When the bare minimum is not enough

Companies wanting long-term success need to raise their standards across the board, rather than just meeting minimum legal requirements, according to research by Ashridge International Business School.

Businesses need to set higher standards in areas such as employee health and safety, environmental protection, treatment of suppliers, product safety and the disclosure of information.

They also need to maintain tight legal standards and encourage good supplier behaviour if they are to be successful.

Ashridge interviewed 700 senior managers in large blue chip companies and analysed attitudes to management. More than three-quarters believed that responsible business practice is essential to long-term commercial success.

"People are starting to look at their company's practices in more sophisticated ways," explained Adam Faruk, senior researcher at Ashridge.

Higher standards

As many as 78 per cent of respondents said that businesses wanting commercial success should go beyond the minimum standards set out by the government and regulatory authorities.

"The law is often seen as a bare minimum," said Faruk. "But if you want to protect your reputation, you have to go beyond it."

Less than half of those surveyed believed that companies should apply global standards to information disclosure.

"With IT, national borders are becoming less important and companies will face tensions between international legal consistency and local regulations," explained Faruk. "But when it comes to local laws, responsible companies will always operate with care."

More than half of the respondents understood that their business is responsible for the commercial well-being of suppliers.

Blue chips must nurture business partnerships carefully, argued Faruk. "Suppliers need the help of large corporate customers. But many suppliers will go bust because big corporate customers don't pay promptly," he said.

Companies should make information flow up and down the supply chain to ensure that bad practice is checked.

A massive 94 per cent of respondents said that higher legal staff working standards could help their business. "The right working conditions are important if you want to attract and retain staff," said Faruk.

Only half the respondents believed that responsible corporate behaviour could lead to direct financial benefits. "People don't expect to see quantified benefits," explained Faruk. "It's difficult to state how much money responsible corporate practices will save you."

More than 90 per cent of respondents said that higher legal standards of responsible behaviour could help protect the company's reputation.

Risk management

"It's about risk management," said Faruk. "There's no point building a brand if you place it at risk by being irresponsible."

Forrester Research argues that blue chips are more risk-averse in 2002. It said that large companies are more likely to build bespoke technology and give control to business managers.

The analyst surveyed IT directors at the world's largest companies, and found that only 27 per cent of will dabble with technology that has not been tested, compared with 45 per cent last year.

Two-thirds said they would rather build technology in-house, and just under half gave control of IT decision making to business managers.