Preview of Issue 02/2016 Asia Pacific edition by Dafydd Phillips

COMMUNICATION DIRECTOR the magazine for corporate communications and public relations

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Issue 2/2016 www.communication-director.com

The unwritten contract How to win the social licence to operate for you and your company

Long-term commitments From Mongolian gold mines to Indian diamond mines, this is how you get the green light from local communities

Licence revoked? The real reason why we still question the legitimacy of Google, Facebook and Amazon

Creating shared value Why itâ&#x20AC;&#x2122;s time for the communications profession to bring back purpose to their work

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SAVE THE DATE

EDITORIAL

How legitimate are you? The social licence to operate is a peculiar kind of contract. Although it confers legitimacy on an organisation, you won’t find it written on the statute books, and you don’t need a pen and paper to sign it. It is closely related to corporate social responsibility, corporate citizenship and stakeholder relations, yet it requires much more than being green. For one thing, it’s a way of keeping companies on their toes: it can be revoked by any number of different groups at any time, even after it’s been granted, and different groups and communities have different expectations for it. This is what makes the social licence to operate such a fragile contract. Companies must understand not only the needs of their local customers, but also their values and norms. These will determine whether or not activities of the firm or its suppliers will be considered acceptable and, if not, to what extent the social licence will be withdrawn. Examples of lost social licences abound, from Shell in the Niger Delta, BP in the Gulf of Mexico, dam building in Myanmar to the GMO debate in Europe. In this issue, we look at how digital giants like Google and Facebook struggle with legitimacy: their size and ubiquity, not to mention our fears about data security, obliges them to constantly apply for the licence to operate. Winning the social licence is harder to define: in this issue, Simone Niven shares some case studies from Rio Tinto’s work with local communities directly affected by its mining activities, including Aboriginal people in Western Australia, while Chris Ettery relates how risk mitigation was one of several approaches taken by Lafarge’s stakeholder engagement. But social licence doesn’t just belong to companies. It also applies to professions, among them – of course –communications and PR. In an age of spin, greenwashing, and budget restraints, how do communicators stake their claim to validity, and ensure that their work is fuelled by purpose? That’s another question posed in this issue of Communication Director.

DAFYDD PHILLIPS

Photo: Laurin Schmid

Editor in Chief

Brought to you by the Asia-Pacific Association of Communication Directors www.apacd.com

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CONTENTS

A long-term commitment Engaging local communities, from Australia to India, helps Rio Tinto deliver value to its stakeholders

2/16

Taking a targeted approach How to choose the right strategic approach to winning the social licence

ISSUE FOCUS 60

Applying for a licence What the social licence means to some of Asia Pacific’s leading communicators

Communicating the social licence to operate

Licence revoked? No one said it was going to be easy: why internet giants struggle to hold onto their social legitimacy

The story of a concept

Inviting the community to share value

Getting the goahead

Tracing the development of the social licence to operate points the way to its future

Communicating the shift from CSR to CSV: Creating Shared Value

How Lafarge used all its internal departments to unlock the value of engagement

6 • AGENDA SETTER

14 • MONITOR

Tourism in the shadow of terror

Satisfaction guaranteed? How communication professionals in Asia Pacific assess their work situation

How do cities struck by terrorist attacks win back tourists? 10 • PR ESSENTIALS

18 • TECHNOLOGY

Top 10 global business risks

A means to an end How communicators can turn their lack of technical background into an asset

A look at the global risk landscape, from market changes to cyber incidents

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CONTENTS

20 • INTERNAL

50 • THE BIG INTERVIEW

Demonstrating respect

Sharan Burrow

Communication directors should influence management to make human rights part of the company strategy

34 • SOCIAL MEDIA

Showing a human side? 24 • BRAND

Authenticity in business As the president of FleishmanHillard explains, brand behaviour trumps narrative, every time

The general secretary of the International Trade Union Confederation on the fight for a better business world

From President Obama to Lee Hsien Loong, world leaders are using social media in bold new ways campaigning imagery

38 • DATA

The devil in the details Forget big data: small data reveals surprising insights into behaviours inside and outside the organisation 84 • COMMUNICATION READER

Photo: Kofi Annan Foundation (l.), picture alliance / dpa; Friends of Europe, CC BY 2.0, commons.wikimedia.org

42 •ROUNDTABLE

Postcard from Latin America Leading communicators share their insights into the challenges of working in this diverse region 28 • CHANGE

Riding the waves How Globe Telecom transformed itself into a mobile leader in a country where social connectivity is a way of life

30 • DIVERSITY

Gender and the bottom line

Books New and upcoming titles for the communicator’s bookshelf

86 • ASSOCIATION

APACD 46 • REPUTATION

Putting reputation on the agenda How global executives deal with today’s reputational risks and opportunities

The latest developments in the Asia-Pacific Association of Communication Directors

90 • PRIVATE PASSIONS

Going the distance

New research reveals how gender parity impacts business for the better

Marty Filipowski on the loneliness of the long-distance swimmer

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AGENDA SETTER

Tourism in the shadow of terror

“W

A candlelight vigil held in Bangalore for those killed in the 2008 terrorists attacks in Mumbai

In the aftermath of a terrorist attack, communicating the message of business as usual brings back tourists. But what are the factors that influence tourists’ perceptions and the recovery of visitor numbers? BY JAN WISNIEWSKI

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here next?” That’s the question asked by civilians, terrorism experts and security forces in the aftermath of a terrorist attack, as rolling coverage brings images of chaos in cities around the globe. While the discussion in media and politics contributes to rather than counteracts a general sense of unease and paranoia, civilians and businesses have little choice but to continue as normal. However, the question of where next has a more immediate impact on the tourism industry. As is often the advice, those not directly affected by these attacks continue with their lives and their businesses. There is one industry however that is significantly impacted by anxious risk perceptions: tourism. Many cities rely on attracting visitors to stimulate their local economies. Furthermore the cross cultural exchange that goes hand-in-hand with tourism helps to quash fears and bridge the “us and them” divide that can be so devastating to society.

AGENDA SETTER

Photo: Picture Alliance

Terror and tourism Indonesia attracts large numbers of visitors from the Asia-Pacific region, with tourism making up just below ten per cent of the country’s GDP in 2015. However the country has also suffered from major acts of terrorism in recent times. The latest of these came in capital city Jakarta in January. In the early months of 2016, foreign tourist arrivals have fallen 17.4 per cent according to the Indonesian Central Bureau of Statistics. The traditional bump in numbers around the Chinese Lunar New Year celebrations failed to come. In direct response to the attacks the Indonesian government ramped up security, deploying police officers and soldiers in Jakarta and another tourist hotspot, Bali. On November 13 last year, Paris suffered a series of coordinated terrorist attacks. Although France is the most visited country in the world, the number of visitors to the French capital has fallen since the attacks. Recent French government figures showed that while numbers were up in France in general in 2015, a drop of 15 per cent occurred in tourism for November and December in Paris. This puts a dent in French foreign affairs minister Jean-Marc Ayrault’s wish to attract 100 million foreign tourists to France yearly from 2020. Speaking to Communication Director, François Navarro, managing director Paris Region Tourist Board underlined the economic importance of tourism to the Paris region. “According to our latest economic report there are 500,000 jobs related to the tourism industry, which is worth €21 million. We have an economic challenge and our objective of course is to attract people and get them to come to Paris.” More recently, Brussels faced its own tragedy. Memories from the March 22 attacks are raw and the city’s authorities are still working to ensure the security of its citizens. For the short term at least it appears people are hesitant to visit the unofficial EU capital.

According to Patrick Bontinck, CEO of the Visit Brussels tourism authority in an online video interview with Euronews. com uploaded on 1 April 2016, early figures showed a 50 per cent drop in hotel occupancy with the impacts being felt throughout Brussels and in other European capitals as well. It is too early to know how long visitors will stay away from these locations. However if we look to past examples, there appears to be signs of hope.

Road to recovery Dr Yeganeh Morakabati, an expert in risk and tourism at Bournemouth University in the UK, explains that over a long time period people tend to forget about potential dangers, especially if a city experiences a one-off attack. In her own research Dr Morakabati examined the 9/11 attacks in New York, the Bali bombings in 2002 and the Mumbai attacks in 2008. Speaking to Commu-

“Perceptions of the safety of post-attack locations is also related to media coverage.” nication Director, she outlines how the period of time for a recovery in visitor numbers has differed with each location. “A time series analysis of international tourism arrivals to USA suggest full recovery occurred around January 2005”, she explains. “Bali was a different case as we have two major attacks, one in 2002 and one in 2005, as well as the SARS pandemic in 2003 and the 2004 tsunami in between. Taking all these into

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account, full recovery was somewhere around March to April 2006. Mumbai was quicker and it went back to where it might have been if an attack had not happened around February 2009.” An important factor affecting the recovery period for visitor numbers is the sense of the stability and security of the country where an attack has taken place. For example, Turkey has suffered from a string of terrorist acts in the past year. The subsequent tense atmosphere and the Turkish travel ban on Russian citizens following the downing of a Russian warplane over Turkish territory have culminated in devastation to the country’s tourism industry. The Turkish Ministry of Culture and Tourism reported in February that the number of foreigners entering Turkey had fallen by just over 10 per cent from the previous year. In contrast to Turkey’s current struggles, the World Travel and Tourism Council (WTTC) reported that levels of tourism recovered within weeks following the 2004 attacks on commuter trains in Madrid, which killed 191 people. According to the WTTC, London bombings in 2005 had no notable impact on arrivals to the UK. Beyond the level of control and the sense of reassurance that is evident in destinations in developed economies, Dr Morakabati identifies social factors that can also affect travel choices. “Cultural, geographical and religious differences also influence the impact and the recovery. Those people with similar cultures and religions are more likely to rally around and support each other against what they perceive to be a common enemy,” she explains. Having twice seen visitor numbers fall and recover in the last 15 years, Indonesia is an example of how a country can continue to promote itself beyond terror and fear. While a focus on state security was also called for directly following the tragic events in Jakarta in January, away from the scrutiny off the western media, Indonesia has directed the message on another course completely.

PR ESSENTIALS

Top 10 global business risks The global risk landscape is changing. The effects of globalisation, digitalisation and technological disruption pose fundamental challenges. The Allianz Risk Barometer identifies the top corporate perils based on the responses of over 800 risk experts from more than 40 countries around the globe. Based on the latest Barometer, we present the top 10 business risks from around the world.

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PR ESSENTIALS

1. BUSINESS INTERRUPTION (INCL. SUPPLY CHAIN DISRUPTION)

The major causes of interruption that businesses fear the impact of most are natural catastrophes (51%), closely followed by fire/ explosion (46%). Supplier failure ranks third (32%). Business interruption remains the top peril for the fourth year in succession, with 38% of responses rating this as one of the three most important risks companies face. In today’s increasingly complex and interconnected corporate environment many of the top 10 global business perils in the 2016 Risk Barometer rankings, such as cyber-incidents and political risks, for example can also have severe business interruption implications.

2. MARKET DEVELOPMENTS

Businesses are increasingly concerned about the impact of volatility, intensified competition and market stagnation. Long-term strategic issues include successfully managing challenges to business models posed by increasing automation, digitalisation and interconnectivity of industry. There is the threat posed by the emergence of more agile start-ups and disruptive technologies. Many businesses are already having to manage a long list of issues, such as having to comply with changing legislative environments, import and export restrictions, more stringent safety requirements and work rules, increasing government involvement and approvals, and environmental restrictions.

3. CYBER INCIDENTS

It is estimated that cyber-crime costs the global economy approximately $445 billion a year with the world’s largest economies accounting for around half of this. The threat posed by such incidents is expected to increase further during 2016. According to Symantec Corporation, risks associated with the increasing use of Apple devices and the Internet of Things are among the factors which will drive this increase. Often the incident is identified, not by the business itself, but by the customer or another stakeholder, which is another reason why cyber risks pose a huge threat to a company’s reputation.

Photos: www.thinkstock.com (3); Private

JESSE VERSTRAETE Corporate Communications Director Asia, Microsoft

Beyond the threat to customer loyalty and brand reputation – which are often the hardest to regain – organisations that lack a comprehensive security strategy risk losing critical intellectual property that keeps them competitive in the market. We have to help business leaders understand that to stay ahead of today’s modern security risks, every enterprise must build a culture of security; this responsibility requires executive involvement from all parts of the business to ensure that security becomes a fundamental part of the organisational culture.

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MONITOR

Satisfaction guaranteed? How communication professionals in Asia Pacific assess their work situation. B Y M AY O . LW I N A N D A N S G A R Z E R FA S S

M Most large organisations place great importance on customer and client satisfaction. While this is undoubtedly of primary importance, executives also need to consider the demands of internal stakeholders. Job satisfaction among employees is paramount in any successful organisation. A positive work climate ensures that talent is retained and that the overall corporate climate nurtures and motivates productivity and excellence. Research has shown that motivated employees are an important driver for both individual and organisational performance and that high levels of satisfaction ultimately result in greater work output and enhanced task performance. On the other hand, employees who are dissatisfied are not only spending time making and seeking exit strategies. They are also more likely to contribute to the creation of negative work environments, which can create contagious damaging effects on fellow employees.

They are detrimental to the construction of strong affirmative corporate culture. Job satisfaction is even more critical amongst â&#x20AC;&#x153;frontlineâ&#x20AC;? staff departments of which communication professionals typically are a part. Communicators play an indispensable role in projecting the organisation to external stakeholders, imparting relevant messages and playing intermediary roles between the organisation and mass media. Communication employees in particular have an important added task of shaping organisational image and perception. Hence any dissatisfaction amongst these frontline personnel is likely to harm organisational reputation and contribute to negative perceptions by external parties. However, little is known about the satisfaction of communication professionals in particular and its drivers. Much of the available data about employee satisfaction has been industry-targeted; in other words, insights are often related to people working in specific sectors. Communication professionals however work across many industries as well as types of organisations and have the

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unique role of interfacing between the organisation and external stakeholders. This is especially the case in Asia Pacific. Our research fills this knowledge gap.

Empirical design The insights provided here are based on a survey of 1,200 communication professionals in 23 countries across Asia Pacific. Three out of four respondents are communication leaders. 62.7 per cent of the professionals interviewed have more than 10 years of experience in the job, 56.9 per cent of respondents are female and the average age is 41.0 years. A quarter of the respondents work in multinational organisations with roots in Asia Pacific, another 31.8 per cent represent multinational organisations headquartered in another continent, while 38 per cent work in organisations with a national or local scope. Almost three out of four respondents work in communication departments, while 24.9 per cent are communication consultants working freelance or for agencies.

MONITOR

Figure 2 Figure 1 Proportion of overall satisfied communication professionals in different countries

65,4% 65.4%

60,9% 60.9%

75,5% 75.5% 60,9% 60.9%

59,4% 59.4%

76.9% 76,9%

67,9% 67.9%

56,7% 56.7%

64,9% 64.9%

68,2% 68.2%

60,0% 60.0%

61,8% 61.8%

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Overall job satisfaction Generally, job satisfaction among communication professionals across Asia Pacific is fairly high, the majority of respondents (65.4 per cent) reporting that they are satisfied with their jobs. Another 22.8 per cent reported to be neutral and 11.7 per cent of the sample declare themselves dissatisfied with their current situation. However there were disparities between countries â&#x20AC;&#x201C; professionals from the Philippines, Japan and Australia in particular report higher levels of satisfaction, with about three out of four saying they are satisfied with their jobs (see figure 1). On the opposite end of the spectrum, professionals in Taiwan, Korea and Malaysia report much lower satisfaction levels.

Drivers of satisfaction Obviously the overall assessment is only a top-line indicator. Managers need to know what drives job satisfaction and more comprehensive facets of satisfaction when they want to motivate team members and drive organisational excellence.

Our statistical analysis indicates that job satisfaction among communicators is driven more by interesting tasks, career opportunities, recognition by superiors and clients, and job status than by salary levels, job security or work-life balance. Interestingly, the ranking of those drivers reflects exactly the situation in a similar study conducted in Europe (www.communicationmonitor.eu), although the exact strength of influence for each factor differs between the continents. The relevance of those dimensions explains why the majority of respondents reported to be generally happy, although less than half of them agreed that their salary and work-life balance are satisfactory (see figure 2). The perception of salary deficiency appears to be particularly strong in South Korea and India, while professionals in Australia and New Zealand are more contented in this respect. Task interestingness and variety is the major positive feature selected by the respondents. This was especially so in Australia, the Philippines and Indonesia. The second most agreed-upon dimension is the respect and valuation shown by

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executives and (internal) clients. Seven out of 10 respondents feel comfortable about this in their current job situation. Thailand, the Philippines, New Zealand, and India are ahead of the rest in the region here.

Organisation types Amongst different types of organisations in Asia Pacific, respondents from non-profit organisations report most often about interesting and manifold tasks. Those professionals are also ahead regarding the appreciation by clients and superiors and their own work-life balance. Respondents from governmental organisations report most often about high job security and adequate salary. But their career opportunities are significantly worse compared to their peers working in listed or private companies (medium rating 3.30 vs. 3.42 on a scale ranging from 1 to 5). Professionals working in the business sector, on the other hand, rate their job security lowest amongst all types of organisations.

TECHNOLOGY

Philips LED lighting used at home, work and play, can increase energy efficiency by up to 80 per cent and reduce carbon emissions while ensuring light quality or power output

A means to an end Communications for technology and technology for communications: a chicken-or-egg scenario.

BY CHARLOTTE SAM

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very long time ago, I recall my communications head saying that she started out her career by faxing press releases to journalists and hand-delivering them wherever possible as a follow-up. At that point in time, I thought “Ouch! How archaic”. Fast forward years later, and it might be worth asking: while technology has enabled and improved efficiency in communications: • has the way we communicate improved? • does technology make us more effective communicators? • how best to communicate with technology? The internet has enabled many aspects of what we do and, most importantly, has blurred geography distinctions; causing a fear-uncertainty-doubt scenario spotted on social media to impart real-time, deep-seated and company-wide implications. Similarly, technology has enabled many business operations and the rise of the consumer on the move. Increasingly even in the enterprise space, we find

TECHNOLOGY

Photos: Philips (2)

examples of companies reaching out to new target segments. For instance, major network equipment providers that are known to vie for sales across the mobile operators are targeting “non-telco” enterprise segments like shipping, logistics, banks and so on. All these have happened due to technology becoming more portable (e.g. modular, cloud-based) and being built on more open standards/platforms (versus proprietary); and in some cases technology can be offered as a set of services with deliverables and innovative payment forms preset within service-level agreements (SLA).

In March this year Philips Lighting collaborated with The University of Arizona Controlled Environment Agriculture Center to test energy efficient ways to grow food that will help feed astronauts on missions to the Moon, Mars and beyond. They found that replacing water-cooled high-pressure sodium systems with energy efficient LED lighting in a prototype lunar greenhouse resulted in an increased amount of edible lettuce while dramatically improving operational efficiency and use of resources. Lettuce grown under Philips LED modules achieved up to 54 grams/kWh of fresh weight, edible lettuce compared to lettuce grown under a high pressure sodium system which achieved only 24 grams/ kWh of fresh weight, edible lettuce, an energy saving of 56 per cent.

Other than the fact we no longer send out press releases by fax, how else should the role of communications evolve with technology? In fact, information communication technology (ICT) should no longer be viewed as a separate industry segment, but an enabling function, much like what we communicators do to enable and equip effective company spokespersons.

Have we become better communicators? If like me, you have often worked for ICT companies, does walking the talk count in what you do? If you work for a device company, sporting the company’s latest phone or smart wearable is probably a pre-requisite, but that’s not going to differentiate your role as a communicator. It is unlikely to beat the star power emanated by celebrities paid to endorse your company’s products. Doing what other consumers do with the product gives you no edge as a brand guardian. Knowing what goes on behind the product, however, does. By this I am referring to the often unsung heroes that give the company and its products character and heritage, and these can include research and development, the engineering right through goto-market, and even the talents behind all these roles and activities. Most communicators do not have a technology or engineering background, and this means being more diligent and inquisitive to reach out to departments that house the gems behind every great product. As long as we can recognise this, communicators can turn their lack of technical background into an asset – to uncover those knowledge gems, sift out the proof points to substantiate the

unique selling propositions, organise and simplify them into a storyboard for your intended audience and equip the storyteller to communicate those messages. What I have just outlined is pretty generic and forms the basis of passionate storytelling. Interestingly, some have asked me if there is a difference between B2B and B2C technology storytelling, I would say no, the basis is the same. Similarly, there is a misnomer that B2C technology communications can provide more colour than that for cut-and-dry B2B technology. The distinction between B2B and B2C is fast disappearing. For instance, the network equipment provider sells equipment and services to the mobile operator which in turn uses this investment to serve consumers who are subscribers of mobile services that run on devices. What goes into B2B has to ensure a superior experience on the B2C end. To illustrate: some years back, our team ran an amazing race with a bunch

“Communicators can turn their lack of technical background into an asset.”

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of journalists. The goal was to have them derive that, for consumers and subscribers to get the best network coverage, their operators must invest in superior network technology and even services to ensure service uptimes. The journalists were each given a phone pre-loaded with SIM cards from major operators in the country. Keeping all things equal, we had the journalists make use of their cell phones to locate clues and send back evidence of milestones completed, as well as reach their ‘life-line’ advisor for harderto-reach clues. At the end of the game, the journalists asked more thoughtful ques-

What does it mean to be authentic in business?

When it comes to consumer perceptions of authenticity, companies must move beyond big brand promises and platitudes and be as they wish to be seen. Research from FleishmanHillard reveals how companies operating in Asia can engage authentically. BY JOHN SAUNDERS

BRAND

ecent examples of corporate misbehaviour have undermined consumer trust in the brands of some of the world’s largest companies. The Volkswagen emissions crisis reverberated far beyond the automotive sector. A business that seemed immune to market changes, synonymous with reputational integrity and impervious to criticism was exposed for its business ‘irregularities’. As an example of German engineering prowess and as representative of a manufacturing

was not simply a regulatory one. Over recent years, the PAC has been heavily influenced by perceived negative public perceptions of tax avoidance. There is a massive blurring of lines between how a company acts and whose responsibility that is. Questions have been personal as well as professional and there is an expectation for companies to pay. How the company conducts itself is critical for audience perceptions. This all goes to demonstrate that management decisions are no longer seen as the preserve of the boardroom. Old

“Our research proves that there is no separation between a company’s brand and its reputation.” sector previously held up as the bastion for success, that gap between customer expectation and the actual experience was shown to be immense. In the UK, the Public Accounts Committee’s (PAC) investigation continued into the tax practices of multinationals. As Google stepped up to take its place on the benches, it was clear that the debate

habits die hard; many companies remain reluctant to either communicate regularly (outside of the mandatory financial results) or to be fully transparent in their business practices. Yet FleishmanHillard’s research into authentic behaviour shows just how fundamentally important this is. In a more demanding world, our

Authentic Engagement Expectations

Brand

what you say and how you behave

AUTHENTIC ENGAGEMENT Managing alignment between brand and

Reputation

what others say about you based on shared perceptions

reputation to achieve successful business results

Experience

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research proves that there is no separation between a company’s brand and its reputation. And in fact, until the two are properly aligned no business can be seen as truly authentic. While companies are spending extraordinary amounts of time and money on their corporate narrative, they are missing the mark on what matters most to their audiences. The Volkswagen example shows that consumers are thinking increasingly about the company behind the products they are buying and using.

So what actually matters in Asia? Our research is split into nine drivers of reputation that fall into three categories: management behaviours, society outcomes and customer benefits. Focusing on those drivers allows us to examine what the priorities are for audiences in each of the sectors we surveyed. It also allows us to see that overall there are certain trends. For example, in Japan: • Consumers now expect to get the full story from companies – not just information on products and services, but the behaviour of the people behind them, as well as the company’s contribution to society. • Consumers also expect better value, although delivering on this expectation is complex as ‘value’ is a combination of convenience of access to products and services, no hidden costs, transparent pricing and recognition by experts as best in class – individual aspects which are more important in some categories than others. • Innovation is non-negotiable across all industries, in all aspects of doing business and managing stakeholder relationships. • Expectations of customer care are as high as for innovation, but these are not fully met by 92 per cent of companies – more than for any other driver.

The Sources of Information Consumers Most Value Knowing who to listen to and who to trust is increasingly difficult. Given the onslaught of information we are all exposed to hourly, we examined which sources of information people most value.

12% 19% Not sure

Blogs, forums and online communities

BRAND

20%

People who work in the industry

30%

Personalities and celebrities

Mainstream media (e.g., TV, websites, print, radio, billboards)

Do not value any of these

30%

Relevant companies/ organizations

36%

Knowledgeable friends, family and colleagues

SOURCES OF INFLUENCE

Sources of Influence – Average All Countries

Photo: Jay Fram

2015 – 2016

Who are the real influencers?

Employee communications – more than box ticking

It’s an intriguing point. When you think about how a company really implements change, and how the enthusiasm might grow about that change, for example, it’s all about the employees – they bring about the strategy, they talk about the strategy – they are the strategy. And yet when it comes to the sources consumers see as important, only one in five think company employees are an important source of information. However, if we think about what actually influences perception of companies we see that knowledgeable peers are the source most people trust; mainstream media also plays a role but companies themselves are also seen as an important source of information in a complementary way. Regardless of what the media would like us to believe, celebrities and social media are regarded as less influential sources. Clearly this is an ever changing situation but it is interesting to appreciate that companies need to nurture their employees, not just as a workforce, but also as a channel for spreading the word, and as a valuable resource.

Employees are ambassadors for what your company represents and should be seen that way. Our research shows that whilst employee care isn’t the largest focus of consumers for any sector it is gradually increasing as a factor in what people think about – Apple, for example, has in recent years had questions asked about its employee policies and Amazon’s care of its employees has been under much scrutiny, particularly in the UK. For a company to be seen as authentic, this needs to be both something that is a focus internally and externally. An employee strategy has to go beyond just ambassador employer brand programmes. We need to take a holistic view of the entire employee experience and treat them with as much sophistication as we do our customers. The approach to internal communications and engagement should take into consideration the entire employee experience from the search and hiring process, onboarding, employment and even through retirement.

•

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JOHN SAUNDERS President and CEO, FleishmanHillard John Saunders is president and CEO of FleishmanHillard, the firm’s fourth since its founding in 1946. As the former regional president of the firm’s Europe, Middle East, Africa region, Saunders oversaw a network of agency and affiliate offices. Among his previous leadership roles, Saunders was regional director of Europe from 2004 to 2011, and managing director for the firm’s Dublin office, which he founded in 1990. A former radio journalist, Saunders served as president of The International Communications Consultancy Organisation and has been a member of the Europe and Central Asia Committee of the World Economic Forum.

INTERNAL

Demonstrating respect Communication directors can and should influence senior management to make human rights part of the company strategy. B Y PA B L O L A R G A C H A

uring the fourth annual UN Forum on Business and Human Rights, which took place in Geneva in November 2015 almost 23 per cent of attendees belonged to the business community. An increasingly large number of multi-national corporations (MNCs are actively assuming their responsibility to demonstrate their respect for human rights in the workplace, not just within the â&#x20AC;&#x153;four wallsâ&#x20AC;? of their own premises, but both upstream and downstream along their value chain, i.e. with suppliers and distributors of the goods or services they produce. As a result, most MNCs today have made public commitments to develop

and put in place policies, as well as due diligence and remediation processes, in order to identify, prevent, mitigate and account for how the company addresses its human rights impacts, either directly, or indirectly through their business partners. These policies focus mainly on fostering open and inclusive workplaces and include provisions on respect for human rights, supplier guiding principles, and community and stakeholder engagement.

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DIVERSITY

Gender and the bottom line

Companies that are recognised with ‘most admired’ reputation status by their industry peers have a higher proportion of female leaders. New research reveals how gender parity drives corporate reputation. B Y R O S E D E L A PA S C UA

The case for improving women’s access to C-level positions has never been stronger. Not only does research suggest that companies with more women in senior executive positions report stronger financial performance, but the reputational and brand advantages are also significant. However, despite decades of analysing the reasons behind the gender pay gap and of women demanding equal representation in business, it seems that there is still a long way to go for women in business when it comes to a seat at the management table.

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Although seven out of 10 global executives of both genders believe it is important that the universe of female CEOs expand, the numbers remain low: just five per cent of the US Fortune 500 and four per cent of the FTSE companies are run by women. Globally, just nine per cent of chief executive officers and managing directors are women. Evidence suggests that organisations that are diverse perform better, boast better reputations and achieve ‘most admired’ status. It increasingly appears that having more women in senior management leads to stronger financial performance, with role models becoming very important. Specifically, younger generations of women are more likely to aspire to forming part of the upper echelons of business if they have experienced working for a female chief executive officer.

DIVERSITY

Gender forward pioneers

An undeniable premium The premium on having women in senior leadership is undeniable. Yet few companies around the world are led by women executives. Corporate commitment to achieving gender equality at the top remains scarce, despite the fact that senior executives optimistically (albeit not very realistically) expect gender equality to happen within the next generation. This made us at Weber Shandwick wonder how the world’s largest companies are performing when it comes to gender equality.

68% Executives who say that public attention to C-level gender equality has increased in the past three years

Figures taken from Gender Equality in the Executive Ranks: A Paradox — The Journey to 2030 by Weber Shandwick and KRC Research

Together with KRC Research, we sponsored a survey of 327 senior executives across 55 countries in North America, EMEA, Asia Pacific and Latin America. Conducted by the Economist Intelligence Unit, the survey was titled Gender Equality in the Executive Ranks: A Paradox – The Journey to 2030. The purpose of the report is to offer top line findings and an understanding of what might constitute best practices for recruiting, training and promoting women for C-level positions. According to the 2015 Index, only 12.5 per cent of senior leaders (C-suite, i.e. the most important and influential group of individuals at a company) in the world’s top 100 companies are women. In EMEA, the figure is even lower, at 9.9 per cent. These findings are a wakeup call. Senior executives around the world must make a positive commitment to redress the gender balance. The research revealed a paradox: almost three quarters of global executives (73 per cent) believe that gender equality in the C-Suite will be achieved by 2030. This sounds great on paper; however, there is no clear road map for making this prediction become a reality. Most executives (56 per cent) report that their company does not have specific goals in place for achieving such an outcome, and only 39 per cent of C-level executives report gender diversity in senior management as a high business priority, ranking seventh in a list of 10 priorities.

How do the world´s largest companies actually perform in terms of gender parity? To address this question, we created the Gender Forward Pioneer (GFP) Index as a supplement to Gender Equality in the Executive Ranks: A Paradox. We call companies at the forefront of gender-balanced leadership Gender Forward Pioneers. The GFP Index measures the percentage of women in senior management positions at Fortune Global 500 companies. Weber Shandwick audited these companies, identifying their top executives and their genders. The survey of senior executives across 55 countries in North America, EMEA, Asia Pacific and Latin America

“Having more women in senior management leads to stronger financial performance.”

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identified weak corporate commitment to achieving gender equality at the top while senior women are simultaneously experiencing ‘gender pipeline fatigue’. Gender pipeline fatigue is the belief that parity will only come through compulsory measures such as boardroom quotas and governmental mandates on equal pay. However, things are beginning to look up. The research identifies several ‘push’ forces that will move gender-balanced leadership further up the corporate management agenda. These include: • Increased media coverage of gender equality (globally, there has been more than a threefold increase in articles about female CEOs since 2010);

SOCIAL MEDIA

Showing a human side? How world leaders are blazing a trail in social media. BY J ER EMY GALB RAITH

Source: Twiplomacy, Most Liked World Leaders on Facebook

irst and foremost, successful communication on social media requires you to present your human side to your audience. This is one of the major findings from Burson-Marsteller’s 2016 Twiplomacy study of how world leaders engage with their public. The lessons of the annual survey apply equally to CEOs and the companies they run, if they want to get their messages across powerfully and effectively to their customers and their workforces. One classic trap that communicators often fall into is that of using social media as a one-way broadcasting tool. Social media is not a megaphone and the most successful leaders recognise that com-

munication is primarily about creating a conversation. Leaders often want to know which social media should be their main channel, or which platform is the best to use? The simple answer is that, today, being present on just one social media platform is no longer enough. Depending on the target audience, leaders should ideally combine a range of platforms to maximise the impact of your messages. The 2016 edition of Twiplomacy, Burson-Marsteller’s global study of how world leaders, governments and international organisations connect via social media includes, for the first time, more than just Twitter and now covers all of the major platforms such as Facebook, Instagram and YouTube. In addition, the study also includes insights on how lead-

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ers use niche platforms when it comes to digital diplomacy such as Snapchat, Vine, LinkedIn, Periscope and Google+. The findings are inspiring and insightful – and frequently entertaining. They confirm that world leaders have truly embraced the evolution of social media and, in so doing, offer corporate leaders and their communication teams valuable lessons in the most effective use of these platforms.

Key lessons for CEOs and companies Twitter and Facebook are the two leading social media platforms for government communications, with 89 per

SOCIAL MEDIA

cent and 88 per cent of all 193 UN member countries having a presence on Twitter and Facebook respectively. But, while these more text-based platforms continue to dominate the rankings, there is an emergence of the more visual platforms such as Instagram. This is not only a shift in how world leaders communicate, but a model lesson for communication as a whole. A central element of the study is the rankings generated from the social media accounts which show the ‘most liked’ or ‘followed’ world leaders, as well as the ‘most engaged’, ‘effective’, ‘active’ or ‘conversational’ ones. These rankings are combined with a more in-depth analysis of the content created on the social media platforms, and thus addressing the question of how effectively world leaders and governments communicate on social media and what can we, as communicators, learn from them?

family pictures. The single most popular post by a world leader is one of a photograph of the Obama family wishing everyone a Happy Easter, posted on the White House page. Similarly, the third most popular post was another family picture of Barack Obama hugging his wife Michelle on their wedding anniversary. This portrayal of family life is also very evident on platforms such as Instagram, where world leaders have uploaded personal photographs of themselves playing sports, or during their family holidays. Snapchat takes this human side even further, making you feel as if you really are following the lives of world leaders. Argentinian president Mauricio Macri, for example, allows his virtual audience to follow him around the world on his official travels, making his Snapchat account appear very personal.

1 Reveal your human side While the majority of images posted by world leaders on Facebook show typical diplomatic settings and announcements, the most popular ones are mainly

Source: Instagram profile of Dmitry Medvedev, prime minister of Russia

Source: Facebook profile of The White House

Instagram also offers a similar intimate connection with audiences, epitomised by the rise of “selfie diplomacy”. This generation-wide phenomenon features on the profile of Russian prime minister Dmitry Medvedev, who takes elevator selfies, as well as on those of the prime ministers of Singapore, Norway, Spain and Turkey, who are all notorious for their group selfies or “wefies”.

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Source: Instagram profile of Lee Hsien Loong, prime minister of Singap0re

2 Be bold and visual Creativity and the use of images and videos are crucial for communicating with impact today. While Twitter used to be considered as the digital diplomacy channel of choice for government leaders, recent years have seen a shift towards Facebook and other more visual platforms such as YouTube and Instagram that allow you to be much more creative. YouTube is also the second largest search engine in the world, behind Google, proving that video remains one of the strongest tools for communicating a message. Instagram, now the fourth most popular platform, is typically used for posting behind-the-scenes images of world leaders, who use the channel to show their creative side. Some of the best examples of visual and creative content include collages by the European Commission, Hungarian politician Viktor Orban posting a picture of his tie on a chair with the caption “Saturday 07:45”, as well as the accounts of Estonian’s prime minister, the Argentinian president and, inevitably, the White House. World leaders can also be seen using Snapchat stories in creative ways. The UK Foreign Office, for example, celebrated International Women’s Day by asking followers who their wonder women are; the White House featured its annual Easter

DATA

The devil in the details What does the way you arrange your fridge magnets say about your brand allegiances? And how does the way you arrange your shoe collection reveal your self-esteem level? Over the past decade Martin Lindstrom has visited more than 2,200 homes in some 77 countries, on the hunt for small signs that show how we relate to brands and to each other, as outlined in his new book, Small Data: The Tiny Clues That Uncover Huge Trends. INTERVIEW BY DAFYDD PHILLIPS

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DATA

Photo: Private

n your book Small Data, you write that “Every culture in the world is out of balance or in some way exaggerated, and in that exaggeration lies desire.” What do you mean by this? On an individual basis, we are all out of balance. You are out of balance, I am out of balance. Maybe we feel too overweight, maybe we feel we have hit our midlife crisis and haven’t achieved enough in our lives or we feel alone and need a partner. All those out-of-balances, and we have hundreds of them, represent a need or a desire for a brand or for some sort of fulfilment. And at a national level you see cultures being out of balance. If you take Syria and the refugee crisis, it’s an entire nation which is out of balance. And can small data help restore this balance? Small data is a counter balance to big data. Where big data is all about a lot of numbers and seeking a correlation between these numbers, small data is about finding the causation, the reason why. We all leave emotional DNA behind that reveals insights about our personalities and where we are out of balance. For example, most people with a Facebook page would admit that in fact it’s one big lie, its meant to reveal how you would like to be perceived by the world rather than who you really are. Just as you have a perception page online you also have a perception room in your house or apartment. When you find that perception room, which is the reflection of who you would like to be seen as by the world, then you can start looking at furniture and fittings. For example, if there is a huge, colourful painting you can be pretty sure that the person living there has fairly strong self-confidence. And if in the perception room you have a large bookshelf packed with books, quite often it indicates that the person didn’t have the most solid education as a child and is trying to compensate for it.

And what do you do with these observations? Of course all these small data cannot be taken out of context or just seen as one piece of single standing data, they have to be combined. But as you create a patchwork of small data, you start to see how we as individuals are out of balance or in balance. And it’s easy to see because in many ways we are all putting our entire lives on display at home because we haven’t put up our defence mechanisms. When I look into a fridge and I notice that you have fruits and vegetables neat-

for some reason triggering those people drinking the water, which was very surprising for the Danone team. Now let’s just pause here for a second. The reason why you and I love certain movies and play them again and again is because it’s reactivating that emotion we had the first time we watched it. It’s not because we’ve forgotten the script, it’s because that emotion is happening again and again. The same is the case with taste and smell. We don’t have a taste preference as such; it is the memory encoding that is linking the taste. When I drank coffee for

“Big data is all about seeking a correlation between all these numbers, small data is about finding the reason why.” ly placed on top but then I bend down and see, hidden below the carrots, you have a regular coke and some chocolate, it shows what we define as a conflicted mind. All these insights are difficult to see through big data, because big data is rarely communicating people’s emotional state of mind. You write about subtle cultural differences, for example Russians’ “fresh smell” associations compared to, say, the French. Are there parallels to be drawn in communicating a brand in a new market? Small data allows you to fine tune that instrument you have so that the tune you’re playing plugs into the deep set of cultures and desires. For example Danone and Evian some time ago were struggling to get into the Chinese market and so the team decided to understand the psychology of drinking water. What they realised was that in China most people who had been born and raised on farmland were drilling water out of the ground and the water would have this mouldy taste. And that mouldy taste was

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the first time it’s not because I loved the taste of coffee, because I hated it the first time, but it’s because I felt adult. And the adult feeling is then embedded in my brain and as I repeat that again and again I start to like the taste. That is exactly what happened with the water. People who were raised in the farmlands of China would link their rosy memories, as I call it, with that particular subtle, mouldy taste of water, and when the people were relocated into the city areas and drank this perfectly filtered Evian water, they did not have that subconscious feeling of cosiness and homeliness. When the team went back, using small data, they discovered that they had to re-filter that water to make sure that mouldy taste would still be present in the water and so would those childhood memories. That is an example of something big data would never be able to pick up. Are there other limitations to big data? We are blinded by big data because it’s such a big volume we can’t even comprehend it, we just assume it’s the

ROUNDTABLE

Postcard from Latin America To mark the Latin-American Excellence Awards â&#x20AC;&#x201C; hosted by Communication Director â&#x20AC;&#x201C; we asked four jury members to share their insights into the corporate communications landscape of this diverse region. The following are excerpts of interviews that were conducted separately

e have to talk about Brazil, which is in its deepest recession for decades and the headlines today are full of political and corruption scandals. How do you motivate and engage your audiences in such difficult times? NELSON SILVEIRA Brazil has been through one of its most challenging experiences with enormous impact in the local market, enterprises and individuals. The level of consumer confidence is at a historical low. Companies have been forced to restructure to adapt business models to the current reality of the market. The case of the automotive industry is even more challenging, as the market dropped almost 50 per cent from the peak in 2013. In times where you have to downsize and change the business model, the impact on the communities and employees is highly relevant. At GM we believe that being a workplace of choice is the best incentive to engage employees and boost motivation.

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ROUNDTABLE

BETH GARCIA The worst aspect of the crisis was not its economic repercussions because a country with such an ample supply of natural resources, like Brazil, will certainly recover, but the despondency it produced in various environments which has contaminated and weakened communication. The greatest challenge now is to raise clients’ and institutions’ spirits. Times of crisis provide opportunities for innovation, driving people to act in more creative ways. Storytelling platforms which can be used in publications, press guidelines and digital and media campaigns, are gradually beginning to share space with advertising. This

Photos: Private (2)

“Any company that wants to operate or expand operations in Latin America needs to be open to listening.” in-house material is a reliable source of information, for both internal and external audiences. It is down to us journalists to find opportunities and harness them. SERGE GIACOMO Brazilians already have creativity in their DNA, in the way we develop and implement projects on a daily basis. In tough economic times, we see this even more. It is challenging, but we love challenges. For Brazilian communicators, the secret is to ensure a strong combination of business strategy with communications goals to make efficient projects and, at the same time, innovative ones. An example of this is to be more connected with the teams from different regions to leverage initiatives that bring value to the brand.

BETH GARCIA

CEO, Approach Communications A journalism graduate from the Université d’Assas in Paris, Beth Garcia worked as a contributing journalist for Bloch Editores in Paris and in 1993, in Brazil, joined the reporting team of Jornal do Brasil before founding Approach Communications in 1996. Beth is responsible for Approach’s general management and for new business development.

SERGE GIACOMO

Director, Communications and Public Affairs, GE Latin America Prior to joining GE in March 2014, Serge Giacomo was the head of corporate communications for Vale SA, based in Rio de Janeiro. Before that, he held a number of communications positions at Shell, both in France and in The Netherlands, and at two leading global public relations firms, Edelman and Burson-Marsteller in various offices in Europe, US and Brazil.

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To change focus to the rest of the continent: with your career experiences both inside and outside Latin America, what are the main differences in corporate communications between Latin America and elsewhere? SERGE GIACOMO It may sound like a cliché, but European communication practice is more structured, based on analysis of data and facts, whereas Latin American communications are based more on creativity, relationship-building and experiences. I’m very lucky to have worked in these two environments. The two are extremely complementary and, when combined, can be really powerful. NELSON SILVEIRA Public relations and corporate communications in mature markets like Europe and the US are in a very advanced stage. However with globalisation and the expansion of internet, emerging markets are catching up in terms of approach and public relations strategies. We have lately experienced major developments in corporate communications in most Latin American countries. Today most of the major global agencies have established branches in the region, either on a standalone basis or by acquiring local enterprises. What about the relationship between journalists and corporate communicators here? NELSON SILVEIRA There are important cultural differences. Latin American media tends to have a more friendly approach. European media is more aggressive and critical. But on the other side it is more difficult to do background work with media in the Latin American region, because journalists tend not to respect off the record conversations. In Europe, media has a different understanding on the benefits of the background information on writing stories. But in general there are strong media groups on both continents with great editorial independence. BETH GARCIA The Brazilian press seems to have some peculiarities that are a bit unfamiliar to European clients. Just to give an example, here the social

REPUTATION

Putting reputation on the agenda How global executives deal with todayâ&#x20AC;&#x2122;s reputational risks and opportunities. BY CARSTEN WEGMAN N

rom September 2015 to January 2016, Reputation Institute surveyed more than 150 global executives to gather insights on todayâ&#x20AC;&#x2122;s trends, practices and priorities related to their stakeholder management. The companies were sized between $1 billion and $30 billion in revenues and based in 20 countries from around the world. The key topics were the top-of-mind issues for senior executives with corporate brand and reputation responsibilities, activating the right strategies to capitalise on growth opportunities, the link between reputation and corporate purpose, the organisational setup for success, communicating on corporate social responsibility (CSR), and the trends in stakeholder measurement and communications. The biggest challenge that companies are facing in this space is the lack of a structured process for integrating stakeholder views as a leadership practice in their business. Fewer than half of the executives interviewed reported

their organisations have the right internal competencies, structures, processes and methodologies in place to assess and manage their reputation. Too often, companies are tracking their stakeholders in silo, meaning there is no consistent model or comparable set of data, and no consistent way to share the insight across the various departments at headquarter level (communications, marketing, HR, investor relations, etc.), as well as between the local markets. The majority of global companies seem to have understood the importance of measuring stakeholder perceptions, and many of them are doing it in a variety of ways. The challenge at this point is in moving to market-level integration of the insights, and using the outside-in perspectives for course-correction in the business strategy. Why is that not straightforward? For one, there is a lot of tracking research in the market that is not really actionable â&#x20AC;&#x201C; basically, long reports with charts and numbers that are hard to interpret.

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Secondly, you need to have the appropriate forum internally in the company to discuss and act on the evidence; more often than not, it never gets out of the drawers in the market intelligence unit. Thirdly, the insight is often not anchored in a concrete set of business problems or opportunities; the knowledge base is stand-alone in nature, and perhaps highly accurate as such, but without a strong link to the business strategy, it will remain under-leveraged. When these challenges are mapped to the reputation performance of the organisations surveyed, it is evident that companies with strong/excellent perceptions have the foundation of measurement in place and are focusing their efforts on cross-stakeholder communication, CSR and managing risks. At the same time, companies with an average reputation are still working on developing the business case for this and experimenting with the best approach to measure their brand and reputation. At the high level, the business case

REPUTATION

for reputation investment is simple: your success as a company relies on people supporting you, customers buying your products, policy makers and regulators giving you a licence to operate, the financial community investing in you, the media reporting on your point of view, employees delivering on your strategy. For them to support your business, they need to trust you as a company that will deliver on its promises. We measure this as stakeholder = business support.

Photo: Private

The business case for reputation At the more operational level, you either need endorsement from the very top of the firm based on the company’s strategic ambitions, or a trigger point (which often comes with a media storm) that unleashes the mandate from the top, or a very well-architected business rationale that is firmly grounded in the views and behaviour of the stakeholder groups that matter the most to the success of the company. Our study confirms that the corporate communications/public affairs department continues to have the leading role in reputation management (60 per cent of functions represented), and the trend is clearly that the bigger the company is in terms of revenues, the more involved the corporate communications office is in the management. This means that this department has the responsibility to build and bring the case forward, unless they have sufficient mandate already. Moreover, the study shows that communications executives are still spending most of their time on ‘classic’ matters, rather than, say, using external stakeholder views to validate business strategies, company positioning, and providing actionable market input for board-level decisions. Less than 20 per cent of the senior communications professionals are really involved in board decisions, while at the same time 45 per cent of them report that reputation is a prominent agen-

“There is a unique chance for senior communications officers to elevate their role and contribute to the corporate agenda.” da item for their board – so there is a gap that needs to be closed. For the most part, corporate communications officers (CCOs) have had direct responsibility for communications-related issues, and less so on broader strategic business issues. One of the key findings in this study is that there is now a unique chance for senior communications officers to elevate their role and contribute to the corporate agenda and decision-making, taking a fact-driven approach to providing that guidance. The point is not for the CCO to seek or take responsibility for the company’s reputation performance at the stakeholder group level, but to influence or drive the company’s stakeholder support and behaviour in line with corporate objectives a) through communications and b) by means of business advice to the company’s executive team and line units on the interactions with the company’s core audiences. The CCO in the sole capacity of the company’s spokesperson is a dying species. Also, managing reputation risk has become top-of-mind for almost half of the executives interviewed, and twothirds of them are now involved in reputation risk assessment and crisis management. However, less than half of them

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report that their organisations have the right internal competencies, structures, processes and methodologies in place to assess and manage reputation risks. This is no surprise in today’s world, where social media enables news to travel around the world within minutes and the perception of who you are as a company has a direct impact on sales, stock price and licence to operate. However, assessing the internal capability to manage the reputation risk is as important as understanding the external impact of the risk event materialising. Study participants from companies headquartered in the US and Canada are clearly ahead of European companies in implementing a “well-established structure for addressing and mitigating key reputation risks” and “a cross-functional governance structure to manage the key reputation risks.” This is a significant finding, given that 84 per cent of all of the respondents worldwide acknowledge their corporate communications is the most responsible entity when it comes to reputation risk management.

Budgets and resources On the matter of budgets, one fifth of the companies surveyed dedicate more than 20 per cent of their annual communications budget to reputation-related initiatives, one quarter spend between five and 20 per cent, and one-third spend five per cent or less. These numbers are relatively moderate, and likely tie with the observation that many are still working on developing the business case for a structured approach to track and use stakeholder insight. Until that case is in place, the majority of funds will continue to flow into classic communications which may not be where the business impact is the greatest, or for that matter, easy to measure. This is important, given that our research shows the total budget for communications rarely exceeds 0.1 to 0.3 per cent of the revenue line. Granted, some indus-

REPUTATION

Putting reputation on the agenda How global executives deal with todayâ&#x20AC;&#x2122;s reputational risks and opportunities. BY CARSTEN WEGMAN N

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REPUTATION

Photo: Private

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ISSUE FOCUS

A longterm commitment From diamond mines in Canada to coppergold mines in Mongolia, Rio Tinto makes local community engagement a top priority. BY SIMONE NIVEN

he social licence to operate has been a central concept in the mining industry lexicon for the past two decades. Jim Cooney, former director of international and public affairs for Canadian mining company Placer Dome, is commonly credited with introducing the term, at a World Bank conference in 1997 that explored the outlook for the sector. It was a time when the mining industry was facing heightened public scrutiny and significant reputational challenges, following a series of environmental incidents and conflicts with local communities.

There was a growing perception that mining was an industry incompatible with the emerging concept of sustainable development. The reputation of the sector as a whole was being tarnished by past, and contemporary, examples of poor practice – posing a serious threat to the sector’s ability to sustain profits, access new assets, and maintain investor and employee confidence. It was against this backdrop that the focus on social licence to operate became elevated in the practice of the industry’s top performers. Around this time too, leading players in the sector – with Rio Tinto instrumental among them – came together to form the International Council

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ISSUE FOCUS

on Mining and Metals, and advance their commitment to sustainable development.

The canary in the coal mine So what do we mean by our social licence to operate? How do we gain it, and how do we maintain it? In essence, social licence to operate is the unwritten contract between a company and the communities in which it operates. The social licence is granted by the community, and encapsulates their general approval and acceptance that a company can begin and continue operating in an area. It is usually site-specific, because the needs of each community and their local environment, and the potential impact each project could have on these, vary from place to place. In the same way, it is never to be taken for granted, and can change over time with shifts in political, economic and stakeholder circumstances. Although legal entitlement to pursue a mining project will come from the host government, this is intrinsically linked to the social licence. Sovereign support is increasingly difficult to maintain without the broad, proactive support of host citizens. Companies must demonstrate that it is in everybody’s best interest for them to develop resources and maintain operations, and then – collectively with their stakeholders – convince governments to issue and maintain the legal licence. In this way, social licence to operate can be seen as the canary in the coal mine, pointing to potential loss of approval to operate, even where the law permits it.

Enduring relationships Our social licence helps us manage business risk, at all points in the cycle. Although there is a clear business case

for focusing on our social licence, at Rio Tinto we take our ethical responsibility to protect our people and our neighbours equally seriously. Not just because it is good business, but because it is the right thing to do. Our approach to securing our social licence centres on building strong and lasting community relationships. Managing these relationships well is as necessary to our business success as the good management of our mines, refineries, smelters and ports. In no sense are community relations an add-on, marginal to our exploration, mining and processing activities. Communities and social performance work is an integral part of the way we operate, every day. We strive to build relationships that demonstrate mutual respect, active partnership and long-term commitment. This means recognising and respecting the cultures, lifestyles and

“Our social licence helps us manage business risk, at all points in the cycle.” heritage of our neighbours, so that we can maximise the benefits and reduce any negative impacts of our operations. Although we recognise we can’t always meet everybody’s concerns and expectations, we aim to operate with broadbased community support. Since our mines are often in remote corners of the world – built where the best mineral orebodies exist – our local communities are often the same towns where many of our employees live. As core members of our communities, open and honest internal communication

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with our people is therefore critical, to make sure we maintain their support. Productive workforces are motivated by accomplishing societal purposes, so it is important that our people see and understand the contribution their work makes to sustainable development.

Communities framework Our approach is founded on our communities and social performance framework – which has transparent communication and engagement at its heart. This framework is based on three main areas of work: building knowledge; engaging with our stakeholders; and developing mutually beneficial programmes. In the first phase, we carry out baseline communities assessments, so that we can understand the key social and economic factors that a community faces. We gather data on the local people, understand the impact we would have, and identify potential risks and opportunities. Equipped with this knowledge, we build relationships and partnerships with our diverse stakeholders, who include communities, governments, NGOs, academics and other corporates – making sure the needs of the various parties are mutually understood and accepted. We then develop communities programmes that reflect both the baseline assessment and engagement phases, and which encourage stakeholders to be self-sufficient, not dependent on our presence. These may cover education, health or livelihood initiatives, and provide local employment, small business and contractor opportunities.

Working for mutual benefit Our work on the ground varies according to the local context, but some themes commonly apply – like local procurement, cultural heritage, gender, human rights and community agreement-making.

“Be curious, share everything, steal (and credit) from the best, be genuine and always strive for simplicity.” Cameron Gunn

Lecturer in Quadriga’s Online Education Programme