of community projects in the career development of employees. 'It's a big part of career development,' he says. 'I like to see people in the trenches, not stuck in the back office. It's better than a thousand management courses. It's playing the game for real. There is no compulsion on staff to participate, but the chairman is not unhappy for employees to believe that taking part will do no harm to their career prospects.' Not only is GrandMet active in the Prince of Wales business leaders forum, but it provides a home for its staff in the company's corporate centre, and has encouraged its business partners in America and Japan to take part. The impetus - and Sheppard's decision to get involved at the outset - came from GrandMet's 1989 acquisition of Pillsbury, the Minneapolis-based firm which was known for its local community involvement and which, it was feared in the City, would be lost under the ownership of a foreign predator. Only a few years on, GrandMet is completely sold on 'the need to promote corporate citizenship on a global scale'.

And, according to David Nash, chairman and chief executive of the company's food sector and honorary treasurer of the forum: 'In the new emerging markets GrandMet is entering, well directed community involvement can give us an important business edge.' This is echoed at BP. Richard Hookway, who is responsible for the oil giant's community involvement projects, says that going into countries under the umbrella of the forum, with its royal patron 'can help considerably, particularly in certain markets in terms of making introductions, securing partnership deals and so on.' The forum has been important to BP in both eastern Europe and Vietnam. 'Even if we were involved anyway, it does help leverage our efforts so we can make a greater impact,' he says. 'If we can do something under the umbrella of the Prince's Business Leaders Forum, it is easier for us to bring in other companies and get them involved.

'The success of the forum has been in the Prince's ability to bring in such a very powerful coalition of really top business leaders. As with all these things, when you know within a company that a project has the full backing of the chairman, it has a much better chance of success.' So everyone is apparently very happy. The Prince has a genuine and useful role, and the businesses involved get plenty out of it. The same is true, of the Prince's other activities, such as Business in the Community. But one thing goes unsaid in all this. There is a degree of royal coercion that is no less effective because it comes on HRH headed notepaper. 'Let's face it, if you are a British company of a certain size and reputation and you get invited to participate, you don't sit down and do a cost benefit analysis,' said one businessman active in the forum, who preferred not to be named. 'What you think is how bad it would look if you said no.' In this respect, at least, royalty is like the Mafia. When they make you an offer, it is very hard to refuse.

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