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NIGEL A.L. BROOKS THE BUSINESS LEADERSHIP DEVELOPMENT CORPORATION Article reprint
CRITERIA FOR SUSTAINABILITY - ARE DECISIONS RESPONSIBLE - ENVIRONMENTALLY? ECONOMICALLY? SOCIALLY? As the economy migrates from the industrial age to the information age, the value of knowledge becomes more significant. As more information becomes available about the impact of industrial activity on the ecosystem, it is important to acquire knowledge about sustainable development, and promote it responsibly. The sustainable enterprise has to make decisions that include environmental, economic, and social criteria for itself, its constituencies, and the community-at-large. The sustainable enterprise gains a beneficial position over time either by enhancing or maintaining its current position, or by changing it. It must make decisions in the present that affect both the present and the future in such a way that future generations are not impacted negatively. The sustainable enterprise employs three criteria in all decision making are the mindset and intended actions responsible: ● ● ● Environmentally? Economically? Socially?
These three criteria should be embraced within values statements so as to set expectations for attitudes and behaviors within the enterprise, with its constituencies, and with the community-at-large. Environmentally responsible... Being environmentally responsible is a discipline that applies to people, and the characteristics of processes and products and/or services (including packaging materials) that they create. It means protecting the ecological biosphere by conserving natural resources, avoiding contaminants and pollutants, and protecting the air, sources of water, and soil, minerals and oils, and plants and animals. It also means being energy efficient and adopting recycling programs.
The benefits of being environmentally responsible include: ● ● ● ● ● ● Accident avoidance - less employee sick time and lower insurance costs Anti-pollution - less clean-up costs Conservation - less waste Employee welfare - reduced turnover and hiring costs Recycling - reduced disposal costs Safe products and/or services - less liability suits
Decisions should be made with environmental responsibility in mind for the enterprise, its constituencies, and the community-at-large. Economically responsible... Being economically responsible is a discipline for building the value of the enterprise while considering the needs of constituencies and the community-at-large. Enterprise value is the equity value plus the fair value of the long-term debt plus minority interests in affiliates less minority interests of affiliates and cash and cash equivalents. Under the notion of stewardship - the responsibility for the performance of the enterprise and the delivery of value, being economically responsible means instilling a value management discipline. This discipline embraces shared values (common beliefs), a vision of what the community and the enterprise can become within its mission, and building value - worth and usefulness. If the value proposition is compelling, constituencies will follow because everybody likes to be associated with success. The value management discipline includes having effective systems of control, and employing both financial and non-financial performance measures to monitor contributions to enterprise value. Financial measures include revenue, costs and expenses, profits, cash flows, and returns on investment. Non-financial measures include market share and penetration, product usage, satisfaction, quality, time-to-market, cycle time, productivity, asset capacity and utilization.
Measures for economic sustainability include: ● ● ● ● ● ● ● Asset life cycle renewal period - ability to replace capital assets according to a prudent retirement schedule Average collection period - effectiveness of converting receivables into cash Current ratio - ability to cover current obligations as they become due Debt service coverage - ability to cover debt obligations as they become due Efficiency - ability of operating revenue to cover costs and expenses Financial leverage - strength of the equity base and the dependency on debt Solvency - ability to cover all obligations as they become due
Economic considerations for constituencies include: ● ● ● ● ● ● Employees - fair compensation, career development opportunity, and a safe workplace in exchange for loyalty and productivity Customers - quality and value in exchange for loyalty and timely payments Suppliers - loyalty and timely payments in exchange for quality and value Investors - returns above the cost of capital in exchange for commitment Regulators - compliance in exchange for freedom to do business within laws and regulations, and a level playing field Competitors - challenges in exchange for fairness
Decisions should be made with economic responsibility in mind.
Socially responsible... Being socially responsible is a discipline that applies to all individuals and enterprises with respect to the community-at-large and society. The minimum standards for social responsibility for enterprises are: ● ● Providing safe and environmentally friendly facilities and equipment, processes and functions, and products and/or services Not engaging in deceptive or fraudulent practices
The requirements for being socially responsible include: ● ● ● Giving back to the local community Providing equal opportunity and embracing diversity Offering opportunities to the disabled and handicapped
Decisions should be made with social responsibility in mind. *** The sustainable enterprise builds aspirational, competitive, collaborative, and cooperative advantage in order enhance, and maintain its beneficial position. Aspirational advantage consists of loyal relationships between employee, customer, supplier, and investor constituencies because stated values and enacted values are consistent. Competitive advantage results from the position and posture that offers consistencies better value than competitors. Collaborative advantage is obtained from relationships between suppliers, or customers, or peers as a partnership with a common mission, and operating dependently for mutual value. Cooperative advantage is obtained from relationships between suppliers, or customers, or peers as an association with a similar mission, but operating independently for mutual value.
Building collaborative and cooperative advantage strengthens relationships with constituencies in communities, and contributes to the development of economic clusters - a key to community sustainability. Enacting change is routine for a sustainable enterprise to continue as an ongoing concern. Making sustainable decisions is an enterpriship (entrepreneurship, leadership, and management) competency.
For more information... For information about audiobooks, books, earticles, ebooks, and eseminars offered by The Business Leadership Development Corporation visit www.etailia.com For more information about the discipline of enterpriship visit www.enterpriship.com For more information about understanding personal styles visit www.understandingpersonalstyles.com/demo To assess your individual competencies in thirty minutes or less, claim your opportunity for instant access when you go to www.individualcompetencies.com
About Nigel A.L Brooks... Nigel A.L Brooks is a management consultant to entrepreneurs, business enterprise owners, executives, and managers, and the enterprises they serve. He specializes in developing the entrepreneurial, leadership, and managerial competencies that build sustainable advantage from vision to value. He is an author and a frequent speaker. He obtained his professional experience as a partner at Andersen Consulting (now Accenture, Ltd.), as a vice president at Booz Allen Hamilton, Inc. (now Booz and Company), as a senior vice president at the American Express Company, as president of Javazona Cafes, Inc., and as president of The Business Leadership Development Corporation. He has been a contributing editor for the Bank Administration Institute magazine, and has served on boards of entrepreneurial networks. He was educated at the University of Exeter, Devon, United Kingdom. His clients are in the financial services, food services, high-tech, manufacturing and distribution, pharmaceuticals, oil and gas, professional services, retail and wholesale, transportation, and government industries. He has experience in North and Latin America, Europe and Asia-Pacific. www.nigelalbrooks.com About The Business Leadership Development Corporation (BLD)... The Business Leadership Development Corporation is a professional services firm that works with entrepreneurs, lifestyle business enterprise owners, executives, and managers, and the enterprises they serve. BLD develops entrepreneurial, leadership, and managerial competencies that achieve performance excellence by building sustainable advantage from vision to value through: Strategic Management Consulting Executive Coaching and Mentoring Professional Training via The Center For Business Leadership Development (CBLD) Motivational Speaking www.bldsolutions.com
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