Private sector should wake up
By Dinesh Weerakkody
Prime Minister Ranil Wickremesinghe recently told the private sector to get on with it, if not society and the government would lose confidence in the private sector and that would mean death to pro private sector policies. His advice to the captains of the private sector was, make use of the generous incentives to expand, grow and create jobs. He asserted that it was now, or perhaps never. The problem with the Lankan private sector is that it lacks the maturity of a developed market. As a result too many companies returning something to society is alien to their corporate culture. If you approach Chief Executives of some of these large companies for a donation to support a worthy cause they would have no hesitation in saying that they are not in business to do charity. In fact, companies in Sri Lanka should embrace the role of good corporate governance not only because it is the right thing to do, but also because giving something back to the communities it serves would ensure its own survival in the long term. Furthermore, employees of companies that participate in social work, also tend to work harder to invest in the communities they operate. Not only is this good for business, it is also good stewardship. Often good corporate citizenship is discussed in terms of doing what's right, but as educated business managers we should believe that doing the right thing, keeping to the moral code, is a natural by product of acting out of compassion. Therefore, compassion uses power to serve and wealth to expand its capacity to serve. In fact Henry Ford the father of the auto industry once said "a business that makes nothing but money is a poor kind of business". In fact, in the USA in the early 1900s, Andrew Carnegie and John D. Rockefeller led the way for the establishment of benevolent foundations for the distribution of private wealth for public benefit.
Prosper
Many private sector companies don't realize that they can only prosper in a society that is permeated by social equity and a basic sense of fulfillment. No company operates in a vacuum and that its success is dependent on the fulfillment of certain obligations to society. I strongly believe that if the private sector is to become the engine of growth in the country, they should take on more of the community activities that the state provides. The community's needs are what they are ultimately servicing through their various enterprises, and apart from anything else it makes perfect business sense to do more for the community. Therefore, companies that want to make itself economically superior should also be environmentally sound and socially responsible. In fact, many people have slammed the private industrial sector for what they discerned as showing arrogance towards the country's environment and energy needs. It goes without saying that the private sector cannot function effectively when social tensions are riding high, also if one thinks of the social obligations of the private sector, that it creates an image of itself which is on the right side of the moral values, if it fails to do so it can contribute towards it own downfall and invite state regulation.
National affairs
The private sector involvement in national affairs has become necessary because our political leaders have failed to build confidence, are sending the wrong signals and resting their hopes of political power on policies that will be harmful for the country. Today, Sri Lanka needs effective leadership more than ever before and it is therefore necessary for the private sector to come forward strongly to pull our nation together to cope with the challenges of the future. In this context we should remember the positive impact the private sector made to promote a peaceful resolution of the ethnic conflict.
Obsessed
In a corporate world obsessed with maximizing returns the question of the private sector taking a lead role in social betterment projects, are rarely on corporate agendas. However, research suggests that investing in the well being of their communities are good for their business. Furthermore, today it is becoming increasingly difficult for the private sector to exist and function in isolation. Our society at last has recognized the need for our private sector to take on greater responsibility in matters affecting our society. It make sense for the private sector to take an interest in public issues, because when society disintegrates, the private sector will find it increasingly difficult to reap the benefits of their investment.
Criticized
Our private sector has in the recent past been criticized by its own leaders for not acting responsibly as corporate citizens and that its activities has little social relevance. Even though the purpose of any business is to satisfy customers continuously at a profit to itself. Large corporates in Asia have struck partnerships with governments and community leaders to strengthen their communities with which they do business. They have realized that their investment is not just charity and that investing in the well being of their communities is becoming necessary for their long-term survival. They also know that it could benefit them by way of brand loyalty, enhancing the long term sustainability of their investment, better potential employees and above all that it helps create a stable society.
Profits
When a business is looking for an opportunity to generate huge profits by over-pricing its products and services, then it is not meeting its social and community responsibilities. The arbitrary price increases by companies are a good example of irresponsible corporate governance. On the other hand if an organization is exploiting its employees and vendors then it is guilty of unfair practices. We are accustomed to thinking the West is a materialistic society. Yet this is what Albert Einstein had to say about the USA: "The social conscience of the well to do is so highly developed that he considers himself obliged as a matter of fact to place a major portion of the wealth and often energies at the disposal of the community".
Expectations
In Sri Lanka the public's expectations of the private sector has changed dramatically over the past two decades. Today, more and more Sri Lankan people seem to support regulatory reforms which reduce government intervention in the affairs of the private sector as long as businesses are willing to demonstrate commitment to social objectives. Our private sector is generally branded as being only profit oriented. There are certain sections of the private sector that support political parties and thereby obtain necessary approvals with no apparent regard for the social costs associated with a project or a government tender. These sections of the private sector have tarnished the good image of the larger private sector, which is conscious of its social obligations. From a business point of view the argument that is most often heard in favour of a firm's involvement in social activities is that such activities can improve a company's public image and help to attract new customers, investors and better employees.
The writer is the chairman of the state-owned Employees' Trust Fund Board.
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