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The give and take of corporate stewardship.

On a day when the major product of business seems to be insecurity, it may be naive to talk about corporate stewardship. Yet thousands of businesspeople, many of them Catholic, try daily to exercise stewardship in boardrooms and in corporate offices. These business people may not consciously be bringing the gospel to the marketplace. Nor do they express their management philosophy in explicitly Christian language. But many of them are motivated by their Christian upbringing and by their continued reflection on the gospel and the church's tradition.

Throughout its history the church has analyzed the relationship between Christians and the world around us. That reflection has yielded a social philosophy that can guide Christians as they fashion institutions and policies in the marketplace. This Catholic social thought - sometimes capsulated in arcane principles like solidarism, subsidiarity, the preferential option for the poor, and several more - must be continually applied to new circumstances, or it means nothing.

Among the Catholic social principles is corporate stewardship. Unfortunately the concept of stewardship is used in churches only when an appeal for money is on the way. However, Stewardship is not just charitable giving," according to a group of 50 Chicago Catholic CEOs known as Business Executives for Economic justice. In their position paper, "The Buck Stops Here: Perspectives on Stewardship," the CEOs explain that stewardship, "is a deeply spiritual yet essentially practical question of how we react to the gifts and resources over which we have some measure of control and influence...

That includes the corporate or institutional resources we manage."

Indeed, writes Father William Byron, S.J. in the New Catholic Encyclopedia, "stewardship is an instrument of social justice.... All we have is held in trust for others.... The exercise of stewardship, if it were real and active in these times, could feed the hungry, assist the poor and free the oppressed."

What the corporate

steward looks like

It is impossible to write the ten commandments for corporate stewardship. The conduct of business is too fluid, too complicated. Any large corporation is bound to have a myriad of policies and products - some exemplary, others questionable. Reebok, a major footwear company, for example, is highly regarded for its promotion of strict environmental and safety standards and its efforts toward urban development. The company is also noted for its progressive on-site day-care facility. Yet, explains the Wall Street journal, the company has prospered, in part by closing 15 factories, mostly in depressed areas, and moving most of its production to various low-cost Asian countries," where it pays skilled workers about $31 for a 57-hour week and unskilled packers and sorters about $15 a week.

To get some perspective on his or her corporate stewardship, a thoughtful businessperson might step back and square the reality of his or her business against three emerging models of corporate stewardship - each having positives and negatives.

Generous to a fault

-The corporate philanthropist-

This long-established method of corporate citizenship is practically taken for granted. Without it, much of American life would disappear: located in a changing neighborhood.

Faustin Pipal, recently deceased CEO of St. Paul Federal Bank originally based in Oak Park, Illinois, said that driving to work in the early 1970s "wasn't a pretty sight. Panic peddling was beginning. Banks had stopped making conventional mortgages. Landlords deferred maintenance on apartment buildings and home owners were losing their pride of ownership." It was likely that the area would quickly change. Pipal had to either "bail out or practice stewardship of the community. With few examples to follow, Pipal and his colleagues decided to make integration and stability the cause of his bank. Today Oak Park is one of the few truly integrated, middle-class communities in the country, and Pipal's neighborhood bank now has a solid reputation and many branches.

Likewise, the Shorebank Corporation, headquartered in Chicago, breathes life into decaying communities by making loans for housing rehab, small business development, and educational efforts. In the last 20 years the bank has loaned over $250 million to 10,000 borrowers. Shorebank advertises nationally and invites individuals and church groups to invest in the bank's vision. The bank is a solid operation.

Other ventures in this model of corporate stewardship have been less successful. One of the better known socially responsible investment funds has failed to keep up with the rising stock market, leaving progressive investment advisors in an embarrassing position with their progressive customers.

Thus the corporate steward who thinks of his or her business as being especially enlightened has, it seems, added responsibility when the business fails to meet the promise it makes to its workers and investors. Think of the church as an example. What happens to stewardship when the church uses its scarce resources to provide education in poor communities with teachers who receive less than a living wage? What comes first - a socially responsible product, the bottom line, or justice to employees? Are the various goals of business internally compatible? Are there different expectations and standards for a company that is basically marketing its ideals?

Even the best slip up

-The corporation as

enlightened employer-

The moral outcome of business today are often so contingent and so far removed that many businesspeople have concluded that they best exercise stewardship through face-to-face care of people - primarily employees but also customers and suppliers. Contrary to older management theories, this concern for employees quite often improves productivity.

The CEO of a very successful engine plant in the Midwest believes that all employees are entitled to know the ins and outs of the company. All information about productivity, overhead absorption, purchasing, marketing, and other business matters is communicated to janitors, secretaries, welders, sales representatives, and officers alike. A team spirit fills the factory. The company doesn't "use information to intimidate, control, or manipulate people," the CEO explains. We "use it to teach people how to work together to achieve common goals and thereby gain control over their lives." As a result of this respect for workers, the business is "more responsive to changing marketplace conditions while providing a tremendous inner satisfaction and sense of meaning to employees." The workers at this company set their own productivity goals that are tied to quarterly bonuses and an employee stock ownership plan. Profits and employee morale remain high in a competitive industry.

In their paper "The Buck Stops Here," the CEOs of Chicago sagely warn, however, that "stewardship of people can very easily become paternalistic."

Take the enlightened CEO at the Midwest engine company. He has repeatedly taken steps to keep unions out of the plant. He once subverted a delivery drivers, strike by dressing his employees in religious habits and sending them in school buses to get the deliveries. He claims not to be antiunion, but in a classic paternal phrase says that a union would be welcome at his plant only if he could join.

It is a rare businessperson today who believes that business has no social responsibility beyond making a profit. "Most companies have made the case that community involvement is good business," says John Weithers of the Midwest Stock Exchange. But by definition a corporation cannot act altruistically. Any effort at corporate stewardship has to make business sense. In the case of publicly traded companies, Weithers says, "the corporate steward has a legal responsibility [not to] disburse excessive amounts of the assets of shareholders - thereby taking away their ability to make their own personal stewardship decisions." Shareholders expect that corporations will publicize their good deeds. In fact, public relations around corporate stewardship is quite appropriate. It encourages more stewardship within the company and from its competitors. But, as is true for individuals, corporations need to exercise a degree of humility.

A very popular beverage retailer recently promulgated a code of ethics which "supports workers' right to organize" and pledges "to raise standards of health, education, workplace safety and economic well-being in communities where [the company] does business." In recognition of this ethics' code the company was given a prestigious human rights award. Not long after, the company's vice-president had to admit that, "we've done nothing yet." The award, it turns out, was given based on the company's mission statement alone.

Many sincere executives have spent countless hours lobbying for and crafting codes of ethics in their companies. "As well-meaning as [the codes of ethics] purport to be," write professors Jon Entine and Martha Nichols, they can too easily "shift focus away from corporate hehavior to the never-never land of good intentions" Unfortunately in our image-dominated society, perceptions are often substituted for reality.

On the other hand there is a major, publicly traded cereal and bakery goods producer headquartered in the Midewest. The company makes its share of donations to concert halls, schools, and hospitals. Its annual report devotes several pages to its role in community affairs. But not mentioned is the company's long-standing practice of each month loading several semitrailers with "the first fruits" from the bakery. Skids of breakfast products, cakes, and snacks are shipped and unloaded at food pantries all around the state. The churches and agencies receiving the donations are instructed to keep the source anonymous. The company's officers beleive that, in addition to normal corporate donations, their product obliges them in a special way to feed the hungry. When it comes to giving away food, the officers do not beleive that their company should get anything in return.

Focus on the issues

Obviously these three models are not distinct in the real world. They are meant to foster, not limit, reflection.

"My thinking on corporate stewardship," says Robert Senser of the Asian American Free Labor Institute, "starts not with models, but with concrete issues. Take the new problems created by hollow corporations based in the United States. These are companies that manufacture nothing but design and distribute products that its foreign partners manufacture. In the United States the typical home office would not hire 11-year-old children, it would not discriminate against women, it would not bum a child with a hot iron or beat an employee. But that is happening all over Asia and elsewhere in the new industries begun by partners of United States businesses. I have doubts that moral suasion alone will effect any change in corporate attitudes in this matter. Which means that models of stewardship won't help, except perhaps for a few."

It is true that simply articulating models of corporate stewardship will not result in better corporate behavior. On the other hand, introspection is a prerequisite for those corporate executives who want the world to better reflect the evolving plan of God. Thinking about the pros and cons of stewardship models might stimulate that meditation. The practice of corporate stewardship, say the Business Executives for Economic justice, "means going beyond what is minimally required by law or even prevailing opinion. It means taking the long view of costs and profits."

That's the attitude of those printing companies in the Great Lakes region that have joined the Great Printers Project. They know that their industry is a major source of pollution. Yet they also know that one printer acting alone is virtually helpless in improving the environment. The competition will win out if only one printer uses recycled paper and cleaner, which involves more expensive waste-control procedures. And so acting together and in cooperation with their unions, suppliers, and large customers, several printers have taken specific steps "to set a standard for incorporating prevention into environmental protection," even if it means a shortterm increase in expenses.

Not all business executives are interested in corporate stewardship. Nor will any executive be successful in single-handedly improving the marketplace. Consumers have a necessary role in rewarding good business practices and shunning undesirable products and services. Professional associations have a necessary role in monitoring their members. Unions and employee associations have a role in representing the rights of workers. Government has a role - perhaps more, perhaps less - to regulate the market. Nonetheless, businessmen and businesswoman as insiders to the system have a great opportunity to practice stewardship and advance the common good.
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Title Annotation:includes related information in being a responsible consumer
Author:Droel, William
Publication:U.S. Catholic
Date:Jan 1, 1997
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