The Challenges - International Labour Organization

Notes from
Making Corporate Citizenship Real:
The Challenges of Implementing Responsibility Management Systems in
Multinational Firms
August 13, 2001
Boston College
Sandra Waddock, Professor
Boston College Carroll School of Management
Senior Research Fellow
Center for Corporate Citizenship
Chestnut Hill, MA 02467
617-552-0477
waddock@bc.edu
Co-Sponsors:
Boston College Center for Corporate Citizenship
International Labour Organization
Charles Bodwell, Senior Researcher
Management and Corporate Citizenship Programme
International Labour Organization
CH-1211 Geneva Switzerland
+41 22 799 8566
f: +41 22 799 7978
bodwell@ilo.org
The following is an executive summary of some of the key issues discussed at the roundtable conversation
on global corporate citizenship held at Boston College’s Carroll School of Management, August 13, 2001.
Attendees
Co-Organizers
Sandra Waddock, BC CSOM
Charles Bodwell, ILO
General Participants
Dr. Tony Cortese, Second Nature
Dr. Brad Googins, BC Center for Corporate Citizenship
Prof. Ira Jackson, Harvard Kennedy School of Government
Ms. Michele Kahane, Ford Foundation
Mr. Steve Lydenberg, Domini Social Investments
Dr. Dara O’Rourke, Massachusetts Institute of Technology
Dr. James E. Post, Boston University
Mr. Timothy Smith, Walden Asset Management
Dr. Eve Spangler, BC Sociology Department/Leadership for Change Program
Dr. Marshall Strauss, Human and Civil Rights Organizations of America
Dr. Steve Waddell, The Collaboration Works/Organizational Futures
Center for Corporate Citizenship Staff Attendees
Janet Boguslaw
Platon Coutsoukis
Cheryl Kiser
Tish Schilling
BC Carroll School of Management Doctoral Candidates
Jen Leigh (also ILO consultant)
Naomi Olson
Interested, Unable to Attend
Mary-Ellen Boyle, Clark University
Josh Margolis, Harvard Business School
Jane Nelson, United Nations/International Business Leaders Forum
John Ruggie, Harvard Kennedy School

Overview
The day was structured in several segments, beginning with introductions of the participants to each other
(see Exhibit A, attached). Introductions were followed by a short explanation of the Management and
Corporate Citizenship Programme of the ILO and of the Total Responsibility Management model (see
Exhibits B and C, attached) for implementing responsible practice, developed by Sandra Waddock and
Charles Bodwell. Three short presentations highlighted core components of the TRM model from the
perspective of the presenter and these brief presentations were followed by a general discussion of issues
raised by the presentation:
• Inspiration (vision and leadership): James E. Post, Boston University
• Integration: Ira Jackson, Harvard Kennedy School
• Innovation, Improvement, Measurement and Monitoring: Dara O’Rourke, MIT
What follows is a thematic summary of the conversation, rather than an attempt to report out exactly what
was said by individual participants, thus it represents a synthesis of the ideas discussed, not a transcript of
the proceedings.
The general focus of the meeting was on the implementation of what Waddock & Bodwell call total
responsibility management systems (TRM) in multi-national corporations and throughout their supply
chains. The focus on responsibility management of corporate operations brings the construct of corporate
citizenship deeply inside the corporation, focusing it on day-to-day corporate practices as they impact
primary and secondary stakeholders, rather than simply on philanthropic activities. The other focus was on
the need to bring greater understanding of the need for responsibility management to the business
community more generally, framed in terms of creating a “tipping point” for corporate responsibility.
Background: Generally speaking, while there was an explosion of codes of conduct in multinational
corporations starting in the early 1990s, companies didn’t really consider implementation of the codes
(particularly within supply chains) to be a part of their responsibility until the late 1990s. It was then that
the question shifted from “Should we have a code?” to “Once we have a code, how do we implement it?”
Four “gaps” pose potential problems for the implementation of corporate citizenship: the communications
gap, which involves the transmission of information about corporate activities and impacts; the
participation gap (between management and worker, rich and poor?); the ethical gap between the ideals set
forth in a code and actual business practices; and the operational gap between efficient and effective
operations.
Create the Tipping Point for Corporate Citizenship: A theme that ran throughout the conversation was the
need to create the “tipping point” for corporate citizenship around the globe and particularly in the United
States. There was some sense that the conversation may have already “tipped” in the UK and continental
Europe and that companies are beginning to understand their responsibilities more broadly than in the past.
US corporations, however, appear to be far behind in understanding corporate citizenship as operating
practice and as a potential source of strategic competitive advantage, rather than simply as philanthropy.
Mico/Macro Level of Impact: There is a tension between focusing on implementation of codes and
responsibility management systems at the individual company level and at the system level. There are
somewhere between 35,000 and 100,000 MNCs in the world today (Jane Nelson’s report to Kofi Annan
will put the figure at 60,000). To have a real impact, some way needs to be found to reach this multiplicity
of companies, through their own operations as well as deep into their supply chains.
Inspiration: The Leadership and Vision Thing
Jim Post’s comments made clear the need for committed leadership on the issue of corporate citizenship, as
perhaps the single most important determinant because leadership gives “soul” to the organization. Jim
identified three types of leaders: 1) stewards, i.e., those CEOs who honor their leadership commitment by
being good stewards of the resources they command; 2) frame-breakers, leaders who are innovative and

imaginative, who passionately set the agenda for their organizations; and 3) catalysts, leaders who
empower people to bring their imaginations to bear on whatever situations are faced.
The key challenge is to figure out how to connect with the leaders of the (60,000) MNCs about corporate
citizenship. The best strategy may be to tap into and use existing CEO forums (e.g., Business Roundtable,
Conference Board, World Business Council for Sustainable Development, CEP, Aspen Institute, and
others). The key to creating understanding is to understand the learning dynamic: first create awareness
and then learning among CEOs about corporate citizenship issues; next cultivate commitment, then
implement new practices that are more responsible.
Reasons for Corporate Behaviors: Companies do things because:
1. They are required to do so by laws (compliance motivation).
2. They are responding to external pressures (e.g., NGOs, shareholder activists, others).
3. Voluntarily, because of enlightened self-interest.
4. There are other types of incentives/institutional mechanisms in place that make it desirable to change.
To get action on corporate citizenship or change corporate behaviors, some combination of all of these
motivations is probably needed.
But, it was also clearly noted that leadership can take place just about anywhere or, as Senge notes, from
any group of people that come together to create a new reality. Thus, CEOs may not be the only source of
leadership on corporate citizenship within companies and it is important to recognize this reality.
Integration
Ira Jackson presented a case study of BankBoston (before it became part of FleetBoston) and its corporate
citizenship. He demonstrated how the idea of integration moved from the CEO’s decision to “walk the
talk” on the bank’s corporate citizenship to engaging with stakeholders in a variety of ways. The bank
moved toward leadership in multiple settings that clearly identified the company’s values through its
commitments and its corporate policies, particularly human resource and community relations policies. As
examples of specific functional area integration, Ira cited the bank’s creative strategy toward
implementation of its Community Reinvestment Act (CRA) responsibilities by forming First Community
Bank, which became a profit center in its own right, while meeting the banking needs of local
disadvantaged communities. In another example, the human resource function operationalized the bank’s
commitment to diversity by creating Employee Resource Groups for different groups within the bank and
by developing a creative Transition Assistance Program that attempted to really provide assistance to laid
off employees with an acquisition was made. Finally, and more traditionally, the corporate philanthropy
programs were helpful in operationalizing the bank’s core values.
Some generalizations Ira suggested from the case study are that:
• Corporate citizenship is both particular and individualistic.
• Companies seek comparative differentiation, and their citizenship activities can potentially be a source
of competitive advantage.
• Much of this activity may be CEO dependent.
• Contextual, sectoral, cultural differences and forces matter.
• There is a risk of rigidity, standardization can yield to bureaucratization and obsolescence. There is a
danger in too much standardization, when companies really seek differentiation to gain competitive
advantage. Responsibility management systems should not so standardize practices that they reduce
the possibility of differentiation.
• Codes can establish ceilings rather than floors (a danger in that they are designed as floors or baselines
for practice, not aspirations).
• Corporations avoid accountability.
• There are first mover costs (as well as advantages) and therefore it is important to question whether
companies engaging in corporate citizenship behaviors are seeking risk avoidance or competitive
advantage.

Integration Requires Commitment Within Operating Systems: One thing that became clear in this
conversation is that operating policies and systems need to reflect the values of the firm if corporate
citizenship is to be made real. For example, BankBoston showed that it valued diversity management by
making 20% of managers’ bonuses dependent on the management of diversity within their units.
Integration also raises the question of how deeply embedded within a company are the espoused values and
commitments to corporate citizenship. There was a general sense that some very real lines do get drawn,
some of which are quite costly.
Continual Improvement: The externally driven move toward corporate citizenship creates an inadvertent
message that perfection is desired (and possible). But CC is not about perfection. Rather it is about
operating with values and a capacity to deal with issues as they arise effectively (in Drucker’s sense of the
word, i.e., by doing the right thing). The key question is: How do companies deal with issues and
operationalize the standards they are creating (or using)? Companies need concrete help about how to
build capacity and measure their performance. They (we) need to create a learning model that works
within corporations and provides examples of what works across corporations. The learning model needs
to be non-punitive, cross functional, systemic, and creative. It needs to show what it takes to make
responsibility happen in corporations.
There is a Focus on Large Companies: A strategic question for creating a tipping point is where the
emphasis should be placed. Most work, including Ira’s presentation, is on the largest companies. In part,
the emphasis is on large companies because of their enormous spillover effects. There seemed to be
general agreement that this focus is appropriate because of the impact of large corporations, though some
attention needs to be paid to small and medium sized enterprises (SMEs) as well.
Improvement, Innovation, and Measurement
Dara O’Rourke provided a compelling presentation about the issues involved in monitoring (and
measuring) the implementation of codes of conduct in multinational firms. For more information, see
“Monitoring the Monitors” at http://web.mit.edu/dorourke/www/. Not only are there multiple forms of
monitoring from multiple types of consultants, but they vary widely on what they are monitoring. Supply
chains in companies are complex and shifting; there is limited leverage of individual buyers, and there are
multiple codes at issue, each of which is embedded with complex technical and social issues.
Key issues, according to Dara, are:
• Transparency is the first key. Not enough to have private, internal consulting reports. We need a
global SEC type mechanisms for triple bottom line type reports so that there can be public comparison
and learning and systematic, comparable assessment. J
• Eliminating conflicts on interest.
• Expanding the number and training of monitors. Currently, monitors are ill prepared for their tasks.
• Monitoring systems need to be credible, comparable, and inter-operable.
Need for Better Measures: There is a clear need for better measures that can reflect the degree of
responsibility embedded in corporate operations and practices. There is also a major need for better
training of monitors. If you “you get what you measure,” then measurement is critical both for making the
business case and for improving practices, as well as for providing a basis for learning systems in
companies. Measures are more readily apparent in some arenas like health, environment, and safety, than
in other areas like living wage and corporate climate/culture, which impacts how workers are treated. The
key question is: How do you make corporate citizenship the stuff of good management?

Possible Action Steps
Numerous ideas were suggest that provide opportunities for future action directed at creating a tipping
point around corporate citizenship and sustaining it over the long term. Some of these ideas are
summarized below.
Creating the Business Case
Use the Slogan: Responsibility is free! Just as the quality movement moved forward when Motorola
understood and began to use the phrase, “Quality is free,” so perhaps can managing
responsibly/responsibility management pick up such a phrase. I.e., it doesn’t cost a manager any more to
treat an employee humanely than it does to mistreat that same person—and there may actually be savings
and higher levels of productivity derived from treating employees well, as well as moral gains.
Then again, is responsibility management even the right word? Some would suggest that “sustainability” is
potentially a better word, though there are definitional problems with sustainability, just as there are with
responsibility. Sustainability implies a survival imperative and may be easier to digest in some circles than
“responsibility.”
Language and Tools Matter: The language of triple bottom line may be helpful because it operationalizes
all three of the components necessary to good corporate citizenship (and, perhaps, ultimately, good
business practice): the financial or economic, societal, and natural environmental bottom lines. One clear
need is to create a business imperative for responsibility management systems, whatever we call them in
the end, but another need is to create systems that are (relatively) easy to learn and use—and that provide a
sense of what the results of changed practice are. It is also clear, however, that there are times when
“better” (more responsible) practices are not necessarily cost-effective.
Government Mandate/Business Imperative: There is a clear tension between mandating corporate
responsibility and having it evolve as a business imperative (see Waddock, Graves & Bodwell, 2001, for
some thoughts on the business imperative as it currently stands). There seemed to be some agreement that
there is competitive advantage to be gained by “defining a market for morals” (Ira Jackson).
Simultaneously, probably some form of mandate and/or institutional requirements will also be needed to
create sufficient pressures on business to really move the whole corporate citizenship agenda forward.
Regulation is especially necessary in arenas where there may be cost disadvantages to behaving responsibly
and where a level playing field is needed for all firms.
Create a Business Imperative for Corporate Citizenship: Rather than being in a technology push mode, we
probably need to move toward more of a demand pull mode to create company interest in corporate
citizenship. We want to generate differentiation among firms, not conformity (and that’s what they want,
too), but it’s probably necessary to create a new form of market demand, to invent something that shifts
demand toward responsible practice (i.e., customer, industry-wide, or investor pressures). Pressures have
largely been top down with codes of conduct and standard. But there are also bottoms up examples. Top
down/bottoms up need to be connected. I.e., what more can be learned from the quality movement? Key
question again is: How do we make responsibility management the stuff of good business management?
How, in particular, do we make responsibility management equal good management in companies not
driven by consumer interests and pressures? What propels non-consumer companies to care about all of
this? Possible answers lie in activists, industry associations, “big box” demands on suppliers, evolution of
“green” and socially responsible “labels.” What mix of incentives and constrains might work? Perhaps
some combination of:
• Consumer pressures and activist groups.
• Government regulation.
• Industry “labels” and pressures.
• Best practice examples.
• Awards and celebrations.
We’d add:

• Social investor pressures.
• Ratings and rankings.
• Continued activism on globalization.
• Increasing demands for transparency complimented by new regulations requiring triple or multiple
bottom line reporting.
Create a “Global Conversation” to Connect Corporate Citizenship Activities, Consolidate Understanding:
One thing noted time and again was that there is considerable fragmentation not only of knowledge (into
specialties and disciplines) but also of actions and initiatives aimed at producing greater corporate
responsibility. How do we go about connecting the multiple movements and initiatives around corporate
responsibility (by whatever title it goes) in the world today. Leverage points may exist for bringing
different types of groups and initiatives together, perhaps in conversations like this one, but in other ways
as well, in a sense-making process that rationalizes the multiplicity of initiatives, standards, reporting
arrangements, and demands on companies. The proliferation is confusing and complex and needs to be
made sense of so that people with similar goals can connect and business leaders can begin to act in ways
that satisfy constituent demands.
Particularly, create forums that cross sector boundaries (i.e., business, academic, NGOs, government), but
also sector groups, industry groups, and regional groupings.
Create a Center for Responsibility Management, modeled on the Quality Management Center. This center
could promulgate and publicize best practices, management development and training programs,
responsibility management systems (e.g., TRM), and measurement systems.
Awards and Celebration: One thing that could be done to move the corporate citizenship agenda forward
would be for a (prominent) organization to create an award for corporate responsibility/citizenship modeled
on the Baldrige Award (where a criterion is that the company’s practices be shared with others). Such
celebration of good performance can be a powerful inducement to others to change, but also potentially
provide a source of sustainable competitive advantage for first movers, especially if they are engage in
learning and improvement initiatives with their best practices. Such celebration of good practices can also
create much-needed corporate champions.
Draw the Map and Make It Simple: Business needs a roadmap to responsibility. Draw it and keep it as
simple as possible in an incredibly complex world. Provide tools, approaches, techniques, that can be
adapted/adopted by businesses everywhere as they recognize the (hopefully) emerging business imperative
of responsible practice. Perhaps help companies consolidate the many standards, codes, principles that are
emerging and make sense out of them; provide readily accessible tools and case studies that illustrate good
practices and constant improvements.
Best Practice Approaches: One suggestion is to create some sort of institutional mechanism for capturing
the wisdom of more and less successful cases of company’s attempting various initiatives. Examples
include BankBoston’s experience in Argentina when it refused to do business with local banks involved
with Nazi-related funding sources or the “trust bank” that Shell had built up through five years of
stakeholder engagement, which bought the company understanding and time in the event of an oil spill.
Some sort of learning system is necessary.
Measurement: More understanding is needed of how to measure and effectively monitor the impact of
responsible (vs. irresponsible) activities by firms. Better and more widely known measurement systems are
needed (GRI, SA 8000, AA 1000 potentially provide good starting points here, but they need to be made
consistent and inter-operable to be truly effective.)

Role for Management (and Other) Education: Need to integrate responsibility into all disciplines of
management, as well as providing for more integrative models of management generally. Need to
fundamentally change higher education. Responsibility isn’t just a “fad” that will go away, but needs to be
integrated particularly into management education, but also into other forms of education as well. Think
about how to:
• Legitimize a profession of corporate responsibility management. Create a discipline, develop
appropriate metrics, develop courses of study. (See, e.g., the New Academy of Business).
• Create business champions. General managers are not well prepared for these new responsibilities.
Use these business champions as case studies in educational programs.
• Target a few good business schools to take on corporate citizenship as a distinctive competency.
Appeal to their internal sense of competition. There’s competitive advantage to be gained in this
domain as well.
• Create narratives and stories that tell about good corporate citizenship. Celebrate and publicize the
stories and the companies.
Training of Company Monitors: There is no program now that trains monitors in all of the skills that they
will need (perhaps watch AccountAbility/GRI on this one). There are no degree programs on corporate
responsibility/citizenship (though do check out the New Academy of Business in England).
Role of the Center for Corporate Citizenship: Enable and empower. Build capacity in this new, enlarged
arena much as has been done with community relations function over the years. Perhaps focus on triple
bottom line language as understandable to business, a simple framework readily comprehended, included
possibly with something like TRM.
Focus on Community: Communities are at the heart of much corporate impact. Much creative action is
occurring at the community level that might be tapped as a resource for improving corporate behaviors,
blending human rights, environment, social issues with business issues. It’s in the community where these
things get “real.”
NGO Involvement: Get NGOs involved more deeply, especially on pressuring industry.

Exhibit A: A Colloquium
Making Corporate Citizenship Real:
The Challenges of Implementing Responsibility Management Systems in Multinational Firms
A Roundtable Conversation
Co-Sponsors
Center for Corporate Citizenship
Management and Corporate Citizenship Programme
Boston College
International Labour Organization
Carroll School of Management
Location:
Boston College Carroll School of Management
Lynch Conference Center
5 th Floor Fulton Hall
August 13, 2001
Agenda
8:30-9:00 Coffee and bagels
9:00-9:45 Introductions
Responsibility Management Systems
Charles Bodwell, Sandra Waddock
9:45-10:30 Inspiration:
Developing Vision and Commitment:
James E. Post, Boston University
Dialogue: Issues with Building Leadership Vision and Commitment
10:30-10:45 Break
10:45-12:00 Integration and Implementation:
Ira Jackson, Harvard Kennedy School
Dialogue: Corporate Citizenship: Integration and Implementation
12:00-1:00 Lunch and “Good Conversation”
1:00-2:00 Innovation and Implementation/Measurement and Monitoring:
Dara O’Rourke, Massachusetts Institute of Technology
Dialogue: Issues of Measurement, Monitoring, reporting, and Verification
2:00-3:00 Dialogue and Wrap-up:
Moving the agenda forward: What’s needed? What’s next?

Exhibit B: An Integrated Model of Total Responsibility Management (TRM)
Internal Stakeholders
Inspiration
(Vision)
Suppliers
Owners
Improvement
and
Innovation
Communities
Governments
Environment
Integration
Employees
Customers
External Stakeholders
NGOs

Exhibit C: The Total Responsibility Management System
Vision and Leadership Systems
Stakeholder
engagement
processes
Responsible
vision, values,
and leadership
commitments
Improvement: remediation,
innovation, and learning
Transparency and accountability
for results and impacts
Improvement
and
Learning
Systems
Foundational
Values
Integration into
Strategies, Practices, and
Assessment Systems
Strategy
Human
resource
responsibility
Responsibility
integration
management
systems
Responsibility measurement system
Results: Performance, Stakeholder, and
Ecological Outcomes and Responsibility