© 2015 Cengage Learning1

Chapter 16 Business and Community Stakeholders © 2015 Cengage Learning2

Learning Outcomes 1.Identify and discuss two basic ways of business giving. 2.Discuss reasons for community involvement, various types of community projects, and management of community stakeholders. 3.Explain the pros and cons of corporate philanthropy, provide a brief history of corporate philanthropy, and explain why and to whom companies give. 4.Differentiate between strategic philanthropy, cause-related marketing, and cause branding. 5.Characterize the nature of offshoring and the movement toward reshoring. 6.Address steps that a business or plant might take before a decision to close is made. 7.Identify strategies that a business or plant might employ after a decision to close has been made. © 2015 Cengage Learning 3

Chapter Outline Community Involvement Community Involvement Corporate Philanthropy or Business Giving Corporate Philanthropy or Business Giving The Loss of Jobs The Loss of Jobs Summary Summary Key Terms Key Terms © 2015 Cengage Learning 4

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 Learning5

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. © 2015 Cengage Learning6

Standards of Excellence in Corporate Community Involvement 1.Leadership 2.Issues Management 3.Relationship Building 4.Strategy 5.Accountability 6.Infrastructure 7.Measurement © 2015 Cengage Learning7

Benefits of Employee Volunteerism © 2015 Cengage Learning8

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. © 2015 Cengage Learning9

Corporate Community Involvement 10© 2015 Cengage Learning

Corporate Philanthropy or 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. © 2015 Cengage Learning11

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. © 2015 Cengage Learning12

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 Learning13

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 Learning14

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 Learning15

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 © 2015 Cengage Learning16

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. © 2015 Cengage Learning17

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 © 2015 Cengage Learning18

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 Learning19

2-Business and Plant Closings 20 Before Deciding to Close Diversification New ownership New owner Employee ownership © 2015 Cengage Learning

3-Business and Plant Closings (continued) 21 After Deciding to Close Conduct a community impact analysis Provide advance notice to employees/ community Provide advance notice to employees/ community Provide transfer, relocation, and outplacement benefits Phase out the business gradually Help attract replacement industry © 2015 Cengage Learning

?Community Impact Analysis 22© 2015 Cengage Learning

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. © 2015 Cengage Learning23

? Communicating With Employees Who are Being Laid Off Be complete Be consistent Inform affected employees first Inform retained employees © 2015 Cengage Learning24

?Survivors– The Forgotten Stakeholders 25© 2015 Cengage Learning

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) © 2015 Cengage Learning 26 Key Terms