By Dr Sea Rotmann
From Wikipedia: The behaviour of an organisation is influenced by the arrangements for its ownership and control. When the owner(s) appoint agents to manage the organisation, conflicts of interest arise which are studied as the principal-agent problem. This concerns the difficulties in motivating one party (the "agent"), to act in the best interests of another (the "principal") rather than in his or her own interests. Common examples of this relationship include corporate management (agent) and shareholders (principal), or politicians (agent) and voters (principal).
When Dusan Jakovljevic of EEIP asked me to write this article, this was the very interesting question he posed to me. On my first instinct, I would have said that company or corporate behaviour is indeed different to individual behaviour. The documentary ‘The Corporation’ argues that, in North American law, treating corporations as legal persons has caused a multitude of social, environmental and economic ills. That is, if you regard (as the film does), a corporation’s behaviour akin to that of a psychopath’s. The general mistrust in corporations and politicians to have public good (‘the principal’) at heart of their actions, is a malaise that has been increasingly causing tensions between the public and its political and industry leaders.
But are corporate leaders (I will leave politicians aside for now) really behaving in a psychopathic manner, due to the mandate posed on them by their shareholders to maximise profits at all cost? As with all things concerning human behaviour, I do not think you can generalise such matters. It has been shown that the incidence of psychopathy among CEOs is about 4 times that of the general population. These are the so-called ‘snakes in suits’, highly intelligent but non-violent sociopaths who possess the right traits of determination, focus, risk-taking, lack of scruples and charisma to take a corporation to maximum profits. The unfortunate side-effects of these traits are lack of empathy, superficiality, lying, manipulating and generally behaving without any concern for others. History has shown the pain and suffering caused by ‘psychopathic’ corporations and corporate leaders, not least during the last financial recession.
Clearly not all corporations and their leadership behave as psychopaths, and corporate responsibility has become an important focus of recent corporate reporting, taking social, environmental and economic sustainability to the heart of corporate actions and behaviour. Probably the best example of such visionary leadership is Ray Anderson, founder and CEO of Interface Carpets and America’s ‘Greenest CEO’ whose successful corporate leadership is portrayed in the must-see film ‘So Right, So Smart’.
But does corporate behaviour really start and end with its leadership and governance? As important as the behaviour - both individual and collective - of the heads of an organisation is, as important is that of its middle-management and workers. When I was working as Sustainability Advisor to one of the largest employers in New Zealand, trying to impart sustainability principles on 10,000 staff in the areas of transport, procurement, energy, waste and buildings, I learned one important formula - you will not be able to change behaviour unless you have all three of the following ingredients: leadership support and buy-in, engaged staff champions and dedicated and knowledgeable managers who understand the detailed workings of the business (be it building, transport, procurement or energy managers). Having all three will not guarantee you large-scale behavioural change, but missing one or more of them will almost invariably guarantee its failure.
In the end, I always keep reminding myself that ‘it’s all about the people’. One bad seed manager or leader can cause invariable damage to an organisation’s reputation and ‘behaviour’, but only if there is a culture within that organisation that supports, fosters or at least does not curb, such behaviours. One dedicated building manager or staff member with the right level of charisma, connections and enthusiasm, can still work wonders in turning around company behaviour from the ‘bottom up’. When studying company behaviour, it is important to look at the overall pattern of performance and behaviour in the company, using generally-applied metrics (such as corporate responsibility, or triple bottom line reporting). But in order to dig through the spin, jargon and green-wash of such reports, it is also important to survey the individuals working at the company - at the leadership, middle management and staff level. Letting them tell their stories of how they perceive the company’s behaviour, will provide invaluable insights into its actual performance. Customers, traders, shareholders and other external parties also need to be included in such surveys to get the whole picture.
In the end, perception is everything, and in the days of social media where a bad customer encounter can lead to immediate, global bad press via twitter, facebook or other channels, corporate behaviour is slowly changing, hopefully to the better.
About the author
Dr Sea Rotmann is an Austrian-Kiwi behaviour change consultant, with improved energy use as her focal interest. Her current main project is being Operating Agent for Task XXIV on Behaviour Change for the IEA’s DSM Implementing Agreement (www.ieadsm.org). She previously worked at the New Zealand Energy Efficiency and Conservation Authority as Principal Scientist and has been the NZ member of the IEA’s Expert Group for R&D Priority Setting and Evaluation for the last 5 years. Her main passion is to find ways to bridge the gap between theory, policies and practice and utilise social media and networking tools to foster international engagement and collaboration. She releases a weekly newsletter called ‘Behaviour Change & Energy News’