Transformational Leaders: Genuine actions to conduct business

Transformational Leaders: Genuine actions to conduct business

 Visionary leadership can inspire and empower employees and help move your company in the direction you wish to take it. It can restore confidence in the midst of economic turmoil.  It can ignite the creativity and dedication of your employees to commit to your company’s principles and goals. Leadership can extend beyond CEO charisma to move towards a leadership style that is committed to words they preach.

As companies across the globe are starting to integrate social and environmental initiatives into their daily practices, some businesses have upheld these standards since their inception.  Businesses with socially conscious roots prove how leadership commitment can positively brand corporate culture.

 

Conscious from the Start

In 1978, Jerry Greenfield and Ben Cohen founded Ben and Jerry’s with the belief in ‘linked prosperity’, where benefits of the company’s success would not only go to shareholders, but to employees and the community as well.  Their mission was to meet their product, economic, and social objectives by, “seeking new and creative ways of addressing all three parts, while holding deep respect for individuals inside and outside the company, and for the communities of which they are part.” 

Since the company’s conception, Ben and Jerry have understood the reciprocal relationship between corporate profit and the company’s stakeholders.  As founder Jerry Greenfield puts it, “If you open up the mind, the opportunity to address both profits and social conditions are limitless. It’s a process of innovation.”  Aside from the company’s sustainable business practices, innovation is evident in the company’s philanthropic approach. The employee-led Ben and Jerry Foundation allows employees to form advisory groups which review proposals and recommend grants to allocate about $1.8 million annually to eligible organizations across the United States.  The foundation’s funding interests are focused on ‘grassroots’ organizations with interests in social justice, environmental protection and sustainable food systems.  In this way, the company is able to address the needs of their stakeholders while engaging their employees to take part in their philanthropic ventures.  

Companies with socially conscious leadership can be found in the Middle East as well, with UAE’s ‘THE One’ proving itself as a worthy example.  In 1996, Thomas Lundgren founded the company ‘with a mission to save the world from IKEA’.  The company’s leadership style is simple; “We believe that leadership is about empathy. It’s about having the ability to relate and connect with people in order to inspire and empower their lives. We call this People Power and practice it throughout the company. We feel that only when our people are empowered can they truly deliver THE Magic.” 

 Employee accolade as part of a CSR strategy is a recurring theme for Lundgren. Upon accepting the award for CSR Leader of the Year Award in 2008, he stated, “At THE One, CSR is not a values issue. It’s a priorities issue."

 

Transitions into Sustainability

In the wake of the company’s economic turmoil in 2008, Starbucks CEO Howard Schultz re-strategized the company’s business structure while putting more emphasis on the company’s CSR.  One evening in February 2008, Schultz ordered the temporary closure of every store of their 7,100 US locations to reinforce the company’s commitment to standards and service known as the ‘Starbucks Experience’.

In times of economic hardship most companies would have pulled back their commitment to CSR.  Rather than cutting costs, Schultz personally guaranteed the company’s commitment to the community and the marketplace where the company operates.  This sent a clear message to employees and consumers that CSR is not just another charitable endeavor, but is embedded in the company’s culture. 

 Schultz issued the following statement expressing the company’s commitment.

 “Now is a time to be bold. Now is a time to invest, truly and authentically, in our people, in our corporate responsibility and in our communities. The argument - and opportunity - for companies to do this has never been more compelling. I share the belief [that business and markets cannot operate in isolation from society or the environment], and it has guided me and my partners over the past three decades, as we have grown Starbucks into the company it is today. Sure, we are the first to admit that Starbucks is by no means perfect. We have made our share of mistakes. But I can tell you unequivocally that as Starbucks confronts today’s economic challenges, it will do so while remaining true to our principles and fostering a culture that genuinely embraces our collective humanity.”

The Starbucks Foundation was founded in 1977 to promote youth literacy and community development.  Since then, Starbucks have developed an integrated CSR policy in response to consumer pressure and the changing marketplace.  Starbucks currently works with 20 organizations in the areas of community, ethical sourcing, and environmental awareness and care.

Starbucks participates in the ‘Partner Match’ program where employee time and money donations are matched by the company.  In 2011, the company’s community service projects generated more than 442,000 hours of service with 1,400 projects completed in April alone for the Global Month of Service.

In 2000 their ‘Fair Trade’ coffee line was introduced, which guarantees the coffee beans are grown without exploiting farmers in poor countries. Today, all espresso roasts sold in UK and Ireland are 100% fair trade. 

 

Transforming Leadership

The term ‘transforming leadership’ was first coined by James MacGregor Burns in 1978 to describe how a corporate leader can enhance the ‘motivation, morale, and performance of followers’ through various mechanisms. These mechanisms include corporate identity, serving as an organizational role model, encouraging innovation among employees, and understanding corporate strengths and weaknesses to increase performance among followers.  Consequent research by Bernard Bass further developed the concept into what is now referred to as ‘transformational leadership’.

The concept can be broken down into four key elements:

 

1. Individualized Consideration – the level of attention given to individual followers by acting as a mentor or coach.  This includes providing support while respecting the contributions followers make towards fulfilling corporate objectives.

 

2. Intellectual Stimulation– the amount of effort a leader exerts in challenging their own assumptions by taking risks and accepting an employee’s ideas. 

 

3. Inspirational Motivation – the ability of a leader to express their vision and inspire their employees.  This provides purpose and meaning to a company’s CSR policy and inspires employees to move accept and contribute to fulfilling these goals.

 

4. Idealized InfluencePerhaps the most important of the elements in the CSR context is the ability of a leader to serve as a role model for ethical behavior while gaining the trust and respect of the employees.

 

In a CSR context, the role of a corporate leader is to develop the strategy for how a company will respond to the social, ecological, and economic impacts that a company poses on the environment where it operates. Leaders are not only expected to develop and guide this strategy, but to also act in an exemplary way for their employees.   According to CSR strategy expert Polly Courtice, this can be accomplished with a combination of knowledge, skills, vision, passion, action, and impact. 

 

Vision and Passion

CSR leaders must possess the vision and passion to make a positive change in the way their business affects their stakeholders.  While personal desire is important, leaders must also encourage their shareholders and employees to share the same goals.  The influence and charisma of a CEO is no longer to deliver this message.  Leaders must lead by example while being consistent in their vision of an effective CSR policy.  

Knowledge and skills

Leaders must understand the global and local context they operate in to implement the appropriate actions to spark positive changes in the short and long terms.  This means understanding the organization’s impact on society and the environment. Possessing vision and passion is a good foundation to take action, but it is not until CSR leaders understand what needs to be done that a sound CSR policy can be developed. 

 

Action and Impact

Once leaders possess the knowledge and skills to develop a sound CSR policy, they must set the wheel of change in motion by making commitments to sustainability principles which are integrated into the company’s corporate principles.  This is accomplished by encouraging innovative change within their organizations by providing adequate resources and support for innovative action. Collaborations and partnerships are a good way to create solutions for the challenges of sustainable business practices.

 

Charisma is Not Enough

Developing a sustainable business policy is a challenge to companies small and large.  Leaders must be willing to learn how this daunting task can be accomplished.  Listening, rather than simply communicating, is a skill any effective leader must possess when learning how to develop their CSR policy.  In doing so, a leader can borrow ideas from a variety of sources to piece together a plan that best suits the CSR needs of his business.

In 2006, a group of researchers set out to explore the role of CEO leadership characteristics in determining the extent which their firms engage in CSR.  Using data from 56 US and Canadian firms, the study looked beyond a CEO’s charisma to identify how the transformational leadership model, which has been defined in terms of how leaders stress self-sacrifice for the long-term good of the larger group or collective, is connected to CSR.  The study found that CEO intellectual stimulation was significantly associated with a company’s engagement in strategic CSR.    In short, where CEO magnetism may be enough for over-all firm performance or socially-oriented CSR (diversity and community initiatives), it takes more than charisma to convince employees to commit to a strategic CSR policy.

The success of any CSR policy depends on the leadership of the organization.  In explaining the vision of the company and serving as a positive example of behavior, leaders can encourage their shareholders and employees to accept changes in corporate behavior by adopting a sustainable business plan; one that helps the business remain profitable while helping their stakeholders in the short and long terms. 

 

SourceResponsible Business Magazine

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All, 2012

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