Principle 9: Corporate Citizenship (Item 1)

The organization's action to ensure a clean, safe, fair and prosperous society enhances the perception of its value to the community.

Why this is important

You must always operate using standards of ethics that are acceptable by the community. To a large extent, this is the long view of sustainability. It is also about your right to operate. In that, if companies (and the people in them) do not work to what are thought of as `good rules', their license to operate is revoked.

Principle 9 is significantly correlated with KPI improvement and with overall Business Excellence Score. However, it has the lowest correlation with both.

This low correlation does not give a true indication of its importance. We believe it is a binary operator. A minimum condition. If you keep your license to operate, you do have a chance to be successful. If your license is withdrawn, there is no chance.

On all the ten Principles, Principle 9 is the one most often disregarded. However, there is growing evidence that disregarding the needs of the community will no longer be tolerated in the twenty-first century. More and more companies are feeling the wrath of the community through the courts and regulation.

Principle 9 has five parts

This is not about doing things to feel good or for altruistic reasons. This is good hard business.

• The community withdraws the `license to operate' from companies that pollute or have unacceptable standards of ethics. Or, the community imposes regulations to enforce companies to work to acceptable standards of practice. Companies should discontinue unacceptable practices and adopt acceptable practices
• Seek competitive advantage by adopting `community friendly' practices, practices that are perceived to `add value' to the community in general
• Work to reduce the waste and pollution your company produces in order to keep the community clean
• Work to reduce the unintended consequences (side effects) to the community of your actions and policies. Keep the community safe, or do no harm — intentionally or unintentionally
• Share your knowledge with others to help them prosper on their journey to adopt the Business Excellence Principles. At a very minimum this should be with your stakeholders: owners, suppliers, customers, employees and community

Right to operate

In Principle 1 (`Role Models'), we saw that employees will not follow untrustworthy `leaders'. In Principle 3 (`Customers'), we saw that the market punishes companies that do not perform according to expectation. In Principle 7 (`Enthusiastic People'), we saw that employees withdraws their enthusiasm and resourcefulness from companies are not working towards a `just cause'.

The community does not tolerate it either. We have repeatedly seen the community, in one way or another, withdraw a company's (or its executive's or director's) right to continue to operate. This happens when the community perceives that the company (or its executives or directors) have broken Principle 9 by behaving in a way that endangers the community's prosperity, health, safety or cleanliness.

There still appear to be many exceptions – ie companies that have dispensed with Principle 9 and remained successful in the long term. In the past, many companies have for a long time avoided punishment for flouting Principle 9. However, we believe the days when the community will tolerate such behavior– profit by few at the expense of most – is now long past.

The tobacco industry is an excellent example. In the tobacco industry, prosperity of a few companies and their shareholders has, for generations, caused strategies and actions that knowingly and callously endangered and took the lives of hundreds of thousands in the community. We are now seeing the inevitable community backlash.

`Withdrawing the right to operate' can take the form of fines, jail, regulations, lawsuits and litigation.

Much of the current community attention grew out the excesses of the 1980s, when the words `business ethics' began to appear in the media. The world community grew to understand that it had been raped in the name of expedient profit and began to demand it be stopped.

Twenty years ago, this was not an important Principle. It is now.

No company or person is beyond scrutiny. Over the last twenty years, you have all seen politicians, presidents, CEOs, company directors, public officials, executives, all come under intense scrutiny. And are frequently kicked out of office. Frequently fined. And sometime sent to jail.

At the boundary

There is considerable potential for short time gain at the boundary between legal and illegal; between ethical and unethical. As a result, many people and companies are drawn there.

Twenty years ago, the boundary was not well patrolled. There appeared to be an attitude that companies would do nothing to harm us. And a helplessness when they did. No more!

The boundary area can be very tricky. It is not stable or fixed. The community's concept of what is and is not ethical will vary, from community to community and over time.

People have an innate concept of right and wrong. It is not defined by laws. It depends on our values. In the past, our parents and close community shaped it. It now comes from our peers, the media, our company's values. It changes as concepts of right and wrong are questioned, proved impractical, unfair or unlawful. The `political correctness' movement made rapid changes to the boundary for a number of issues. The position of the boundary is now changing at an unprecedented rate. One hundred years ago the boundary was not changing much. In the last part of the twentieth century, it galloped along.

Be aware and keep up. Be aware that much of what you were brought up believing is no longer true. Be aware that much of what you thought to be ethical is no longer considered ethical. Be aware that when you operate in another country or another culture, right and wrong will not be the same you grew up with or your own community.

The media patrols the boundary

The media is now constantly patrolling the boundary. Investigative journalism and nightly `current affairs' programs with time slots to fill and a public demand for scandal and outrage, all mean that journalists will be constantly picking at the boundary looking for the next outrage. Looking for the next official to haul before the lens of scrutiny. The greater the outrage that can be whipped up, the better the story. Especially, if there are repeat performances.

Disgraceful — or a fact of life?

It does highlight responsibilities for two groups. First, the company must behave ethically so it does not to attract the attention of watchdogs in the media. This is a corollary of Principle 9.

This also shows the huge responsibility now carried by the media.

The table below shows two types of error: failure to find unethical behavior when is happening; and accusing a company or person of behaving unethically when they are not. The first can lead to long term damage of the community. The second can be devastating to the person of company involved and is not well thought of by the courts. An example where the media itself crosses the boundary.