Romina Rabani - Executive Master of Business Administration

Managers are traditionally reluctant to implement responsibility performance measures, fearing that good social performance may negatively affect financial performance. Yet example after example demonstrates that operating responsibly saves money and, in some cases, even creates profitable new opportunities. The payback to the audited companies that we studied was between six and twenty times the audit cost over periods of 6 months to 3 years. The companies consistently found that interacting responsibly with their primary stakeholders caused them to operate more responsibly and more profitably. They direct managers’ attention to socially responsible practices that meet the expectations of primary stakeholders. Achieving the benefits rests on creating an adaptive and proactive corporate culture from the top down. Such proactive management helps avoid normally hidden costs and liabilities that come from reacting to problems as they occur. Moreover, operating responsibly is — or can be — a core business strategy, one in which core operating functions is considered strategic, and stakeholder relationships and financial performance is allowed to grow.In this study we propose that auditing a company’s core operating practices by using a responsibility audit may help to bridge this rhetoric-reality gap. Such an audit assesses a company’s overall performance against its core values, ethics policy, internal operating practices, and management systems. Eight Companies assessed those operating practices that related to implementing their stated vision, values, and mission. All eight had award-winning environmental, health, and safety (EHS); human resources; or corporate giving practices. However, they all discovered significant gaps in four operating areas: employee relations, quality systems, community relations, and environmental practices.

Responsibility Audits, Corporate Responsibility, Operating Practicing