CASE STUDY – 12

BEN & JERRY’S SUPER AUDIT CRUNCH

Submitted to,

Professor Abhilash G N

On

August 16, 2014

In partial fulfillment of the requirements of the course

Principles of Management

By

Nivin Vinoi

P14199

PGDM-B

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Table of Contents

Executive Summary…………………………………………………..3

Situational Analysis…………………………………………………...4

Problem Statement……………………………………………………4

Action Plan…………………………………………………………....4

Implementation………………………………………………………5

Conclusion…………………………………………………………....6

Exhibit 1……………………………………………………………....6

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EXECUTIVE SUMMARY

This case is all about Ben & Jerry’s, an ice cream maker which started to publish unedited version of annual reports based on finance and social performance of the organization rather than following the usual path and due to the transparency and accountability in the report how they got credibility from all stockholders.

(Word count: 53)

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SITUATION ANALYSIS

Usually organizations annual report tend to focus on only one aspect, i.e. organizations financial growth. The top officials only show organization’s best side to stockholders as the actual status of the company. Failures, financial or otherwise, are often sugar-coated or ignored altogether. But Ben & Jerry’s Homemade, Inc., (Exhibit 1) a super-premium ice cream maker challenged the usual norms and created a path of its own. They published two types of bottom lines in its annual report: one financial, the other social. Their report was prepared by an outside auditor and the findings of the audit, positive or negative, are then published, unedited. Due to this brutal honesty they have to come across lot of criticism.

PROBLEM STATEMENT

Is it good to publish unedited annual report?

ACTION PLAN

Unedited report shows the transparency and honesty of the organization.By adding social report, they shown they are socially responsible too.Stockholders get a full view about the organization that how well they are doing in terms of managing the human capital side of business or whether they are building a healthy company.

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The Ben & Jerry’s social audit rates the company in areas such as employee benefits, plant safety, ecology, community involvement, and customer service.

IMPLEMENTATION

Ben & Jerry’s, management believes that a company should be evaluated not only on its financial performance but on its social performance as well. “To be profitable for its shareholders and to be socially responsible, inside and outside the organization” is an assertion boldly made in the company’s mission statement. This increased stockholders trust on the organization. Due to this honesty, during an annual audit they were openly criticized regarding their plant safety after a serious of accidents were reported and about the vacant positions at the top of the company as they have a fixed salary ratio of 7:1, which prevented the highest-paid employees from making more than 7 times the salary of the lowest-paid employee. Even Ben & Jerry’s charitable efforts like ‘Save the Family Farm’ have been attacked in the social audits. But they never changed their stand. Regarding the accidents if the report has not been published and somehow the external world comes to know about this, then the image of the company would have been tarnished badly than when they themselves had the guts to report the problem in their own annual report. They never changed their stand regarding employees’ salary ratio since company wanted employees who are interested in working for them rather than working for salary. Actually this critics alerted the stakeholders about problems like plant safety that need to be corrected immediately so that

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employees can work in a safe environment and number of days lost as a result of these accidents can be reduced.

CONCLUSION

From the analysis of this case, we can conclude that in spite of certain negative points this unedited annual report has lot of positives which can overcome all its drawbacks. Instead of publishing sugar-coated reports they give priority for accountability in this business context. This increased faith in stakeholders. But it will be a different game when Ben & Jerry have a bad year, if sales were down or they have to significantly reduce their workforce.

(Word count: 527)

Exhibit 1

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