The Individual and Business
Chuck Prince, CEO of Citigroup, talked to students on August 22 about ethics, integrity, leadership and corporate governance of a global organization. He spoke candidly about the challenges Citigroup faced last year when regulators ordered the closure of its private banking operations in Japan and investigated issues related to a London debt trade. These issues, which to Prince epitomize the dangers of short-term thinking, not only hurt Citigroup’s reputation and stock price, but also hindered its growth prospects around the world.
“These were short-term activities,” Prince said. “They were not long-term, franchise-building activities; they were not we’ve-been-in-business-almost-200-years, I-want-my-kids-to-come-and-work-here-and-take-over-my-customer-book-when-I-retire kinds of activities. They were not those. And, yet, those are exactly the kinds of activities we need, long-term, to continue to grow the franchise.”
After consulting CEOs of companies with strong cultures, including Johnson & Johnson, Dell and IBM, about how they manage culture in large organizations as well as speaking to Citigroup employees about what it means to work at Citigroup, Prince and his management team created a new five-point program for all of Citigroup’s 300,000 employees worldwide. The key, he believes, is shifting from a rules-based approach that puts forth explicit guidelines to a principles-based approach that encourages employees to make good decisions in areas that may or may not be covered by the rules. By laying this foundation of principles, Prince believes future growth prospects are better than ever.
“Your reputation is the most important thing you have,” Prince said. “It takes a long time to build, but not long to lose.”
Business and Society
On August 23, Geoffrey M. Heal, the Paul Garrett Professor of Public Policy and Business Responsibility, moderated a discussion among Alan Hassenfeld, chairman of Hasbro, Inc., James McDonald, president and CEO of Rockefeller & Co., Inc., and Lord Ronald Oxburgh, chairman of Shell Transport and Trading Company, P.L.C., on the relationship between business and society. The discussion highlighted how companies integrate social and environmental concerns in their business operations and interaction with stakeholders.
“Corporate social responsibility is about managing conflicts between business and society,” Heal said. “In an ideal world, there would be no conflict.”
In reality, conflicts can exist. The panelists agreed, though, that CSR’s ability to minimize conflicts brings the ideal much closer. Whatever the costs of CSR, the costs of conflicts increasingly make the right thing to do also the most profitable thing to do.
“Social responsibility is an essential part of any business,” Oxburgh said. “The costs are invariably less than the costs of not being socially responsible.”
An important element of a company”s success is its perception by the public. Shell”s mismanagement of public perception of its controversial decision to sink an oil rig in the North Sea damaged the company’s reputation. The company has spent the past decade trying to rebuild trust and better communicate its CSR policies. GE, which notoriously polluted the Hudson River and spent millions to avoid cleaning it up, now runs a green project called “Ecomagination.”
“Problems are like ice cream cones,” Hassenfeld said. “If you do not lick them right away, they become a big, sticky mess.”
“If you want to be part of the 21 st century,” Hassenfeld added, “you better be socially responsible.” McDonald agreed, “Your generation has no choice but to run quite transparent and responsible companies.”