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How do organizations learn to become more socially responsible? According to writer Simon Zadek[1], there are two types of learning processes that organizations need to engage with: organizational and societal. Here we consider the way in which organizations move through both these types of learning and how their application leads to what he terms ‘civil learning’.
Organizational Learning
Let us first consider Zadek’s five-step model for organizational learning [2] shown below.
THE FIVE STAGES OF ORGANISATIONAL LEARNING
When it comes to developing a sense of corporate responsibility, organizations typically go through five stages as they move along the learning curve.
Stage
What Organizations Do
Why They Do It
1. DEFENSIVE
Deny practices, outcomes or responsibilities.
To defend against attacks to their reputation that in the short term could affect sales, recruitment, productivity and the brand.
2. COMPLIANCE
Adopt a policy-based compliance approach as a cost of doing business.
To mitigate the erosion of economic value in the medium term because of ongoing reputation and litigation risks.
3. MANAGERIAL
Embed the societal issue in their core management process, i.e. the company needs to give managers of the core business responsibility for the problem and its solution.
To mitigate the erosion of economic value in the medium term and to achieve longer term gains by integrating responsible business practices into their daily operations.
4. STRATEGIC
Integrate the societal issue into the organization’s core business strategies in order to ensure responsible business practices.
To enhance economic value in the long term and to gain first-mover advantage by aligning strategy and process innovations with the societal issue.
5. CIVIL
Promote broad industry participation.
To enhance long-term economic value by overcoming any first-mover disadvantages and to realize gains through collective action.
• Reactive Stages
During the first stage of learning, then, an organization facing criticism for irresponsible practices tends to claim either ‘it didn’t happen’ or ‘it’s not our fault’. It does this to protect its reputation in the short term. With experience, it progresses to a compliance approach in order to be seen to be doing the right thing and to minimize chances of litigation.
• Proactive Stages
By stage three in the learning curve, an organization’s approach will be more proactive than reactive. It realizes that compliance alone is insufficient to address certain issues and fundamental changes to management processes are required. At the fourth strategic stage, the organization learns that integrating the issues into its overall business strategy can actually give it the competitive edge.
• The Civil Stage
By the final stage of organizational learning, the organization has come full circle. No longer is it the target of unwanted criticism. Rather, it in turn, is encouraging collective action for corporate social responsibility.
Societal Learning
How organizations learn to become model corporate citizens does not just happen from the inside out. In order for an organization to develop a true sense of corporate social responsibility, it also has to engage in societal learning. This means learning to anticipate and respond to the concerns of the society in which the organization operates.
Pharmaceutical company Novo Nordisk has created the Four Stages of Issue Maturity model [3] to help measure the maturity levels of different societal issues. This model evolved in response to the company’s need to be able to align business strategy with society’s stance on particularly sensitive issues, but Zadek believes it can also help other organizations gauge public expectations around social responsibility issues.
The Four Stages of Issue Maturity are:
- Latent – when the issue is vague and usually ignored or dismissed by the business community.
- Emerging – when there is greater political and media awareness, with leading businesses attempting to address the issue.
- Consolidating – when voluntary standards come into play and collective action occurs within the business community.
- Institutionalized – when legislation or business norms are established and these become a normal part of the good practice model.
In other words, as societal issues mature, they become a focus for debate, and solutions to the issues are gradually adopted as standard practice.
Civil Learning
Zadek explains that plotting issue maturity against organizational learning can help organizations develop future business strategies that will be acceptable to society. He calls this approach ‘the Civil Learning Tool’.
When an issue is at the evolutionary stage, organizations may get away with a defensive response to criticism about their actions. But the more mature the societal issue becomes, the more enlightened and forward-thinking an organization needs to be to take advantage of opportunities and avoid risks.
Conclusion
For organizations to really commit to corporate social responsibility, they need to engage in both organizational and societal learning. The organizations with the greatest willingness to learn are the ones who will enjoy the best competitive advantage, and who will ultimately be recognized as the most socially responsible.
References[1] Simon Zadek is the Managing Partner of AccountAbility, a global not-for-profit organization that promotes accountability innovations for sustainable development.
[2][3 Zadek, S.
The Path to Corporate Responsibility,
Harvard Business Review
, December 2004, p 128. Available
here.
