Peggy Simcic Brønn1 Chapter 14 Ethics – seasoning or ingredient? & Corporate Social Responsibility Organizational and Managerial Communication

Peggy Simcic Brønn2 Two views of ethics Seasoning metaphor –Salt to camouflage the bad taste? Ingredient metaphor (integrated view) –Integral part of the meal? –Integrating character with actions.

Peggy Simcic Brønn3 What is ethics? Derived from Greek ethos Rules or standards of right behavior towards others Includes teaching these rules or standards and their practical application Aristotle –Who we are is as important as what we do –Have to start with the character of the person, its formation and content – the whole human being

Peggy Simcic Brønn4 Connection to corporate communication Formulating and sending messages that influence many people Relationship between stakeholders is an ethical one How one relates to others Ethics inextricably connected to corporate communication Ignoring this can have consequences for organization and ourselves

Peggy Simcic Brønn5 Responsibility and dialogue Indirect responsibility Openness to what is being marketed Willingness to engage in dialogue –Those who are part of one’s own organization –Those to whom the messages are directed Lack of communication fails to respect the other party’s humanity

Peggy Simcic Brønn6 Identity, Brand Building and Ethics Closely related The process involves many people Two levels –Meeting between character of individuals and profession or organization –Organization itself – definition of what it wants to be – its values and standards Act ethical as long as it is profitable?

Peggy Simcic Brønn7 Moral Preparedness Brand building requires serious reflection Identity is not invented overnight Ethical ideas need to be stated up front as both internal and external signals Individuals must decide what their concept of the good life is Read Plato

Peggy Simcic Brønn8 Corporate social responsibility A mission or purpose for existing that includes more than creating shareholder value and profits. Corporate citizenship -- policy and practice of a corporation’s social involvement over and beyond its legal obligations for the benefit of society.

PHILANTHROPIC ACTIVITY Improve the quality of life Be a good corporate citizen Contribute to the community ETHICAL RESPONSIBILITY Avoid harm Do what is right, just, fair LEGAL RESPONSIBILITY Play by the rules of the game Obey the law -- it is society’s codification of right and wrong ECONOMIC RESPONSIBILITY Be profitable Pyramid of Corporate Social Responsibility, Carroll 1991.

Peggy Simcic Brønn10 Corporate Image Dimension Values and Programs –Concern with the environment programs to protect or improve the environment and make more effective use of natural resources –Social Responsibility -- contributing to community programs, supporting artistic and social activities and generally trying to improve the welfare of society

Peggy Simcic Brønn11 Corporate citizenship issues Corporate governance Environment Human rights and the workplace Fair trade Ethical investment The arms trade Tobacco Animal welfare and protection Education

Peggy Simcic Brønn12 If they don't say enough about their charity links consumers believe that companies are hiding something and if they say too much they believe that charities are being exploited by the big corporations. It makes the promotion of such schemes one of the most delicate jobs in marketing. Go too far one way and consumers believe you are using the charity, go the other way and they will not even know of your involvement (Tom O'Sullivan, 1997).

Peggy Simcic Brønn13 Cause related marketing The process of formulating and implementing marketing activities that are characterized by contributing a specific amount to a non-profit organization that in turn causes customers to engage in revenue-providing exchanges. C. Caywood, 1997 Linking a worthwhile charitable cause in a market to the growth of a business through the fusion of marketing, public relations, promotion, and special events. Mullen, 1997

Peggy Simcic Brønn14 Cause related marketing Using marketing money, techniques and strategies to support worthwhile causes while at the same time building the business. Commercial activity by which businesses and charities or causes form a partnership with each other to market an image,product or service for mutual benefit. Adkins, 2000

Peggy Simcic Brønn15 Need for CSR as part of mission CSR must have prominent place in firm’s core mission and vision Mission should be well explained, widely understood and shared Must be willing to ‘walk the talk’

Peggy Simcic Brønn16

Peggy Simcic Brønn17 Skeptics –distrust of firm to actually donate –perceived triviality of donated amount –perceived inequity of donation to firm benefit –potential misuse of CRM campaign –question motivations

Peggy Simcic Brønn18 Norwegian Research USA UK Norway Awareness of companies supporting causes 79% 68% 7.5% Likely to switch to brands that claim to help a cause 76%86% 35.5% Likely to pay more for a brand that supports a cause54% 45% 29.2% More likely to buy product that supports a cause78%N/A 46.3%

Peggy Simcic Brønn19 Research from Norway It is less important what companies support -- rather it is more important that companies support something. For Norwegians, the motivation of the company is more important than what is supported. The more cynical a company’s motivation, the more consumers are skeptical. This is particularly true of customers’ with higher education. Consumers want information that companies support good causes. CRM creates extra value for the customer. CRM is accepted even when consumers know it is being done to get them to purchase. Given that price and quality are equal, brands that support good causes are preferred.

Peggy Simcic Brønn20 It is important that consumers know how much money is given and what it is being used for. Norwegians are split in their opinions that there should be a natural link between the giver and receiver to achieve believability. Important aspects for credibility: –time span -- must be long-term –size of support must be significant

Peggy Simcic Brønn21 Most companies in Norway support or have supported a non-profit organization (non sports) Most support is through donations Estimated corporate support ca. 750 million NOK Ca. 50% support national causes, ca. 36% international and the rest local Only about 1/4 communicate their support, mostly through advertisements Firms use support to position themselves, to create goodwill with stakeholders, to show support for society and to create confidence in their brand, identity and image Showing social responsibility is the most important Almost no company evaluates the effectiveness of these programs

Peggy Simcic Brønn22 “The next big thing in brands is social responsibility. It will be clever to say there is nothing different about our product or price, but we behave well.” Wally Olins, corporate identity and image guru, quote in The Economist,