Monthly Archives: December 2011

Corporate Social Responsibility Reporting

Corporate social responsibility (CSR) has become a significant theme in business operations domestically and globally. The essence of CSR is integrating stakeholder’s economic, social, environmental and other concerns into an organization’s operations to ensure that it can conduct and grow operations on a sustainable basis. Stakeholders include customers, employees, vendors, and the community a business operates in. CSR has become a topic of importance in the wake of fraudulent practices and negative impacts on the environment attributed to some businesses that have damaged the public’s trust. As a result, many companies have responded by taking actions to become better corporate citizens. These actions have ranged from philanthropy to embedding environmentally –conscious practices in their businesses.

Consumers of products and investors have choices about the companies they conduct business with and invest in. Therefore, a vital part of the CSR effort is reporting results to interested stakeholders of the organization. While there is no universally accepted means of reporting CSR activities, one organization is making inroads with developing standards for reporting. The Global Reporting Initiative (GRI) is a non-profit organization provides companies and organizations with a comprehensive sustainability reporting framework. The terms CSR and sustainable business practices have many similarities and have been used interchangeably. The GRI defines sustainability as a combination of long-term profitability, social justice and environmental care. It has been documented that more than 3,000 organizations from 60 countries employ GRI guidelines to prepare their sustainability reports. There are some prominent publicly traded companies who released sustainability reports on 2010 activities following GRI guidelines, including Amgen, Kimberly Clark, and UPS.

In 2011, the GRI issued G3.1, the latest sustainability reporting guidelines. The sustainability reporting guidelines provide a framework for reporting related to the content, quality, and boundaries of reporting along with standard disclosures to be made. Those standard disclosures encompass the following dimensions of a company’s operations:

  • Strategy and company profile
  • Economic
  • Environmental
  • Social:
    • Labor practices
    • Human rights
    • Society
    • Product responsibility

The type of business and the scope of operations, among other variables, will determine the specifics of items reported. To get a better idea of what is disclosed in a sustainability report, selected information from the 2010 UPS Sustainability Report covers:

  • A summary of key performance indicators (KPI) and comparative results for 2007 – 2010 plus goals for 2011 and 2020
  • KPIs include:
    • Penalties as a percent of total environment inspections
    • Water and energy consumption
    • Gallons of fuel per ground package
    • CO2 emissions, normalized
    • Total charitable contributions
    • Full-time employee turnover rate
    • Auto accident frequency
  • Detail sections supporting efforts in: minimizing negative environmental impacts, creating a safe, employee-friendly environment, and being a good corporate citizen to the community
  • GRI grade earned (B+ level), based on GRI guidelines
  • An assurance report independently prepared by Deloitte and Touche LLP

CSR reporting appears to have been adopted by some large and well known companies. Those using the GRI framework employ standards that may aid in comparability of results from one company to the next. With the passage of time, it will be interesting to observe whether CSR reporting becomes more prevalent.

Jeffrey Wong, Ph.D. CPA

Jeffrey Wong, Ph.D. CPAJeffrey Wong is associate professor in the College of Business and received his Ph.D. from the University of Oregon. Wong’s work has been published in a number of journals including Behavioral Research in Accounting, Database, International Journal of e-Collaboration, and Internal Auditor.

His research interests focus on understanding how a firm’s strategic decisions and actions ultimately map to financial results. This research focus has most recently examined how a company’s information systems and investments in technology enhance the value of a firm.

Why UNR Online Executive MBA?

To better serve and create access for professionals, the College of Business at the University of Nevada, Reno has started an Online Executive Master of Business Administration (EMBA)  in August 2011. The first cohort is strong consisting of fourteen professionals from Northern Nevada, Las Vegas, Sacramento, and San Francisco who bring extensive leadership and academic credentials to the program. The UNR.s Online EMBA builds on the existing nationally ranked part-time MBA program at UNR. Specifically, UNR’s part-time MBA is ranked #4 in the U.S. and #2 in the West by Bloomberg BusinessWeek in 2011.  Bloomberg BusinessWeek is the most prestigious source for ranking of Business Schools. The courses of UNR’s Online Executive MBA are taught by the same faculty who teach in UNR’s part-time MBA. The faculty are well connected within professional circles and have national and international recognition in their areas of expertise. Nevada’s Online Executive MBA provides quality, flexibility, reputation, and cost competitiveness. Its salient features are:

  • Courses are online,
  • Program is cohort-based and each cohort will be completed in two years,
  • Courses are taught by faculty with significant professional and academic background,
  • Program meets the accreditation standards of the Association to Advance Collegiate Schools of Business (AACSB), the highest attainable level of accreditation in business education,
  • Program is entirely self-funded, and
  • There is no residency and immunization requirement making the application process highly convienient.

Business leaders face increasingly complex responsibilities, demanding extensive knowledge of all functional areas of business. They must maintain and enhance their managerial and leadership capital. To advance, they must acquire new skills and broaden their management perspective.

The EMBA program will teach executive leadership by integration of knowledge, skills, and experience. The EMBA program is oriented towards managerial skills in problem identification and analysis, and application of managerial skills to discovery of alternative solutions. The UNR Online Executive MBA program encourages application of theoretical solutions to real world business problems. The objective of the program is for the graduates to acquire the following skills:

  • To lead organizations,
  • To apply knowledge in new and unfamiliar circumstances through a conceptual understanding of relevant disciplines
  • To adapt and innovate to solve problems, to cope with unforeseen events, and to manage in unpredictable environments.

Obtaining the Master of Business Administration (MBA) degree has many benefits: the opportunity to advance in your career, increase your salary, and to meet and develop a strong network with executives and colleagues in your industry. The Online MBA experience is both personally and professionally fulfilling and enables students to realize their career goals.

One of the biggest challenges in today’s economy is acquiring tools for career adaptation.  A good Online MBA candidate should have an understanding of what “career adaptability” means — it means that they should be prepared to experience employment changes, as well as moves to different fields and areas of expertise, just to survive in today’s business environment.

Kambiz Raffiee is associate dean and director of MBAs program of College of Business at the University of Nevada, Reno. For information about UNR Online Executive MBA, e-mail him at Rarfiee@unr.edu or visit the program’s website at emba.unr.edu

Executive Pay And Risk-Taking

The financial meltdown of 2008-2009 brought the attention of both the media and regulators back to the failure of corporate governance practices in general, but specifically on executive incentive systems which encourage risky investments. One of the most controversial issues is how executives are compensated and whether that impacted their risk-taking behaviors.

The outrage about executive pay was caused by the large pay-packages of some banking firms which eventually received bailout money from the federal government in the form of TARP money. CNN money has listed 2007 pay-packages of top executives from nine such banks. For example, in 2007 the total compensation for Kenneth Lewis of Bank of America was $24.8 million.

The role of incentives in risk-taking is even greater in the banking industry where the amount of debt is larger when compared with industrial firms. This is highlighted by the following article from Financial Times:

“The problem with this is that bankers are incentivised to seek bigger and riskier bets because volatility increases upside return without affecting downside risk. They are similarly encouraged to increase balance sheet leverage since this further magnifies the pay-off. And this incentive has been greatly reinforced by bonus targets related to return on equity – a classic inducement to short-term risk-taking.” By: John Plender, Financial Times, 25th Oct., 2011.

Critics of incentivized executive pay systems have proposed many ideas to curtail executive incentives in order to control the risk-taking behaviors. Such demands recur after every major economic crisis. For example, New York Times reported on March5, 1934 that Sen. Burton Wheeler complained about “Corporations in the red paying excessive salaries.” Recently, these proposals have been discussed across many countries. For example, in June 2010, U.S. regulatory agencies jointly issued the Final Guidance on Banking Incentive Compensation, designed to ensure that incentive compensation policies do not encourage imprudent risk taking in financial institutions. In last 3-4 years, countries like Canada, Germany and Holland have seen similar proposals. However, one needs to also consider other factors which have led to the growth in executive compensation and risk taking simultaneously. For example, the role of corporate boards which decide on how much to pay in what form to pay?

Corporate scandals of the last two decades or so have pushed board structures towards more independence from the management. The enactment of Sarbanes-Oxley Act (2002) and subsequent adoption of listing requirements by the national stock exchanges have made it mandatory to have a majority of independent directors. A push towards smaller and outsider dominated boards from the proponents of corporate governance reforms have significantly reduced the managerial representation on boards. These changes might have had impacted the quality of managerial evaluation and monitoring effectiveness of boards as outside board members rely on the insider directors for valuable information about a firm and its investments. In the absence of managerial inputs, outside board members could find it difficult to evaluate the quality of managerial decision making and may not design a compensation scheme that balances growth with risk taking.

We really need to understand whether the absence of these executive directors from the board room exacerbated the CEO power and hence the CEO pay-package and excessive risk taking. Without understanding these issues, we might end up adopting yet another defective system of executive incentives which almost certainly could expose us to the risk of another financial crisis.

Dr. Arun Upadhyay teaches finance courses in the College of Business at University of Nevada Reno. His primary teaching area is corporate finance. Before moving to academic world, Dr. Upadhyay worked for several years with a commercial bank in the area of credit analysis and international banking. He received Ph.D. in finance from Temple University. Prior to moving to University of Reno, he worked at University of Alaska Anchorage where he was awarded College of Business and Public Policy Best Teacher award. Dr. Upadhyay also served on the Investment Advisory Commission of Municipality of Anchorage.

Dr. Upadhyay’s research focuses on corporate governance issues. He studies corporate leadership structure and executive compensation. He has published articles on board structure in high quality finance journals such as Financial Management, Journal of Corporate Finance and Journal of Business Finance and Accounting. His work has been presented at various national and international conferences.

Successful Executives Must Master Technology Leadership

“Whosoever desires constant success must change his conduct with the times.”

— Niccolo Machiavelli

 

In 2008, Apple became the top retailer of music in the world.  They passed Wal-Mart, Best Buy and Amazon and they did it without shipping a single CD.  Coinstar, who owns Redbox, is participating in a $7Billion industry and is attempting to unseat Netflix in its distribution model.  Redbox has 28,000 kiosks and has rented 1.7 Billion movies.

What happened to Tower Records and Circuit City and Wal-Mart?

In a board room somewhere, the board of directors at Blockbuster Video failed their shareholders, probably 10 years ago.  The company was committed to a certain way of doing business and didn’t leave any way to evolve easily.  They may have been profitable at the time, but they failed to develop a strategy and marketing plan that would allow them to compete in the age of broadband against Netflix or against distribution convenience at Redbox.  By the time they developed something, it was too late.  They were too slow to change and those that did were more successful.

Apple, a technology company, figured out how to harness technology to sell music on devices that they developed.  iPod’s are extremely well designed and easy to use.  By developing the music distribution model to go with the device, the were successful in selling both.   By increasing the number of iPod users they were able to increase the amount of music available.  Their strategy created a network externality that allowed Apple to benefit exponentially as they sold more devices and made their music compatible on other devices.  (and others made their devices compatible to Apple’s format).  Microsoft tried a similar strategy, but folks didn’t like the device enough to generate the same market share.  Somewhere in a board room Sony must be kicking themselves.  When I was a teenager, the Walkman was everything.  Sony had the technological know-how, they had the content, but failed to deliver a device.  They were outdone by a computer company which is now a consumer product company.

It’s not just about strategy, marketing and finance, good leaders have to see the future and not be afraid to act.  I was fortunate enough to see Scott Klososky speak this year and he talked about this.  (visit his blog here:  http://www.klososky.com/ts_blog/)  He offered that a leader that doesn’t understand technology and trends is only 60% of a leader.  Companies can no longer afford to ignore this or risk failure.  He mentioned Apple and Blockbuster and these concepts resonated with me.

I teach Marketing and Economics but this only offers a part of the picture students and business leaders need.  You need good strategy, good marketing plans and you need to understand your markets.  Most importantly you need to understand where the market is going.  Trends become magnified and more important.  It creates a lot more risk and uncertainty.  Redbox could have easily failed as could Apple, but by not acting, you could end up like Blockbuster.

Jim McClenahan is the Director of Management and Executive Programs for Extended Studies at the University of Nevada, Reno, responsible for more than 150 professional development courses annually as well as several major conferences. He serves as the Treasurer to the Northern Nevada Chamber of Commerce, chair of the Schools to Careers committee for Washoe County and on the advisory board for St. Albert the Great Catholic Church. He completed his MBA at the University of Nevada, Reno in 2006.

Seven Personal Qualities That Help And One That Hinders Influence

Want to get ahead in your career? I hope so! If you do, you need to realize that success requires more than superior job performance – it also requires the ability to influence others. Part of becoming more influence requires understanding the most important qualities that make people influential, objectively assessing your strengths and weaknesses with respect to those qualities, and believing that you can change and continually improve.

In his evidence-based management book entitled “Power: Why some people have it and others don’t,” Jeffery Pfeffer identifies seven personal qualities that can help you build power:

The two fundamental dimensions that distinguish people who rise to great heights and accomplish amazing things are will, the drive to take on big challenges, and skill, the capabilities required to turn ambition into accomplishment. The three personal qualities embodied in will are ambition, energy, and focus. The four skills useful in acquiring power are self-knowledge and a reflective mindset, confidence and the ability to project self-assurance, the ability to read others and empathize with their point of view, and a capacity to tolerate conflict. (p. 43).

Intelligence is probably the single best predictor of job performance, but Pfeffer believes it is overrated as a quality for building personal power. While studies have shown a statistically significant correlation between intelligence and income, the effect size is very small.

Intelligence might even hinder your ability to influence others. People that think they are really smart can be seen by others as arrogant and aloof. People with an inflated view of their intelligence think they can do things better than everyone else, so they often don’t bother including others as they make decisions and develop strategies. Intelligence can also be intimidating, and “although intimidation can work for a while, it is not a strategy that brings much enduring loyalty.” (p. 56)

Obtaining influence is a worthy goal if you intend to use your power to help those you’ve been given the privilege to lead accomplish a shared purpose. If you understand what it takes to become more influential, and you are willing to put forth the effort and persevere and learn from setbacks, then you have a power reason to be hopeful for the future of your career.

What do you think? Please share your thoughts in the comment section below!

Related Posts:

Grit

The Wholesome Use Of Power

If I Abuse Power, I Can Learn From Others And Change My Behavior

Success Takes More Than Performance

We have an amazing group of students in our Executive MBA program at UNR. They all have a strong desire to advance their careers by becoming better leaders in their organizations.

Is superior job performance enough to succeed and advance in your organization? The truth is performance alone is probably not enough. Even if you perform well, it’s going to be tough for you to get ahead if your supervisor does not like you; however, if you perform with distinction, you are more likely to strengthen your supervisor’s relationship with and commitment to you. Keep in mind that if your supervisor does not like you, it will have a negative impact on how she or he perceives and evaluates your performance in the first place.

In his brilliant evidence-based management book entitled “Power: Why some people have it and others don’t,” Jeffrey Pfeffer argues that you are going to need to acquire power to get ahead at work, and “one of the biggest mistakes people make is thinking that good performance – job accomplishments – is sufficient to acquire power” (p. 22). According to Pfeffer:

The people responsible for your success are those above you, with the power to either promote you or to block your rise up the organization chart. And there are always people above you, regardless of your position. Therefore, your job is to ensure that those influential others have a strong desire to make you successful. That may entail doing a good job. But it may also entail ensuring that those in power notice the good work that you do, remember you, and think well of you because you make them feel good about themselves. It is performance, coupled with political skill that will help you rise through the ranks. Performance by itself is seldom sufficient, and in some instances, may not even be necessary. (p. 35).

If you want to succeed, you are going to have to develop your understanding of the principles of power and be willing to use them with political prowess. Performance matters, but if you aspire to be an effective executive, you are going to need more than performance.

What do you think? Please share your thoughts in the comment section below!

Related Posts:

Don’t Make Your Work Look Too Easy

Book Review: Power By Jeffrey Pfeffer

Management Is An Authority Relationship

 

Eight Activities For Self-Development Of Leadership Skills

Leadership development requires a combination of formal training (e.g. obtaining an Executive MBA), developmental activities within your organization (e.g. coaching, job rotation, and performance evaluation), and self-development activities. In his book entitled “Leadership In Organizations,” Gary Yukl identifies the following eight suggestions for how we can develop ourselves as leaders (p. 482):

  1. Develop a personal vision of career objectives
  2. Seek appropriate mentors
  3. Seek challenging assignments
  4. Improve self-monitoring
  5. Seek relevant feedback
  6. Learn from mistakes
  7. Learn to view events from multiple perspectives
  8. Be skeptical of easy answers

Leadership requires the ability to form influential relationships with others in order to consistently achieve changes that matter to the shared purpose of the organization (not just yourself). Lots of folks have the formal training and are exposed to great developmental activities, but never make the transition to becoming truly effective leaders. The discipline of self-development is what distinguishes truly great leaders from the rest.

Bob Sutton and Jeff Pfeffer argue that the gap between knowing and doing is more important than the gap between ignorance and knowledge. Without a system of self-development you can’t effectively translate what you know about leadership into habitual behaviors that help others accomplish purposeful change. Self-development is a personal responsibility that will help you master and leverage the knowledge and skills you acquire in a formal training program like the Executive MBA from UNR.

What do you think? Please share your thoughts in the comment section below!

Bret L. Simmons, Ph.D.

Bret Simmons is associate professor of management in the College of Business where he teaches courses in organizational behavior, leadership, and personal branding to both undergraduate and MBA students.

Simmons earned a master’s degree in international management from Whitworth College in Spokane, Washington, and a Ph.D. in business administration/management from Oklahoma State University, Stillwater. Simmons blogs about leadership, followership, and social business and teaches organizational behavior, management and organization science, international management and entrepreneurial psychology at the University.

 

Related Posts:

Ten Most Important Leadership Functions

The Leader’s Power To Reward

The Leader’s Power To Discipline

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