Monday, October 30, 2017

There is more to shared value than you might think

by Ian Thomson
Ian Thomson

Shinglespit Consultants Inc.

This article was originally published online in Resource Global Network (November-December 2015): 

When the subject turns to value and values, it may be necessary to exercise caution and seek more information. This is not something to trifle with. Value and values are subject to variable meaning and understanding. Just what are we getting into by opening a conversation on this topic?

First there is the problem that value and values can be both nouns and verbs. What's more, as nouns, these words have multiple meanings. They can refer to colour intensity, a linguistic unit, the duration of a sound note in music, and a numerical amount in algebra. Then there is the more familiar use of value and values as referring to something important, useful or held in high regard. However, there are at least three application of this meaning: value and values as the importance or usefulness of something; as an expression of material or monetary worth; and, not to be forgotten, as the principles or standards of behaviour to live by. Then there is the matter of perception and interpretation. What is valuable to one person may have no value to another. It can get complicated and become the source of tension and even conflict when individuals or groups have different opinions on value or values.

Social psychologist John Haidt in his fascinating book "The Righteous Mind" describes how shared values define three distinct groups within the United States, which happen to also describe the three dominant political movements in the country; liberal (Democrat), conservative (Republican) and libertarian (Tea Party). Haidt provides an intriguing analysis of the moral foundations to these groups, which also explains why they behave as tribal units fiercely proclaiming the superiority of their values and feeling deeply resentful when another group attempts to impose their values through laws and regulations. The polarization of politics and the political process in the United States becomes inevitable as the various tribes vie for dominance and the opportunity to apply their vision of what is right and just.

Fairness is a value that appears to be present in all cultures and societies. Children learn about fairness at an early age through playing games. They do not like to be cheated or have free riders that do not contribute. Haidt and his research partners have been able to show that, while everyone dislikes cheaters and free riders, perceptions of fairness differ systematically among the political tribes of the United States. According to Haidt:

  • Liberals have a concern for the disadvantaged with compassion and political and economic equality key elements of fairness. For liberals the most important value is care of the victims of oppression.
  • Conservatives do not emphasise fairness and further qualify it in terms of proportionality: 'you get back what you put in' and 'three strikes and you are out', which has a flavour of retribution that makes liberals uncomfortable.  For conservatives the most important value is to preserve the institutions and traditions that sustain a moral community.
  • Libertarians emphasise being self-sufficient and not a burden to others. Fairness is simply proportional with a particular distaste for free riders, who should be heavily sanctioned. For libertarians, the most important value is individual liberty.

From this analysis it is clear that individuals and groups can and do share values that, de facto, allow them to be part of the group. People involved in business share common values that are inherent to the business of doing business. Since economic activity is an essential aspect of modern society, administrators and politicians share many of the same values. As a consequence they see economic wellbeing measured by income and employment as the ultimate indicator of success. They are convinced that these values are of paramount importance and arrive at the moral imperative that they should be promoted ahead of any others. Which takes us to the issue of Shared Value as a business proposition.

As articulated on the Shared Value web site and in the publication 'Extracting with Purpose', there is great confidence that Shared Value can provide positive outcomes for both mining companies and communities. Shared Value is described as a management strategy focussed on companies creating measurable business value by identifying and addressing social problems that intersect with their business. Shared Value focusses on the creation of meaningful economic and social value – new benefits that exceed the costs for the business and society. However this confidence appears flawed and based on the assumption that the values of business are congruent with those of communities. Two statements put this in doubt. First, the Shared Value proponents assert that 'shared value is not about including stakeholders' values in corporate decisions'. Second, they also claim that a by-product of successful program implementation is a positive social license to operate.

The unilateral promotion of values creates unintended risks. As shown by the example from the United States, the unquestioned imposition of one groups' values on another will create tensions and can lead to conflict.  Communities are not businesses, they have different values.  While employment and incomes are important, they do not define the moral matrix of all communities. Many, notably indigenous communities and those in the developing world, prioritize social well-being, self-determination, and the centrality of cultural values and social institutions. Further, there is ample evidence that the strongest determinant for the social licence to operate is the quality of the relationship between the company and the community. It is emphatically not what is done by the company; it is how it is done. Communities value the quality of contacts with the company, being included in planning and decisions, and being able to define their own futures. The highest quality of social licence comes when companies and communities collaborate. A company that makes decisions in isolation and then imposes them on a community is asking for trouble.

Shared Value has potential provided it is tempered by rational application through recognition and reasonable alignment between the values of both company and community. This implies trade-offs, which in turn indicates the need for dialog between the parties to find the points of convergence that will deliver genuine 'shared value' and a social license to operate. Only by engaging with the community will companies find out which values are genuinely 'shared' and be able to identify the place and scale of action that will provide real success.

Other articles published in the IAPG Blog:

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