Big Business Encouraged to Take Lead on Addressing Social Inequalities
Monday, 5th March 2018 at 1:46 pm
Influential non-executive director Sam Mostyn believes there are “huge opportunities” for big business to take the lead on addressing social inequalities, as the governance standards of these organisations come under increasing scrutiny.
Mostyn – a non-executive director at Mirvac, Transurban and the Sydney Swans – was one of the key speakers at The Australian Governance Summit last Thursday.
She took part in a panel discussion on the evolving role and responsibility of business with Productivity Commissioner Robert Fitzgerald AM and KPMG chair Alison Kitchen.
Mostyn spoke about how diversity was integral to the future good governance of the corporate sector, but that this could not be achieved without re-defining notions of merit in the workplace.
“If merit had been appropriately applied across our life time, we wouldn’t have the problem that we have. So clearly the definition of merit has been seen through the prism of bias,” Mostyn said.
“So we have not worked hard enough to remove the processes of bias that stop us from truly understanding a person of merit. To get to that point you need more people of diversity around that conversation to pick [those people], which means you have to use quotas to get there.
“And I’ve been that quota appointment enough times to know that it’s a thing to grab and something that breaks the back of the lack of people around those decisions to make the right choices into the future.”
#GovSummit18 @sammostyn referring to #CrackingGlassCulturalCeiling @DivCouncilAus – lack of #culturaldiversity on boards is a chronic missed opportunity esp for #Asians in our region @AICDirectors @LisaAnnese pic.twitter.com/ye1jmC6n1O
— Ming Long (@MingYLong) February 28, 2018
When moderator Leigh Sales asked the panel whether the public cared about a business’ social responsibility, Fitzgerald said that some people might not but “many people will”.
“And they will judge the company [not only] in regards to the goods and services they provide… [but] they will also expect that the company is now part of being a good global citizen, to use that expression, or honouring social licences,” Fitzgerald said.
But he warned that these social pursuits must “align with the nature of the business itself”.
“Let me be very clear, anybody who proposes measures that would decrease the profitability of organisations in the long term, or reduce the ability to grow value in the company long term, would fail. No business should agree to that proposition,” he said.
“But for example with same-sex marriage, a company has no interest in same-sex [issues] per se, however the same-sex marriage campaign from a business point of view was about discrimination.
“And every company in Australia should be concerned with discrimination and if their customers or employees are being discriminated against. What business in Australia wouldn’t want to be in a campaign against discrimination?”
Kitchen reflected on a recent sexual harassment scandal afflicting KPMG and said businesses needed to rebuild trust by openly apologising when things go wrong.
“For me, you have to work out why you lost trust and own up to it and then prepare to do something about it,” Kitchen said.
“The first thing you have to do is apologise and be very clear that you’re genuine and waning to fix it.”
Mostyn told Pro Bono News that it wasn’t just the younger generation demanding that businesses were more accountable to the public.
“It’s a multifaceted series of things. A younger generation brings a different perspective on the world, but actually it’s the scale of challenges that we face, together with the rise of this distrust, that’s come at a time when we have changing demographics and the rise of technology,” she said.
“All this has come together to put huge pressure on the governance structures and the people that sit there.
“So we’re reached a moment where the accountability of people who do govern these organisations is under intense scrutiny and that then changes our behaviours and focus.”
Via @leighsales, @victorperton @OptimistsVoices asked what makes the @AICDirectors #GovSummit18 panellists #optimistic? Very #optimistic evocative answers from Robert Fitzgerald and @sammostyn!#optimism pic.twitter.com/Ks3MSkSS61
— The Case for Optimism: The Optimists' Voices (@Case4Optimism) February 28, 2018
But Mostyn believes this evolving role offers “huge opportunities” for businesses to capitalise on.
“On the flipside of all these risks are huge opportunities. As we face these big challenges, if you have the right people around you on these board tables and are getting the right insight from your customers, then huge markets open up,” she said.
“And there’s huge opportunities to work with employees to feel more and more committed and loyal to organisations. So building of trust and dealing with complex issues can end up meaning you take advantage of what the future holds as opposed to always managing risk.”
She said the decline in government trust meant governments were not as able to play a role in addressing social issues as they were in the past, paving the way for business to lead the way.
“I think people turn to big businesses because they see they have some sort of relationship into our communities, they have insights, they have capacity and increasingly a voice on the table to often raise the issues that governments are finding tough,” Mostyn said.
“It’s good business, and businesses that are engaged with different stakeholders and picking up trends and ideas can step into a space that governments have found very difficult in modern times.”
Mostyn also noted that social responsibility would have strong benefits for the business as well.
“You ensure that your workforce is proud of the place they work for, so it goes to the attraction and retention of the best people. You’re able to have a better conversation with customers and grow markets, and you’re able to step into a space that elevates the trust of the organisation to then enter new territories and new opportunities,” she said.
“That might mean all new markets, and new products and services. But it’s taking that first step of actually standing for something for employees, for suppliers, and the ecosystem of the organisation.”
But she echoed Fitzgerald’s advice that any social advocacy efforts had to align with the organisation’s mission.
“You have to go back to what is your core focus as an organisation, and then you look at the things that mean you can execute that purpose well,” Mostyn said.
“Whether it’s marriage equality, or Indigenous reconciliation, or product stewardship or modern slavery, organisations will be able to know from their purpose and sense of values what areas they need to step into.
“This will give confidence, not just to their employees, but to their customers as well, that they are reliable, reputable and trustworthy parts of a society.”