engaging the whole organization in corporate...
TRANSCRIPT
Engaging the Whole Organization in
Corporate Responsibility
Holly Duckworth, PhD Sherpa, Inc.
Mike Wallace BrownFlynn
#CRSummit2016
Introductions
• Previous positions include leadership roles in six sigma, quality and operations at Kaiser Aluminum, TRW Automotive, GE – Aviation, and Lockheed.
• B.S. in Mechanical Engineering from the University of Tennessee, M.S. in Management from the University of Southern California, Ph.D. in Industrial and Organizational Psychology from Capella University
• ASQ certified Six Sigma Black Belt, certified Manager of Quality, and Organizational Excellence, Certified Master Black Belt with ISSSP
• Chair of the ASQ Technical Community on Social Responsibility
• Co-author:“My Six Sigma Workbook” & “Social Responsibility: Failure Mode Effects and Analysis”, and “A Six Sigma Approach to Sustainability: Continual Improvement for Social Responsibility”
Holly Duckworth, PhD
www.sherpabcorp.com
Mike Wallace, MD, BrownFlynn
www.brownflynn.com
• Managing Director at BrownFlynn, focused on
Strategic Partnerships and Emerging CR / Sustainability Services
• Previous Director at the Global Reporting Initiative (GRI) in Amsterdam and in North America
• Experience in traditional EH&S consulting, M&A Due Diligence and Corporate Responsibility / Sustainability.
• B.S. in Business Administration from Miami University of Ohio; Dual Major: Organizational Behavior & Employee Relations
• Current and past member of ABA Sustainability Task Force, CRA Ratings & Rankings and Responsible Supply Chain Councils, Committee on Supplier Ratings (COSR) and Center for Safety & Health Sustainability (CSHS)
#CRSummit2016
Agenda
American Society for Quality – Social Responsibility Research
• How the Markets Assess Sustainability
• Continual Improvement for Social Responsibility
• Engaging the Whole Organization in Corporate Responsibility
#CRSummit2016
A Connection Between Quality
and Corporate Responsibility
• ASQ
– US TAG for ISO 26000
– Repeated research projects demonstrate strong connection between Quality principles and methods and social responsibility
• ASQ + IBM: 2010
• ASQ + BSR: 2011
• ASQ Integration Guide: 2014
• ASQ + BrownFlynn: 2015
#CRSummit2016
CR Helps Quality
• Stakeholder engagement – Existing CR approaches and best practices for stakeholder
engagement can help quality professionals collaborate and communicate with a wider range of internal and external stakeholders.
• Transparency – CR reporting has innovated a range of standard non-
financial reporting metrics and indicators that quality professionals can use to build more holistic models.
• Systems thinking – CR approaches incorporate the interdependence inherent
in ecosystems and can bring in important aspects of society and environment into business decision making.
#CRSummit2016
Quality Helps CR
• Making hidden costs visible (Cost of Poor Quality)
– Eighty-six percent of CEO’s see “accurate valuation by
investors of sustainability in long-term investments” *as important to reaching a tipping point in sustainability
• Corporate governance (Quality Management Systems and Layered Process Audits)
– The majority of problems are the fault of management, process, or systems, rather than poor workmanship.
• From reactive to proactive (Preventive and Systemic Corrective Action)
– Monitoring approaches when used alone for suppliers will fail to address root causes for social and environmental challenges.
• Employee Engagement (Total Quality Management and Shop Floor Kaizen)
– Including employee voices and promoting an informed, participatory workplace will help to ensure fair working conditions.
*United Nations Global compact 2010 report, “A New Era of Sustainability”
#CRSummit2016
ASQ+BrownFlynn: 2015
Key Findings
• 20 public ASQ Enterprise Member companies
• A clear relationship exists between Public Commitment to Quality and performance on third-party Sustainability evaluations.
• Companies who reference ISO standards demonstrate higher Sustainability performance and deeper levels of transparency.
• Nearly all companies reference Quality when evaluating risk factors to their business.
• The vast majority of companies reference the importance of a full value chain perspective (both upstream and downstream of the organization) as it pertains to both Quality and Sustainability.
• Companies with greater transparency demonstrate better Sustainability performance.
#CRSummit2016
Agenda
• American Society for Quality – Social Responsibility Research
How the Markets Assess Sustainability
• Continual Improvement for Social Responsibility
• Engaging the Whole Organization in Corporate Responsibility
#CRSummit2016
• AIAG 2016 Modern Due Diligence: How the markets are assessing sustainability
© BrownFlynn 2016
#CRSummit2016
Growing Demand
Transparency on
MATERIAL
CR/Sustainability
Information
Investors /
Financers
Employees
Customers
Suppliers
Regulators
Legislators
Boards of
Directors
Local
Communities
Activists/
Advocacy
Groups
Industry
Associations
© BrownFlynn 2016
#CRSummit2016
Expanding Issues
Environmental
Materials
Energy
Water
Biodiversity
Emissions
Effluents and Waste
Products and Services
Environmental Compliance
Transport
Supplier Environmental
Assessment
Environmental Grievance
Mechanisms
Economic Economic Performance
Philanthropy
Market Presence
Indirect Economic Impacts
Economic Inclusion
Procurement Practices
Human Rights
Non-discrimination
Freedom of Association &
Collective Bargaining
Child Labor
Forced /Compulsory Labor
Security Practices
Indigenous Rights
Supplier Human Rights
Assessment
Human Rights Grievance
Mechanisms
Labor Practices
& Decent Work Training and Education
Employment
Labor/Management Relations
Occupational Health & Safety
Diversity & Equal Opportunity
Equal Remuneration for Men
and Women
Supplier Assessment for
Labor Practices
Labor Practices Grievance
Mechanisms
Society Anti-Corruption
Public Policy
Anti-competitive Behavior
Local Communities
Supplier Assessment for Impacts
on Society
Grievance Mechanisms for
Impacts on Society
Product Responsibility Customer Health & Safety
Product & Service Labeling
Marketing Communications
Customer Privacy
Product Compliance
© BrownFlynn 2016
#CRSummit2016
Drive to Materiality
To objectively determine what matters most—by looking up and down your value chain and assessing the perspectives of your internal and external stakeholders. Managing these material topics mitigates risk and/or drives value for stakeholders and your business.
© BrownFlynn 2016
#CRSummit2016
Influence on Definition of Materiality
Please describe how your risk and opportunity identification processes are applied. How do you prioritize the risks and opportunities identified?
The information in a report should cover [topics] that reflect the organization’s significant economic, environmental, and social impacts or substantively influence the assessments and decisions of stakeholders
Disclosure of material sustainability issues is important to investors, companies, regulators, and the public
Is your company publicly reporting the processes and tools used to identify and prioritize critical issues within the sustainability strategy, including a consideration of impact on the company’s business performance (i.e. materiality analysis/matrix)?
© BrownFlynn 2016
#CRSummit2016
ESG Ecosystem
Based on sustainability reporting standards and frameworks, there are 100+ organizations producing lists, rankings, and scorecards of “top companies” and “most sustainable” companies.
© BrownFlynn 2016
#CRSummit2016
Investor Coalitions
© BrownFlynn 2016
#CRSummit2016
Access to Capital –
supplier/customer relationships
Source: http://www.unpri.org/
© BrownFlynn 2016
#CRSummit2016
Shareholders & Supply Chains
NYC Comptroller influences industry on sustainability measurement, management and performance reporting Comptroller’s Office oversees over $150B in pension investments and seeks long term sustainability of these retirement funds
– Fiduciary responsibility of investing and protecting the Fund for more than 237,000 retirees and beneficiaries and more than 344,000 City and affiliated employees
– Monitors and manages:
• Traditional financial and reputational risks of the Fund
• Alignment with the basic values of the constituents, such as workers rights and environmental concerns
– Recognizes regulatory (i.e., Dodd-Frank) and non-regulatory (i.e., Sustainability Reporting) market developments will have an influence on the resilience of investment portfolio
Evolution of the NYC Comptroller story
July 2012 - “. . . . the New York City
Comptroller’s Office secured agreements from
Apple, Dell, HP and Intel, who agreed to
encourage, and in many cases require, their
major suppliers to issue sustainability reports
encompassing both environmental and social
issues. Together, these firms represent more
than 50 percent of the personal computer
market, making them some of the most
exposed to risk.”
June 2013 – How corporate reporting
improved Microsoft’s supply chain, GreenBiz
December 2013 – Incorporating sustainability
into supply chain management: A look inside
Intel’s approach, GRI Newsletter
November 2014 – NYC Comptroller targets 75
companies in groundbreaking proxy access
initiative, Pensions & Investments
© BrownFlynn 2016
#CRSummit2016
Market & Regulatory Developments
Stock Exchange Activity
International Regulatory & Public Agency Activity
US Regulatory, Public Agency & Professional Industry Activity
© BrownFlynn 2016
#CRSummit2016
Market & Regulatory Developments (Sept. 2015)
© BrownFlynn 2016
#CRSummit2016
Market & Regulatory Developments (Oct. 2015)
© BrownFlynn 2016
#CRSummit2016
Reporting Activity
© BrownFlynn 2016
#CRSummit2016
Reporting & Supplier Activity
Sustainability Surveys IBM Airbus Kaiser Permanente Siemens Marathon Oil British Telecom Boeing Ingersoll Rand Volvo United States Postal Service Walmart BMW Johnson Controls CR’s Top 10 Best Corporate Citizens 2013
Sustainability Training Nike
Puma
Apple
AT&T, Inc.
Mattel
Bristol-Myers Squibb
Campbell’s
Intel
© BrownFlynn 2016
#CRSummit2016
City of Cleveland
© BrownFlynn 2016
#CRSummit2016
City of Chicago
© BrownFlynn 2016
#CRSummit2016
City of Atlanta
© BrownFlynn 2016
#CRSummit2016
State of Washington – Dept. of Ecology
© BrownFlynn 2016
#CRSummit2016
U.S. Postal Service
© BrownFlynn 2016
#CRSummit2016
U.S. Army
© BrownFlynn 2016
#CRSummit2016
White House CEQ
© BrownFlynn 2016
#CRSummit2016
State of California
CIO $91 billion
Procurement $6 billion
Procurement $9 billion
CIO $283 billion
CIO $188 billion
© BrownFlynn 2016
#CRSummit2016
ORGANIZATIONS
Conveners
Advisory Committee
Participants
Sponsor Chair Technical Consulting
Reduce, Reuse, Recycle
The Committee on Supplier Ratings (COSR) – An initiative hosted by the Sustainable Purchasing Leadership Council (SPLC) that aims to use existing ratings and rankings methodologies to manage supply chains - https://www.sustainablepurchasing.org/cosr/
© BrownFlynn 2016
#CRSummit2016
Engaging the Entire Organization
© BrownFlynn 2016
#CRSummit2016
Agenda
• American Society for Quality – Social Responsibility Research
• How the Markets Assess Sustainability
Continual Improvement for Social Responsibility
• Engaging the Whole Organization in Corporate Responsibility
#CRSummit2016
CISR® Continual Improvement for Social Responsibility
– A new framework for Quality Professionals
– Bring the Quality discipline and valuable expertise to CR efforts.
– Ensure that Corporate Responsibility efforts yield meaningful results, NOT glossy marketing spin.
– Influence ability to attract and retain employees, members, clients, customers and investors.
© Sherpa Inc. 2016
#CRSummit2016
Like Six Sigma for Sustainability
– Requires a continual improvement approach
– Achieves incremental improvement through
project work
– Expert problem solvers are deployed as
project leaders
– Uses rigorous statistically-oriented problem
solving methods
© Sherpa Inc. 2016
#CRSummit2016
Six Sigma: DMAIC
• DMAIC is a method used
in the Six Sigma
methodology
• Define, Measure, Analyze,
Improve, and Control phases
• Defined set of objectives and
tools used at each phase
• Projects with discrete start
and discrete end
• Organizational learning
through method training and
project work
CISR: SOFAIR
SOFAIR is a method used in the CISR methodology
• Stakeholders/Subjects, Objective, Function/Focus, Analyze, Innovate/Improve, Report/Repeat
• Defined set of objectives and tools used at each phase
• Projects with discrete start and discrete end
• Organizational learning through method training and project work
© Sherpa Inc. 2016
#CRSummit2016
Stakeholders/
Subjects
Objective
Function/
Focus
Analyze
Innovate/
Improve
Report/
Repeat
Define Measure Analyze Improve Control
The CISR framework differs from traditional Six Sigma DMAIC,
in that we do not begin with PROBLEM DEFINITION.
The CISR Mindset also includes a focus on the POSITIVE.
What are we already doing well?
What is working?
What is the ideal state?
Do more of that….
© Sherpa Inc. 2016
#CRSummit2016
The SOFAIR Method
Stakeholders
And Subjects
Objective
Function
And Focus
Analyze
Innovate and Improve
Report
And Repeat
Continual Improvement speaks to the PROCESS of improvement… ongoing, in all of its forms and areas.
© Sherpa Inc. 2016
#CRSummit2016
Stakeholder and Subjects
• Phase Objectives
– Charter the SOFAIR project
• Business case, problem statement, goals
– Engage in stakeholder dialogue
– Determine process relationships with SIPOS
– Analyze stakeholder needs across all 7
subjects of social responsibility
– Prioritize and measure the current state for all
critical-to-sustainability characteristics
S
© Sherpa Inc. 2016
#CRSummit2016
Objective
• All CISR activity should be linked to the business objectives of the organization
• Organizational goals, objectives, and resource allocation for the SOFAIR project is determined
• Project is chartered
• Tools – Hoshin Kanri
– SWOT analysis
– Ideal Final Result (IFR)
– Narratives
O
© Sherpa Inc. 2016
#CRSummit2016
Function and Focus
• What part of the problem will we work on first?
• Deployment of systems thinking
• Defines a very narrow focus for the project
• Tools
– Internal and external contextual analysis
– Life cycle analysis
– Process flow analysis
– QFD
– Theory of constraints
– Pareto analysis
F
© Sherpa Inc. 2016
#CRSummit2016
Analyze
• Finding the relationship between organizational decisions and actions to stakeholder impact
• Risk analysis for potentially irresponsible decisions and actions – Risk assessment
– FMEA
• Causal analysis for corrective actions – 5-why’s, cause and effect analysis
– Hypothesis testing
– Regression analysis
A
© Sherpa Inc. 2016
#CRSummit2016
Innovate and Improve
• Innovate where incremental improvement
does not allow for goal achievement
• Cross-functional, creative solution
generation
• Tools
– TRIZ
– 7-ways
– Prioritization analysis
– Project and change management
I
© Sherpa Inc. 2016
#CRSummit2016
Report and Repeat
• Transparency and accountability through
public reporting
• Continual improvement approach
– We are never finished
• Tools
– Internal scorecards
– External sustainability reporting frameworks
• GRI, IR, SA8000, SASB, CDP, EICC, etc.
– Communication and culture change strategies
R
© Sherpa Inc. 2016
#CRSummit2016
Agenda
• American Society for Quality – Social Responsibility Research
• How the Markets Assess Sustainability
• Continual Improvement for Social Responsibility
Engaging the Whole Organization in Corporate Responsibility
#CRSummit2016
The Untapped Resource
• Most CR initiatives have very few full time, dedicated resources
– Yet the supply chain and investor relations risks loom large
• Quality and Continuous Improvement Professionals are the untapped resources
– They are plentiful and at all levels of the organization
– Their methods and systems align with CR efforts
– Engagement in CR efforts can help to retain and develop Quality talent
#CRSummit2016
Case Studies
• Approximately 200,000 employees
• 7 employees dedicated to sustainability or corporate responsibility
• 8,000+ employees Six Sigma trained
• 3,000+ employees with Quality roles
Automotive OEM Tier 1 Supplier • Approximately 10,000
employees in NA
• 2 employees dedicated to sustainability or corporate responsibility
• 1,000+ employees Six Sigma trained
• 700+ employees with Quality roles
#CRSummit2016
Engaging the Whole Organization in
Corporate Responsibility
• Moving from theory to practice
– Train all employees on CR basics
– Allocate a small percentage of Green Belt and Black Belt work to CR performance improvement with CISR
– Integrate CR processes in the Quality Management System
• Policy, procedures, audits
– Teach Quality risk assessment and preventive action techniques to CR professionals
#CRSummit2016
Thank You!!
• Questions?
#CRSummit2016
Introductions
• Previous positions include leadership roles in six sigma, quality and operations at Kaiser Aluminum, TRW Automotive, GE – Aviation, and Lockheed.
• B.S. in Mechanical Engineering from the University of Tennessee, M.S. in Management from the University of Southern California, Ph.D. in Industrial and Organizational Psychology from Capella University
• ASQ certified Six Sigma Black Belt, certified Manager of Quality, and Organizational Excellence, Certified Master Black Belt with ISSSP
• Chair of the ASQ Technical Community on Social Responsibility
• Co-author:“My Six Sigma Workbook” & “Social Responsibility: Failure Mode Effects and Analysis”, and “A Six Sigma Approach to Sustainability: Continual Improvement for Social Responsibility”
Holly Duckworth, PhD
www.sherpabcorp.com
Mike Wallace, MD, BrownFlynn
www.brownflynn.com
• Managing Director at BrownFlynn, focused on
Strategic Partnerships and Emerging CR / Sustainability Services
• Previous Director at the Global Reporting Initiative (GRI) in Amsterdam and in North America
• Experience in traditional EH&S consulting, M&A Due Diligence and Corporate Responsibility / Sustainability.
• B.S. in Business Administration from Miami University of Ohio; Dual Major: Organizational Behavior & Employee Relations
• Current and past member of ABA Sustainability Task Force, CRA Ratings & Rankings and Responsible Supply Chain Councils, Committee on Supplier Ratings (COSR) and Center for Safety & Health Sustainability (CSHS)