Nestlé buffs its image with its living wage policy

July 4, 2014

The global consumer goods giant Nestlé develops its living wage policy. Will the approach help it avoid further lapses in Corporate Social Responsibility?

In June 2014, Nestle announces an extension of its policy of paying the living wage to employees. From 2017, the company will pay contractors in a similar fashion to its own workers.
[For an explanation of the minimum wage concept see this BBC article]

The unrepentant chocolatier

In 2009, the Economist examined Nestlé’s history and current strategy in an article entitled The unrepentant chocolatier.

The potted history reveals how a little Swiss firm making chocolate products became the World’s largest manufacturer of food products by revenues, ahead of Kraft, an American multi-national.

The stated plan is to strengthen future growth through a move into ‘wellness products.’ The Economist notes the commercial logic of the plan, but identifies a dilemma for Nestlé

The Dilemma

The Dilemma is suggested in the title of the article. Nestlé is seeking to reposition itself as a thoroughly ethical company,. Yet it will persist as a purveyor of many products seen as unhealthily loaded with carbohydrates and fats. The Dilemma has some similarities to challenges that facing the giants in the soft drinks and the alcoholic beverages markets.

The dilemma is made tougher for Nestlé for its historical record of association with stories damaging to the company’ brand. These include the baby milk scandal in Africa, and more recently the bottled water product with chose affinity to branded tap water, and meat products of dubious origins.

The company hopes to promote a policy that preserves its hard-earned revenues from its indulgence brands and grows new brands associated with the ‘noble cause’ of functional foods and wellness products.


Wonga gets it wronger

July 2, 2014

This week, [April 26th, 2014] The Financial Conduct Authority [FCA] ordered the payday loans company Wonga to pay £2.6m compensation to 45,000 customers after it sent threatening letters from non-existent companies

The figure could have been much higher, but the FCA had limited powers for events that occurred prior to its formation when it replaced its ineffective predecessor, The Office of Fair Trading in 2011. Consequently, Wonga is to compensate customers at a rate of 8%. Commentators point to the annualised rate it charges its debtors which could reach the 5,853% “representative” APR as quoted on its website.

To be continued

[Non-subscribers can follow additional information communicated to their email address or tablet site. Use the RSS feed, top right the screen for free subscription to Leaders we deserve.]


Overheard at Wimbledon: The hot and cold nature of French tennis players

June 27, 2014


Wimbledon’s tennis tournament each year provides many examples of discussion suggesting the irresistible temptation for commentators to indulge in national stereotypes. The following is offered for practice in discourse analysis

BBC’s Radio 5 Live [606 Wavelength]re-labels its self as ‘Radio Six Love Six’ for Wimbledon fortnight. The following exchange between two [English] commentators was broadcast today, as play was starting [ 27th June 2014] in a third round match in the Gentlemen’s Singles competition

First English commentator
He’s a beautiful player, so graceful and powerful

Second English commentator
… but he blows hot and cold

First English commentator
Yes he’s like that. But that’s the same with French players

Second English commentator
Yes, they all blow hot and cold

First English commentator
That’s the French temperament isn’t it?

Regular readers will recall equally enlightened discussions initiated by another commentator, John Inverdale, at last year’s Wimbledon

The BBC was forced to apologize for remarks made by John Inverdale about Marion Bartoli, an hour before the match which won her the Wimbledon Ladies singles competition:

Inverdale’s comment came about an hour before the match began as he chatted to former Wimbledon champion Lindsay Davenport about Bartoli’s technique as a player. He said: “I just wonder if her dad, because he has obviously been the most influential person in her life, did say to her when she was 12, 13, 14 maybe, ‘listen, you are never going to be, you know, a looker. ‘You are never going to be somebody like a [supermodel such as] Sharapova, you’re never going to be 5ft 11, you’re never going to be somebody with long legs, so you have to compensate for that. You are going to have to be the most dogged, determined fighter that anyone has ever seen on the tennis court if you are going to make it’, and she kind of is.”

Inverdale’s comments on Radio 5 live as the French player prepared to face Germany’s Sabine Lisicki provoked anger from many listeners. A BBC spokesperson said: “We accept that this remark was insensitive and for that we apologize.”

Learning from experience

Mr Inverdale has learned not to focus on the pulchritude of the players. This year he has found a replacement interest. He has noticed that players are of different sizes. This permits much discussion about how tiny some of the ladies are, and who might have been the tiniest of all time. Many he didn’t quite take on board the messages from his remedial training on avoiding such topics.


Discursive leadership: a note on leadership style

June 23, 2014

Book review: Fairhurst, G.T., (2007) Discursive leadership: in conversation with leadership psychology, Thousand Oaks, Ca: Sage

Tudor Rickards

I became interested recently in Discursive leadership through reading a book on the subject by Gail Fairhurst, an American Professor of Communication Studies.

Many leadership styles have been proposed by practitioners and theorists. They include the charismatic style; those based on theories X, Y, and Z; Machiavelli; authenticity; and moral rectitude.

Discursive leadership may appear to be yet another leadership style. It may also provide challenging insights to a different way of thinking about leadership and the nature of styles.

Discourse and discussion

Readers not acquainted with the term discursive will recognize the similarities with the more familiar concept of discussion. Readers acquainted with post- modern writings will already be aware of discourse theory, which explores the processes of constructing social reality through texts and other narrative structures.

Professor Fairhurst is not describing a style. Indeed, the book rejects the popular view that leadership styles exist as objective phenomena. The departure point is whether a leadership style exists as an objective phenomenon with a measurable and observable essence. The widely- accepted view is that it does, so efforts to study and measure the style are afoot. Professor Fairhurst subscribes to the social constructionist belief that leadership and its various modes are beliefs constructed in social action. It is a point that has been applied to leadership by other scholars such as Keith Grint

This set me wondering whether such a discursive approach could be applied to other leadership concepts. Might charismatic leadership be considered as socially constructed? And how about Authentic Leadership not considered as a style, but as arising from the way in which a social group develops its notions of authenticity?

If Fairhurst’s ideas become more widely accepted, cherished notions of leadership style will receive much-needed revision.

Comments

Comments are particularly welcomed from participants in GEL workshops held around the world, June-July 2014. Subscribe now to receive free notifications of future Leaders we deserve posts to your email, smart phone or tablet.


‘The unacceptable face of capitalism': how history repeats itself from Lonrho to the Marikana Massacre

June 18, 2014

In the 1960s, The Lonrho group was memorably labelled by Prime Minister Edward Heath as representing the unacceptable face of Capitalism. Fifty years later, this week, a much re-structured organization was accused in the same terms by Sir Richard Needham, a board member in tendering his resignation

The original Lonrho [London and Rhodesian Mining and Land Company] was built into a conglomerate retaining its focus mainly in Africa by controversial entrepreneur Tiny Roland. His leadership style and practices gave him the reputation of a ruthless operator. Board room battles and attempts to oust him in 1973 resulted in the notorious outburst in Parliament by Edward Heath. Roland continued to be a high-profile and contentious figure as he expanded the influence of Lonhro, eventually being removed as Chairman in another board room coup, twenty years later.

He repeatedly attracted controversy in his business dealings including an obsessive pursuit of Harrods and the House of Fraser, and feud against the Fayads in the late 1970s.

A more serious set of allegations surrounded his deals with the Libyan government, at a time when the United Nations was considering sanctions in connection with the Lockerbie bombing. “To me, Gaddafi is a super friend,” Rowland explained. “Don’t talk to me about morality and proper behaviour. I pay my taxes here. Gaddafi and Lonrho are a perfect fit.”

After Roland’s departure, Lonrho went through various divestments and name changes. Controversy continued to stalk the emerging corporations. The mining division emerged as Lonmin plc, which earned unwelcome publicity and financial rating through the Marikana miners’ strike in 2012 in which 34 miners were killed.

In 2014, another controversy broke out in the corporate entity retaining the name of Lonrho.

When it comes to assets, a majority stake in a Mozambique hotel is all that links the sprawling, Africa-focussed Lonrho conglomerate which was built up by controversial businessman Tiny Rowland in the second half of the last century and the overhauled group today. Yesterday, that slender asset link was joined by a corporate governance connection, as the former trade minister Sir Richard Needham quit the board of Lonrho following a row about pay and transparency.

In his resignation letter, Sir Richard alluded to Lonrho’s one-time reputation under Mr Rowland:

“You will remember only too well that the allegations, years ago, that the company was dubbed an unacceptable face of capitalism, dogged its reputation. It would be a pity if history was to repeat itself,” Sir Richard wrote. [June 11th, 2014]

In essence, the corporate governance complaints against Mr Rowland’s old Lonrho and executive chairman David Lenigas’ new Lonrho – a vastly slimmed down operation largely dedicated to agribusiness – are quite different. Sir Richard’s concerns about the new Lonrho centre on the proposed hike in the salary of Mr Lenigas, from £500,000 to £750,000 – and the way he allegedly rushed it through.

Lessons of history?

Mining has always been a tough industry often operating in extreme environmental conditions. Pioneering leaders have to deal with the other powerful leaders seeking the best deals for their institutions and their personal interests. The protagonists often share combative instincts. Roland, for example worked with the notoriously unpredictable Colonel Gadhafi . He also had no apparent qualms about engaging in bitter personal battles with the Fayads, and former allies with whom he had fallen out.

His successors at Lonmin are embroiled in investigations of the deaths of 34 of its mine workers in Marikana. In the ‘new’ Lonrho, the disputes and resignations continue. The company is said to be risking resurrecting the unwanted tag as the unacceptable face of capitalism.

Today, the leader may find it harder to shrug off criticism in the words of Tiny Roland “Don’t talk to me about morality and proper behaviour”. Even if the company pays its taxes, global institutions are finding it easier to recognize the intricate way in which ethics and profits are inter-connected and exert pressure accordingly.


Creative Leadership: Broken Windows, Maps and Dilemmas

June 13, 2014

Creative Leadership: Broken Windows, Maps and Dilemmas illustrates an approach for changing dysfunctional environments into more positive and creative ones

Creative leadership: broken windows, maps and dilemmas from Tudor Rickards

Who Broke my Windows?

The Broken Windows approach was initially used as a way of understanding how the quality of a physical environment can influence criminal behaviour. Thinking about this in terms of a creative climate we suggest that neglect of a physical working environment, together with poor quality personal behaviours (lack of courtesy, sarcasm and so on) can lead to a deteriorating atmosphere in which people feel demoralised and that their work is of no value. This leads to a downward spiral of performance and morale which can be very difficult to deal with.

We know from the work of Teresa Amabile, Steve Kramer, Goran Ekvall and others that behaviours are critical to sustaining a creative climate. If put under the stress of change we can all behave poorly, without realising it and without meaning to. It is the role of a creative leader to understand how these behaviours happen and how they might be addressed.

The unintended behaviours are

Being Rude
Being Greedy
Having Favourites

And the way to address them is to think about

Clarifying
Connecting and
Communicating

so as to involve individuals, teams, and wider social groupings.

To be continued


The Lenovo Juggernaut Rolls on Unabated

June 10, 2014

Dr Pikay Richardson

Chinese personal-computer maker Lenovo Group is looking to acquisition to fuel further growth. The company has great ambitions, and cash to fund its plans. Will it be able to balance innovation and efficiency?

Lenovo recently concluded two deals worth collectively about $5bn. The company has acquired IBM’s low-end server business for $2.3bn and from Google, Motorola Mobility handset operations for $2.9bn. Both were seen as Lenovo’s efforts to diversify beyond PCs into other faster growing areas of the computer industry.

Growing through acquisitions

Lenovo’s foray into other business segments was not entirely surprising. Having beaten HP to become the world’s largest PC maker by shipments, it has been looking for new sources of growth, mainly in smart phones and servers and storage systems. “We will continue to use acquisitions as a means to grow”, Lenovo Chief Executive Yang Yuanqing said after a shareholders meeting in Hong Kong. “Wherever there is a good opportunity, we will grasp it”.

The company has great ambitions, and an extra cash store to match. After paying $4.7bn, it still has $2bn on hand, according to Wang Wai Ming, Lenovo’s chief financial officer. What is more, the current low-interest environment provides opportunity to raise further funds, which Lenovo is considering, according to Mr Wang.

Lenovo’s strong corporate governance regime

Investor confidence is high. On 21st May, Lenovo announced its full-year results in Hong Kong where it has been listed since 1994. Its revenues were 14% higher than the year before, at $38.7bn, while pre-tax profits topped over $1bn for the first time in its history, up 27% on the year before. But this is only part of what is causing the investor euphoria. The other is that, Lenovo unusually for a Chinese Company, claims a strong corporate governance regime, as well as consistently delivering predictable returns.

Lenovo’s ability to turn around the controversial $2.9bn purchase of Motorola Mobility has been questioned. The pioneer mobile phone has fallen on hard times, but Mr Yang has responded to skepticism by saying that he was confident his company will be able to turn around the unprofitable business in four to six quarters, based on a strategy of increasing economies of scale rather than trimming staff.

From losers to treasures

“We have a good track record of turning around money-losing businesses into treasure”, he said, pointing to Lenovo’s first foray into foreign markets when it bought IBM’s loss-making PC business in 2005. Few believed then that an obscure Chinese company could save a Western premium brand, but this is precisely what Lenovo has done. Yang went on “Lenovo is the best company in the world when it comes to balancing innovation and efficiency.”

Whether or not this claim is sustainable is more a matter of “wait and see”.


Follow

Get every new post delivered to your Inbox.

Join 1,559 other followers