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Chapter 16Chapter 16Business and Business and

Community Community StakeholdersStakeholders

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Learning OutcomesLearning Outcomes1.1. Identify and discuss two basic ways of business giving.Identify and discuss two basic ways of business giving.2.2. Discuss reasons for community involvement, various types Discuss reasons for community involvement, various types

of community projects, and management of community of community projects, and management of community stakeholders.stakeholders.

3.3. Explain the pros and cons of corporate philanthropy, provide Explain the pros and cons of corporate philanthropy, provide a brief history of corporate philanthropy, and explain why a brief history of corporate philanthropy, and explain why and to whom companies give.and to whom companies give.

4.4. Differentiate between strategic philanthropy, cause-related Differentiate between strategic philanthropy, cause-related marketing, and cause branding.marketing, and cause branding.

5.5. Characterize the nature of offshoring and the movement Characterize the nature of offshoring and the movement toward reshoring.toward reshoring.

6.6. Address steps that a business or plant might take before a Address steps that a business or plant might take before a decision to close is made.decision to close is made.

7.7. Identify strategies that a business or plant might employ Identify strategies that a business or plant might employ after a decision to close has been made.after a decision to close has been made.

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Chapter OutlineChapter Outline

• Community InvolvementCommunity Involvement

• Corporate Philanthropy or Business GivingCorporate Philanthropy or Business Giving

• The Loss of JobsThe Loss of Jobs

• SummarySummary

• Key TermsKey Terms

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Business and Community Stakeholders

• The actions of a business affect a range of communities. Managers must be aware of these impacts, and manage in a way that respects community stakeholders.

• We focus on the immediate locale, but instant communication means that the relevant community includes the region, nation, or the world.

• For business and community stakeholders, there are two major kinds of relationships:• The positive contributions business can make to

the community. • The harm business can cause to community

stakeholders. • We discuss here community involvement and

corporate philanthropy © 2015 Cengage Learning 5

Community Involvement

• Business involvement in the community represents enlightened self-interest, because businesses help themselves in the process of helping others.

Volunteer Programs - such programs reflect the resourcefulness and responsiveness to communities, and are essential for attracting and retaining the best talent in the workforce.

Employees want to work for the “good guys.” Managing Community Involvement – focuses on

the contribution of managerial and employee time and talent.

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Standards of Excellence in Corporate Community Involvement

1. Leadership

2. Issues Management

3. Relationship Building

4. Strategy

5. Accountability

6. Infrastructure

7. Measurement

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Benefits of Employee Volunteerism

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Developing a Community Action Plan

1. Knowing the community.

2. Assess the company’s resources.

3. Select projects to support; match community needs to company resources.

4. Monitor performance of the community actions program and make adjustments.

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Corporate Community Involvement

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Corporate Philanthropyor Business Giving

Philanthropy a desire to help mankind as indicated by acts of charity; love of mankind.

Corporate Philanthropy - Business giving, the motive for which can be difficult to assess.

A Brief History of Corporate Philanthropy –

•Community chest efforts dominated early giving

•Since 1960, giving has grown to address a variety of initiatives

•Now, the watchword is “strategic philanthropy” which benefits both society and the business.

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A Call for Transparency

• Companies need not disclose direct donations to charities, but proposed legislation would require disclosure.• Proponents say the money belongs to the

shareholders, and they should make the decision, not managers giving to their favorite charities, which would not benefit the business

• Some fear that disclosure would result in fewer donations, and would reveal company strategy.

• Non-disclosure has led to a rise in “dark money” political funding to nonprofits from undisclosed sources.

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Giving to the Third Sector: Nonprofits

Business and government – are supported by profits and taxes

The third sector – (churches, museums, hospitals, libraries, colleges, and more) depends on philanthropy.

Why do companies give?•Charitable – (no expected benefit for the business)

•Community - (gifts support business goals)

•Commercial – (giving that benefits the business)© 2015 Cengage Learning 13

To Whom Do Companies Give?

• During any budget year, firms receive numerous requests for contributions from a variety of applicants, and decide which to honor.

Estimates of most business giving -

1. Health and human services

2. Education

3. Civic and community activities

4. Culture and the arts© 2015 Cengage Learning 14

Managing Corporate Philanthropy- 1 of

2

• Two aspects to the pressure on businesses to be more businesslike in their philanthropy:• Base giving on business skills, resources, and

capabilities to enhance philanthropic outcomes.

• Focus on philanthropy that will enhance corporate profitability and also make a difference in the community (a strategic approach).

• Strategic giving is on the rise. © 2015 Cengage Learning 15

Managing Corporate Philanthropy- 2 of

2 • Factor Conditions – the available inputs for

production• Demand Conditions – concerned with the nature

of the company’s customer and the local market• Related and Supporting Industries – can also be

strengthened through strategic giving• Cause-Related Marketing – a direct linking of a

firm’s product or service to a specified charity; each time a consumer buys the product, a donation is given to the charity by the business (is this really philanthropy?)

• Global Philanthropy – depends on the size of the firm’s workforce in international markets

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The Loss of Jobs

• A negative consequence of a firm's actions; has a detrimental impact on the community.

From Offshoring to Reshoring – • Offshoring - The relocation of business

processes to a different country.• Affects blue collar and white collar workers.

• Even skilled high-tech jobs are offshored.

• Reshoring – returning of business processes to their original location; the costs often outweighed the benefits.

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Business and Plant Closings (1 of 2)

• Business and plant closings have detrimental impact in the community.

• What rights and responsibilities does business have in relation to employee and community stakeholders? Consider:

• Before the Decision to Close is Made –• Is this the only option?

• Diversification

• New ownership or employee ownership

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Business and Plant Closings (2 of 2)

• After the Decision to Close is Made –• Community-Impact Analysis

• Transfer, Relocation, and Outplacement Benefits

• Gradual Phase-Outs

• Helping to Attract Replacement Industry

• Survivors: The Forgotten Stakeholders, need-• Emotional support

• Directional support

• Tactical support

• Informational support © 2015 Cengage Learning 19

2-Business and Plant Closings

20

Before Decidingto Close

Diversification

New ownership

New owner

Employee ownership

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3-Business and Plant Closings (continued)

21

After Decidingto Close

Conduct a community impact analysis

Provide advance notice to employees/community

Provide transfer, relocation, andoutplacement benefits

Phase out the business gradually

Help attract replacement industry

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?Community Impact Analysis

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WARN? Advance Notice

Worker Adjustment and Retraining Notification Act (WARN)•Requires firms with 100 or more workers to provide 60 days advance notice before shutting down or conducting layoffs.•The recent global economic crisis has prompted some states to strengthen WARN protections.•WARN often falls short of its goals of protecting workers.

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? Communicating With Employees Who are Being Laid Off

Be completeBe consistentInform affected employees firstInform retained employees

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?Survivors– The Forgotten Stakeholders

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• cause branding• cause-related

marketing• community action

program• community

involvement• community

partnerships• employee owned

• offshoring• outsourcing• philanthropy• reshoring• strategic

philanthropy• third sector• Worker Adjustment

and Retraining Notification Act (WARN)

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Key Terms Key Terms