Business and Society in Canada PDF

Pillar 1, Good Management, links ethics to management, while Pillar 2, Good Organization, considers managing ethics inside the organization. Pillar 3, Good Citizenship, goes beyond organizational boundaries. Taken as a whole, this book lays down the foundational concepts that explain the dy...

Pillar 1, Good Management, links ethics to management, while Pillar 2, Good Organization, considers managing ethics inside the organization. Pillar 3, Good Citizenship, goes beyond organizational boundaries. Taken as a whole, this book lays down the foundational concepts that explain the dynamic relationship between business and society with the goal of building good companies. We start our journey with a critical question: Are we in "good" company? Mythbuster 1.1 "Is it even possible to build good companies?" People often talk about business with cynicism: "Why study business ethics? Good companies do not exist and are not possible." We propose to ask another question: Is good management possible? If good managers are possible, if they can exist, then good companies are possible. Companies are built by people like you. You are capable of being a good manager, which will build a good company. The future of business is really in your hands. Are you ready to do business in Canada? It involves learning from the historical background of the Canadian business system and being prepared to address contemporary issues confronting business and society today and in the future. Canada is a pluralistic society composed of over 680 First Nations, Inuit, and Métis communities, along with immigrants from every country in the world. 3 This has created a unique diverse multicultural tapestry of interwoven actors influencing business, including federal–provincial–local governments, labour unions, institutions, groups, minority groups, civil–political–business activists, consumers, the communications media, business organizations, and non-governmental organizations. As would be expected from a diverse heritage, issues arise as a result of different perceptions and expectations of business. This book has certain goals for navigating the relationship between business and society in the uniquely Canadian landscape: To focus on describing distinctly Canadian capitalism so you will be able to recognize and evaluate the influence and demands of the actors involved in the Canadian business landscape; To approach the relationship between business and society with critical thinking and an open mind about varying perspectives on business ranging from ownership to stewardship; To prepare you for decision-making, where you will formulate your own optimum response to business–society issues by drawing lessons from the past and constructing best practices for the future. To start, we will define two key terms that are central to this book: business and society. Page 5  Society Defined Society is a community with broad groupings of people with common traditions, values, and history. Canadian society is composed of individuals, groups, organizations, and institutions that operate within the Canadian legal framework. However, it is a pluralistic society of values, backgrounds, and aspirations, where many members are not always in agreement with each other. Very broadly, Canadian values revolve around diversity, freedom, democracy, rule of law, and social protection. The latest Canadian government statistics reveal extensive social protection programs combined with the universal health care and public education systems that amounted to about 48 percent of the country's total gross domestic product (GDP). 4 Business Defined In general terms, business refers to private, commercial-value oriented (i.e., for-profit, for-benefit and co-operative) legal enterprises. Businesses are made for an array of purposes, and they can be as small as a one-person proprietorship and as large as a multinational corporation with thousands of employees. In Canada, small- and medium-sized enterprises (SME), make up about 99 percent of all businesses, employ 88 percent of Canadians, and contribute about 52 percent of the Gross Domestic Product (GDP). On average, about 15 percent of Canadian business is foreign owned. 5 The large business landscape is shared with large Crown-owned companies. Crown corporations are owned by the government. As of 2022, there were 47 federal Crown corporations in Canada and 2,928 large companies (with over 500 employees). 6 Businesses operate in all industries. Some industries (i.e., fossil fuel extraction) and large businesses have been receiving negative public attention. However, we should keep in mind that small- and medium-sized businesses, in particular, and the social enterprise movement have also been receiving increased positive media coverage. The Business–Society Relationship: Licence to Operate As the quotation from Paul Polman at the beginning of the chapter states, "Business can not succeed in societies that fail." 7 Put another way, business and society need each other. Business needs a healthy society with infrastructure resource inputs, like education for an educated workforce and equal opportunity for workforce participation, and healthcare for healthy consumers and workers, as well as a supportive regulatory framework that encourages innovation, ethical practices, and responsible corporate citizenship. This symbiotic relationship between businesses and society fosters sustainable growth, shared prosperity, and a positive impact on the well-being of business, individuals and communities alike. Prosperous societies contribute to the profits of businesses through a steady demand for goods and services. Society also needs successful companies. Business is needed to create jobs, wealth, and innovations that improve the standard of living for society. If business is weakened for any reason, jobs disappear, competitiveness is lost, wages stagnate, and overall wealth to spend on goods and services declines. 8 Society has certain expectations of business behaviour. The social contract (discussed in greater detail in Chapter 5) is one way of thinking about the business–society relationship as a mutual expectation of behaviour between two institutions. The social contract is explicitly written into law and also has a set of tacit semi-formal expectations around financial, ethical, social, and environmental business performance. However, Carroll, Brown, and Buchholtz have noted that there is a gap between business social performance and actual social expectations, which they term the social problem. 9 Society grants organizations permission to operate in the social system as long as the goals and values are congruent. Therefore legitimacy, the alignment of business–society expectations, is a precondition to the economic activity of business in a social system. Social licence is the privilege of operating in a society with minimal formalized restriction—that is, legislation, regulation, or market requirements—based on maintaining public trust by doing what is acceptable to stakeholders in the business and society relationship. 10 The social license is based on society's expectations and is not static; there is a dynamic evolving social contract about what business responsibilities should be based around financial, ethical, social, and environmental performance. Business is expected to conduct itself with integrity in its environment. Businesses that seek funding, growth, and overall profitability realize that they must meet societal expectations. As a result, businesses are considering the following issues in their relationship with society: Business corporations should meet humanity’s needs without harming future generations. Social responsibility or corporate sustainability reports published should move beyond the public relations exercises they may have been in the past. Increasing numbers of stakeholders demand corporations account for more than economic responsibilities.  Progressive and innovative responses to social, ethical, and environmental responsibilities constitute a valuable intangible asset. Executives must have the skills and competencies to manage these additional responsibilities successfully. Page 6 Responses to these responsibilities will determine the corporations that will survive. 11 One attempt at measuring the responsiveness of corporations to societal expectations is Corporate Knights magazine’s annual ranking of the best corporations in Canada, described in Everyday Ethics 1.1. Everyday Ethics 1.1 Canada’s Best Corporate Citizens a Annually, Corporate Knights magazine identifies the 50 best corporate citizens in Canada. In 2022, the five top-ranking corporations were Hydro-Québec, Innergex Renewable Energy Inc., Brookfield Renewable Partners LP, BCE Inc., and Kruger Products LP. Corporations are evaluated on 14 key performance indicators covering resource, financial, and employee management. Energy Intensity Carbon Intensity Water Intensity Waste Intensity Clean Air Productivity Score Innovation Capacity Percent Tax Paid  CEO–Average Employee Pay Ratio Pension Fund Status Supplier Score Safety Performance Employee Turnover Leadership Diversity Sustainability Linked Compensation Ethics and business