BE IT LEE SCOTT, RICHARD PARSONS, AKIO TOYODA OR HOWARD SCHULTZ, CEOS OF THE WORLD TODAY CAN ONLY IGNORE STAKE HOLDER ACTIVISM AT THEIR OWN PERIL
With the rise of blogs, such negative backlash can assume alarming proportions. A research conducted by University of Georgia, which studied three anti-brand websites for in-depth analysis: anti-Wal-Mart, anti-McDonald’s and anti-Starbucks, concluded that such blog activism activity actually hurts the company reputation as the word spreads faster than one can imagine. To tackle this form of activism, companies are launching their own communication platforms. According to industry reports, 15.8% (89) of Fortune 500 companies are blogging. Another case in point when discussing consumer activism is Toyota’s recent product recall, which fortunately hasn’t done much damage due to the company’s past reputation. In US, Toyota is facing 200 legal cases due to recalls related to faulty engineering. Contrast this with the fact that there are zero lawsuits against Toyota in Japan. Interestingly, Japan’s most famous consumer activist Fumio Matsuda is frustrated because there has been no consumer outburst pertaining to the recall in Japan. He says that the revolutionary activism he had ignited in Japan decades ago has lost momentum. According to Matsuda’s blog, “The Japanese these days are defending Toyota as though it is getting bashed unfairly.”
Employee Unrest becomes Activism
In today’s times of uncertain business fortunes, it is often natural for employees to feel that they are getting the shorter end of the stick. This is increasingly evident in China, where activism is actually getting well organised and hence dangerous for the establishment with associations being formed and legal advice also being sought. The younger lot of migrant workers there are far more aware of the happenings around the world and about what their rights should be, a trend with workers across the globe. Among the complaints of workers is the misuse of the ruling on the minimum wage by the government of 1100 yuan. Often, that’s all that owners provide them. Wages are not the only bone of contention in such cases. In a bizarre twist of events, 800 workers at the Carlsberg brewery went on a five day strike on April 8, 2010. The reason was a new company policy that put a ban on the drinking of beer during work hours. Earlier the workers were entitled to three free beers a day, which was brought down to just one during the lunch break. The strike caused the brewery to halt operations and delay domestic shipments for two days. This policy change by Carlsberg was a healthy and positive step but it faced huge agitations from workers. The strike at BA in 2009 was more about retrenchment policies. BA decided to reduce its staff strength by about 5,000 by March 2010, introduce changes to staff contracts and carry out a 2-year pay freeze plan. This led to huge disagreements between the workers union and the airline management, which led to cancellation of BA flights between December 22, 2009 and January 2, 2010. The 12 day planned strike by the cabin crew cost BA $5.6 billion, not to forget the loss on the reputation front. It is indeed risky to ignore employees in today’s time.
Green Activism
Exxon’s Valdez oil spill in March 1989 was one of the biggest man made environmental disasters before the current BP oil rig leak (refer to the special coverage on BP in this issue). It occurred when an oil tanker on its way to Long Beach California hit Bligh Reef and “Eleven million gallons of oil spilled into Alaska’s Prince William Sound; killing hundreds of seals, thousands of otters and hundreds of thousands of seabirds. Alaska’s marine life is still eating oil from the spill two decades later,” says John Hocevar, Oceans Campaign Director, Greenpeace USA. After the event occurred, all the blame was put on Exxon for the horrible disaster and Exxon was held responsible for loss of livelihood (fishermen) and wild life in the Alaskan region, “When the spill occurred, Exxon lied, covered up as much information as possible, and also enlisted an army of lawyers to fight the claims of fishermen and other injured parties. Of the plaintiffs in the litigation, over 6,000 died in the 20 years it took to settle the claims, ” says Dan Strickland, Bristol Bay Fisheries Liaison for Alaska Marine Conservation Council. And as the BP case shows, an environmental disaster can be even more damning in today’s time and age.
Relevance of the green word today hardly needs a mention. It may not even need a disaster at times. Wal-Mart is an acknowledged ‘enemy’ of the environment by green groups. Part of the problem is its size itself, which automatically means a huge carbon footprint attributable to one irresistible target company. Its logistics in US alone involves a mammoth number of 7,000 tractors and 50,000 trailers. The company was slapped with fines for environment damage across 9 states in 2004 and has come under fire for alleged water pollution, greenhouse emissions, et al. It responded by unleashing a campaign in 2005 under the then CEO Lee Scott, which also laid out a target to reduce greenhouse emissions in its operations by 20% in seven years and improve fleet efficiency by 25% in three years. Now Wal-Mart makes it a point to highlight its green initiatives. While the scepticism persists, the lesson cannot be missed. If you are taking actions on the environment front, ensure that the world knows. Genuine intent is important; a strong communication campaign all the more.
With the rise of blogs, such negative backlash can assume alarming proportions. A research conducted by University of Georgia, which studied three anti-brand websites for in-depth analysis: anti-Wal-Mart, anti-McDonald’s and anti-Starbucks, concluded that such blog activism activity actually hurts the company reputation as the word spreads faster than one can imagine. To tackle this form of activism, companies are launching their own communication platforms. According to industry reports, 15.8% (89) of Fortune 500 companies are blogging. Another case in point when discussing consumer activism is Toyota’s recent product recall, which fortunately hasn’t done much damage due to the company’s past reputation. In US, Toyota is facing 200 legal cases due to recalls related to faulty engineering. Contrast this with the fact that there are zero lawsuits against Toyota in Japan. Interestingly, Japan’s most famous consumer activist Fumio Matsuda is frustrated because there has been no consumer outburst pertaining to the recall in Japan. He says that the revolutionary activism he had ignited in Japan decades ago has lost momentum. According to Matsuda’s blog, “The Japanese these days are defending Toyota as though it is getting bashed unfairly.”
Employee Unrest becomes Activism
In today’s times of uncertain business fortunes, it is often natural for employees to feel that they are getting the shorter end of the stick. This is increasingly evident in China, where activism is actually getting well organised and hence dangerous for the establishment with associations being formed and legal advice also being sought. The younger lot of migrant workers there are far more aware of the happenings around the world and about what their rights should be, a trend with workers across the globe. Among the complaints of workers is the misuse of the ruling on the minimum wage by the government of 1100 yuan. Often, that’s all that owners provide them. Wages are not the only bone of contention in such cases. In a bizarre twist of events, 800 workers at the Carlsberg brewery went on a five day strike on April 8, 2010. The reason was a new company policy that put a ban on the drinking of beer during work hours. Earlier the workers were entitled to three free beers a day, which was brought down to just one during the lunch break. The strike caused the brewery to halt operations and delay domestic shipments for two days. This policy change by Carlsberg was a healthy and positive step but it faced huge agitations from workers. The strike at BA in 2009 was more about retrenchment policies. BA decided to reduce its staff strength by about 5,000 by March 2010, introduce changes to staff contracts and carry out a 2-year pay freeze plan. This led to huge disagreements between the workers union and the airline management, which led to cancellation of BA flights between December 22, 2009 and January 2, 2010. The 12 day planned strike by the cabin crew cost BA $5.6 billion, not to forget the loss on the reputation front. It is indeed risky to ignore employees in today’s time.
Green Activism
Exxon’s Valdez oil spill in March 1989 was one of the biggest man made environmental disasters before the current BP oil rig leak (refer to the special coverage on BP in this issue). It occurred when an oil tanker on its way to Long Beach California hit Bligh Reef and “Eleven million gallons of oil spilled into Alaska’s Prince William Sound; killing hundreds of seals, thousands of otters and hundreds of thousands of seabirds. Alaska’s marine life is still eating oil from the spill two decades later,” says John Hocevar, Oceans Campaign Director, Greenpeace USA. After the event occurred, all the blame was put on Exxon for the horrible disaster and Exxon was held responsible for loss of livelihood (fishermen) and wild life in the Alaskan region, “When the spill occurred, Exxon lied, covered up as much information as possible, and also enlisted an army of lawyers to fight the claims of fishermen and other injured parties. Of the plaintiffs in the litigation, over 6,000 died in the 20 years it took to settle the claims, ” says Dan Strickland, Bristol Bay Fisheries Liaison for Alaska Marine Conservation Council. And as the BP case shows, an environmental disaster can be even more damning in today’s time and age.
Relevance of the green word today hardly needs a mention. It may not even need a disaster at times. Wal-Mart is an acknowledged ‘enemy’ of the environment by green groups. Part of the problem is its size itself, which automatically means a huge carbon footprint attributable to one irresistible target company. Its logistics in US alone involves a mammoth number of 7,000 tractors and 50,000 trailers. The company was slapped with fines for environment damage across 9 states in 2004 and has come under fire for alleged water pollution, greenhouse emissions, et al. It responded by unleashing a campaign in 2005 under the then CEO Lee Scott, which also laid out a target to reduce greenhouse emissions in its operations by 20% in seven years and improve fleet efficiency by 25% in three years. Now Wal-Mart makes it a point to highlight its green initiatives. While the scepticism persists, the lesson cannot be missed. If you are taking actions on the environment front, ensure that the world knows. Genuine intent is important; a strong communication campaign all the more.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
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IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
