From TQM to TRM:
The Emerging Evolution of Total Responsibility Management Approaches
Sandra Waddock
Boston College
Carroll School of Management
Chestnut Hill, MA 02467
USA
+1 617-552-0477
f: +1 617-552-0433
waddock@bc. edu
Charles Bodwell
Management and Corporate Citizenship Programme
International Labour Organization
CH-1211 Geneva Switzerland
+41 22 799 8566
f: +41 22 799 7978
bodwell@ilo.org
July 19, 2001
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From TQM to TRM:
The Emerging Evolution of Total Responsibility Management Approaches
Abstract
Whereas managers of the past faced growing quality demands from customers, together with
increased capacity of often-overseas competitors to meet these demands, managers of today
face a growing array of demands - in new areas such as labor practices and supplier relations
- from a range of stakeholders. Faced with a more complex set of objectives, with
implications across their organizations, leading firms are adapting systems and practice
analogous to the systems and practices of TQM, but now applied to issues of responsibility
rather than quality. To cope with this complexity a set of interdependent managerial
practices that parallel those of TQM, which we refer to in their whole as Total Responsibility
Management is emerging. Built on widely-agreed upon foundation values, we can identify
three main elements that make up the emerging TRM approach: 1) vision setting and
leadership systems, 2) integration of responsibility into strategies and practices, and 3)
assessment, improvement and learning systems. TRM approaches can potentially provide a
means for integrating external demands and pressures for responsible practice, calls for
accountability and transparency, the proliferation of codes of conduct, managing supply
chains responsibly and sustainably, and stakeholder engagement into a single approach for
responsibility practices within the firm.
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From TQM to TRM:
The Emerging Evolution of Total Responsibility Management Approaches
Quality Management and the Link to Responsibility Management
In 1980, most American companies were paying little attention to quality management
despite increasing public attentiveness to the quality of products. Yet for 30 years, Japanese
firms had been implementing quality improvement processes based on the ideas of W.
Edwards Deming and Edward Juran, who had introduced quality control methods to the
Japanese after World War II, when US managers had been uninterested (Evans & Lindsay,
1999). As the public's perception of the quality of Japanese goods shifted from poor to
excellent during the 1960s and 1970s, managers in companies that has not yet "discovered"
quality began to feel significant competitive heat.
Competition came especially from Japanese companies, which were by the 1970s producing
goods of high quality at relatively low cost. A turning point came in 1980 when NBC aired
its white paper documentary on the work of Deming, "If Japan Can.. .Why Can't We?"
Shortly afterward, the quality revolution began in earnest both in the US and in other parts of
the world. As one book on managing quality puts it, "[Deming's] name was soon a
household word among corporate executives" (Evans & Lindsay, 1999). Over time,
numerous corporations began implementing quality management and improvement systems
as a means of regaining global competitiveness in the face of the intense competition posed
by the quality of Japanese products.
The year 1987 was crucial in the development of quality management systems in the US,
with then-President Reagan establishing the Baldrige Award for Quality and Productivity.
The Baldrige Award ultimately became "the most influential instrument for creating quality
awareness among US business" (Evans & Lindsay, 1999). In Europe and the US, the need
for consistency in product quality and continual improvement in both products and processes
had become apparently. ISO 9000 quality standards issued by the International Standards
Organization's (ISO) in the same year helped to rationalize approaches to quality and placed
emphasis on quality processes as opposed to just outcomes (Jourbet, 1999).
By the year 2000, the Baldrige Award was widely recognized as providing the most
comprehensive approach to quality improvement processes and systems, as well as creating
business awareness of the need for quality management (Curkovic, Melnyk, Handfield, &
Calantone, 2000). Further, since the 1992 free trade agreement of the European Economic
Community (European Union), many companies in the European Union have required that
suppliers be certified as in compliance with the ISO 9000 quality standards, a move that has
put considerable pressure on many companies to implement high quality standards (Evans &
Lindsay, 1999). In the US, ISO 9000 standards were adopted by the American National
Standards Institute with the support of the American Society for Quality Control, providing
an accepted framework to guide companies' continual quality initiatives (Evans & Lindsay,
1999).
Today, competitive pressures on product and service quality and widespread consumer
attention to quality mean that companies cannot compete successfully without paying close
attention to the quality of their products and services. Although the acceptance by managers
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of quality as a business imperative was not easy to achieve, failure to pay attention to quality
now can quickly contribute to business failure. In this paper, we will argue that a similar
evolution is occurring with respect to managing a company's responsibility for labor, human
rights, supplier, customer, ecological, and related stakeholder practices.
Most large businesses today operate in a fundamentally global competitive environment, both
in producing and selling their wares. But as the demonstrations by activists of many stripes
against globalization in Seattle, Davos, Washington, Prague, and Quebec City, Gothenborg
and elsewhere suggest, globalizing operations does not go unquestioned. Corporate activities
today face activism, fueled by the connectivity of the Internet, that increasingly questions the
integrity of companies particularly with respect to their outsourcing (notably labor and human
rights) practices and ecological impacts. The publicity attendant to demonstrations against
global trade has resulted in more sophisticated consumers who increasingly demand that
companies meet high expectations with respect to how and where their products are
produced. These sophisticated consumers indicate in survey after survey that they make
purchasing decisions based on (their perception of) a company's responsibility and citizenship
Rochlin & Christoffer, 2000).
Attention to working conditions, use of child labor, and hiring and firing policies, particularly
in developing nations, have received particular activist attention. Significant negative
publicity follows on the "discovery" by labor activists, for example, of sweatshop conditions
or child labor in footwear, toy, and apparel contractors, causing consumer boycotts and
reputational damage that can cost companies customers and revenue. Overall, the attention to
working conditions and environmental issues has raised the consciousness not only of
activists, but also of consumers, investors, and multinational companies themselves to the
increasing social expectations that are being placed on companies—and on their suppliers.
Accompanying the rising public expectations with respect to human rights, labor, and
environmental policies is a proliferation of auditing and reporting methodologies, such as the
balanced scorecard, triple bottom line accounting, holistic performance assessments, internal
and stakeholder-oriented social audits, and the Global Reporting Initiative, among others.
These assessment and reporting techniques accompany the continually growing array of
global standards and principles that are helping to create societal expectations about corporate
practices. For example, companies can now choose to adhere to any or all of the following
standards: the UN Declaration on Human Rights and the Environment, the International
Labor Standards, the principles of the Global Compact, the Caux Principles, the Clarkson
Principles on stakeholder relationships, the Sunshine Standards, to name just a few. Then
there are the voluntary corporate initiatives, such as the SA (social accountability) 8000
accountability standards, AA 1000 accounting standards, the Fair Labor Association (FLA)
anti-sweatshop standards, the CERES principles on environment, and the Sullivan Principles
with respect to abusive regimes. And these are only some of the confusing array of
principles, standards, assessment, and reporting initiatives that have recently been added to
companies' own codes of conducts and ethical standards.
To cope with pressures to conform to high principles and related growing social expectations,
companies are now evolving multiple bottom line reporting systems. They are implementing
and operationalizing codes of conduct not only within their own companies but also through
their supply chains, and evolving systems to manage the responsibility of their practices.
This understanding of what is taking place in the implementation of corporate responsibility
is based on an on-going research program at the ILO and through the Center for Corporate
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Citizenship, involving over 100 formal interviews with managers in Europe, the USA, China,
Vietnam and Thailand, as well as through an on-going process of dialogue and less formal
discussions taking place with senior managers responsible for implementing the corporate
responsibility policies. It is the result of intensive examination and analysis of the corporate
responsibility practices of multinational corporations with respect to labor, human rights, and
working conditions in their own facilities and their supply chains.1 Further, environmentally
responsible management systems have been found to have analogues to quality management
systems (Curkovic et al., 2000).
As companies attempt to cope with the need for quality management, environmentally
responsible manufacturing, and responsibility management systemically, they are
experiencing a need to integrate data, information, and approaches across these systems to
avoid becoming overloaded and to provide the most useful information for managing the
company and its relationships. As systems begin to be combined into integrated vision
setting, management, measurement, and reporting systems, comprehensive responsibility
management systems are now beginning to evolve. We believe that these emerging
responsibility practices, which can be extensively observed in modem supply chain
management, provide the framework for a powerful system for integrating responsibility into
all of a company's systems, processes, and results, providing a solid basis for competitive
advantage in the long run.
We would suggest that, much like managers of a generation or two earlier, managers of today
face a changing landscape. Whereas managers of the past faced growing quality demands
from customers, together with increased capacity of often-overseas competitors to meet these
demands, managers of today face a growing array of demands - in new areas such as labor
practices and supplier relations - from a range of stakeholders. Faced with a more complex
set of objectives, with implications across their organizations, leading firms are adapting
systems and practice analogous to the systems and practices of TQM, but now applied to
issues of responsibility rather than quality. As such, we would argue for the emergence of a
set of interdependent managerial practices that parallel many of those of TQM, which we will
refer to in their whole as Total Responsibility Management.
Total Responsibility Management (TRM)
Total responsibility management or TRM can be seen as a systemic approach to the
management of a company's relationships with its key stakeholders and its treatment of the
natural environment. Built on widely-agreed upon foundation values, we can identify three
main elements that make up the emerging TRM approach: 1) vision setting and leadership
systems, 2) integration of responsibility into strategies and practices, and 3) assessment,
improvement and learning systems. We would suggest that, along the lines of what TQM has
done for quality, an integrated system to address reliability helps companies maximize
competitive success by: continually monitoring and improving performance through engaged
'* The on-going research program, mentioned here, is being conducted by the Management and Corporate
Citizenship Programme, International Labour Office, Geneva, Switzerland, in cooperation with the Center for
Corporate Citizenship. Researchers from this program have met with dozens of managers, workers and union
representatives, conducting over 100 formal interviews, visiting corporate headquarters of numerous
multinationals, their purchasing offices in Asia and factories in China, Vietnam and Thailand where products are
actually manufactured.
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and mutually responsive relationships with employees and other key stakeholders; measuring
performance on multiple bottom lines (i.e., the triple bottom line of economic, societal, and
ecological criteria); and transparently accepting responsibility and accountability for the
impacts of corporate decisions, actions, and results. Figure 1 illustrates the interdependent
nature of the main components that make up a TRM system.
Integration into strategies
Vision setting and
As with TQM approaches, a firm
leadership systems
and management
operationalizing its responsibility
practices
objectives through TRM has to take a
Foundational
total systems approach. A systems
Strategy
Human
Values
resource
approach ensures that the company's
responsibility
treatment of its stakeholders and the
\
Responsible
Responsibility
natural environment is responsible,
vision,
integration
values,
and
management
while also effective and efficient,
leadership
systems
commitments
contributing to positive corporate
performance financially, as well as on
the multiple bottom lines associated
Assessment
Improvement: remediation,
innovation, and learning
improvement,
with different stakeholders and nature
and learning
Responsibility measurement system
+
(Waddock, 2000). A TRM / total
Results: Performance, Stakeholder,
systems
T ransparency and
accountability for results and *4— and Ecological Outcomes and
systems approach to responsibility, as
Responsibility
impacts
companies are beginning to discover,
particularly in their struggles to meet
strict global labor standards and the demands of activists for responsible practices with
respect to people, requires attention to issues that go well beyond the production and service
delivery processes that are at the core of TQM. TRM approaches encompass human resource
policies, labor relationships and standards, environmental policies and practices, supplier
relationships, and customer relationships, as well as product quality and financial
performance. With those firms that we have observed to be moving toward a TRM approach,
responsibility management has become deeply integrated into corporate strategies and
operating practices.
As with quality management systems, a TRM approach is based on the unique competitive
situation, stakeholders, corporate history, and so on of each company. We suggest that firms
implementing TRM can be multi-site or single site, serve a global market or a single market;
they carry out production entirely in-house or outsource manufacturing. Thus, there is no
single set of values or standards that, at least today, applies to all companies. Rather, TRM
approaches tend to be built on a foundation of generally agreed values, such as the ILO
conventions on labor and human rights; however, they also recognize this basic individuality
of company vision, strategies, and commitments. Companies implementing TRM approaches
develop company-specific approaches to responsible management that provide a framework
to guide managers, without putting unnecessary constraints on their activities. Although
companies moving toward TRM are doing so in response to external pressures, they are
developing their own visions, core values, and commitments, which are then integrated into
their specific corporate and business strategies.
Vision setting and leadership systems create the organizational context for total responsibility
management. A necessary condition is having a clear vision about corporate responsibility
from top management and well-articulated guiding core values that support the vision.
Further, as research on the implementation of codes of conduct into multinational supply
chains indicates, top management needs to make a clear, consistent, and repeated
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dissemination. TRM approaches, as a result, involve measuring operating practice,
stakeholder relationships, and results in new ways and on multiple bottom lines. Necessarily,
taking a TRM approach involves creating accounting and reporting systems that satisfy the
needs of internal stakeholders and managers for information that improves company
performance and satisfy the demands of external stakeholders, including unions, nongovernmental organizations (NGOs), governments, and local communities, for transparency
and accountability. Most importantly, it seems that TRM requires the integration of core
values and responsible practice into top management's commitments and the company's
corporate and business strategies to assure that companies actually live up in practice to the
standards they articulate on paper. Thus, feedback is essential internally, while responsibility
itself implies external accountability and, to make that real, transparency.
The rest of this paper will explore the links between accepted approaches to total quality
management and describe the emerging TRM approach to responsible practice. First we
attempt to define what we see as a TRM approach and its relationship to TQM. We then
explore briefly some of the ways in which managers responded to TQM in its early stages of
development and suggest similarities in managerial responses to TRM approaches. We then
outline the components of a TRM approach with reference to basic criteria found in US,
European, and Japanese approaches to quality, as well as standards of excellence for
community relations, and environmental management systems. This assessment allows us to
show how taking a total responsibility approach provides a comprehensive means of
responsibly managing all aspects of a company.
Defining TRM, Defining Responsible Practice
Quality, according to one definition, "means maximizing organizational behavior to enhance
the satisfaction of present and potential customers" (Cole, 1998). The definition of quality
management has evolved over time, as we fully expect that the definition of responsibility
management will continue to do. According to one leading text, definitions of quality range
from general judgmental criteria, such as superiority or general excellence, to identifiable,
specific, and measurable product-based criteria centered on attributes that can be compared
from one product to the next, in part depending on whose perspective is being considered
(Evans & Lindsay, 1999). From the user's perspective, quality is how well a product
functions for its intended use. A values-based perspective focuses on the relationship
between usefulness or satisfaction to price, and, finally, manufacturing-based criteria
emphasize conformance to specifications (Evans & Lindsay, 1999).
Responsibility is similar to quality in that to a large extent its definition depends on the
perspective of the particular stakeholder whose interests are under consideration. In that
sense, responsibility management can be said to involve a process of mutual engagement and
dialogue with relevant stakeholders on issues of concern in an effort to come to agreement on
a mutually acceptable set of decisions, processes, or results. In the dictionary, responsibility,
like quality, has multiple meanings, depending on the perspective taken. In the most negative
sense, responsibility means taking blame or accepting accountability for activities and
actions, which of course assumes that those activities are negative. More positively,
however, responsibility implies having the capacity for making moral decisions and therefore
being accountable, providing a rationale for vision and underlying core values becoming key
ingredients in managing responsibly. Thus managing for responsibility (as with quality) sets
a fairly high standard of excellence for employee and other stakeholder relationships, i.e., that
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workers, other stakeholders, and the natural environment be treated respectfully, both from
management's perspective and from the particular stakeholder's perspective.
Further, as with quality, determination of responsibility requires a measurement and
assessment system that provides a basis of understanding and information for internal
stakeholders, like employees, and external stakeholders that holds a company accountable for
its actions and their outcomes. Because responsibility is defined by its impacts and how they
are perceived by different stakeholders, i.e., are they positive or negative, companies need to
know how well they are doing with respect to those different stakeholders, particularly
internal stakeholders like employees. This level of accountability implies the need for the
integration of responsibility into strategies and the operating practices used to carry out those
strategies. It also implies a corresponding need for improvement and learning systems, built
on feedback from holistic measurement systems, so that when problems occur steps can be
taken to improve the situation.
Responsibility is in another respect similar to quality. Like quality, responsibility is integral
or inherent to any corporate action or decision with consequences (which, of course, lets few
actions and decision off the hook). That is, responsibility is something that cannot be
sidestepped or avoided, as some level of responsibility, for good or for ill, is always present
in any action, policy, or decision that has consequences. Similarly, some level of quality,
whether poor or excellent or somewhere in between, is always present in a product or service:
denying or ignoring it does not change that reality. And that reality with respect to
responsibility management is apparent to the workers who are affected by company
decisions, e.g., about the extent to which safety standards will be followed or working
conditions improved. It is evident to the communities that witness the devastation that can
follow company layoffs or the prosperity that can be associated with companies acting as
neighbors of choice, taking care to treat their communities with respect (Burke, 1999). It is
evident to customers with respect to the efficacy and nature of products and services. It is
evident to the activists that seek redress for company abuses, as well as to those with whom
companies engage productively in dialogue, seeking mutual understanding and
accommodation. And so on with respect to other stakeholders.
Responses to Managing for Responsibility
Initial responses to implementation of quality management systems, especially in the US,
were hardly favorable. Indeed, as noted above, it took more than 30 years from the time that
Deming first tried to sell his ideas to US managers before the importance of quality to
competitive success was finally recognized and actions began to be taken in US companies
(Cole, 1998). Among the reasons for initial resistance to quality management are:
incomplete information, the persistence of misguided beliefs despite evidence to the contrary,
and the need for managers to make difficult cognitive leaps (Cole, 1998). Additionally,
management norms, when quality management was first introduced, did not legitimate
learning from the Japanese, solutions were framed in ways that inhibited learning, and poor
judgment created inadequate responses, all of which was combined with what one observer
terms "heavy doses of arrogance" (Cole, 1998).
Today, we see similar responses to managing for responsibility, although labor and NGO
activism and the advent of the world wide web have made it relatively harder today for
companies to ignore the global attention that is now paid to the responsibility of their labor,
9
human rights, and ecological practices. A common response, similar to that in the early days
of quality, is that "you can't measure this stuff." Yet recent advances in social auditing
(Davenport, 1997) as well as more holistic approaches to traditional organizational auditing
and performance assessment, such as the balanced scorecard (Kaplan & Norton, 1992),
strategic audits (Bell, Marrs, Solomon, & Thomas, 1997), holistic performance assessments
(Lewellyn & Sillanpää, 2001), and the Global Reporting Initiative (GRI) (Global Reporting
Initiative, 2001), among others, clearly disprove this point of view.
Another common response is that it will be too costly for companies to implement
responsibility systems with the result that doing so will place the company at a disadvantage
relative to its competitors. Concurrently, there is the typical (though largely mistaken)
financial "wisdom" that there is a necessary trade-off between "doing well and doing good,"
i.e., between responsible practice and strong financial performance. Yet there is a growing
body of evidence that this trade-off is, for the most part, mythical. Indeed, more responsible
practice may be synonymous with the good management that actually leads to positive
financial performance, making the actual relationship a positive one (Griffin & Mahon, 1997;
Pava & Krausz, 1996; Wood & Jones, 1995; Waddock & Graves, 1997; Margolis & Walsh,
2001 a,b). Additionally, evidence from the social investment movement suggests that there is
either no difference in the performance of share prices of more responsible firms or that these
firms may actually outperform those of less responsible firms, especially when considered
overtime (diltz, 1995).
The perspective that managing responsibly costs more than not doing so contains a cognitive
assumption similar to the one that underpinned much of the initial resistance to quality
management: that higher quality would add unrecoverable costs (Cole, 1998). In this case,
the cognitive assumption is that higher levels of responsibility will add unrecoverable costs.
In part the problem with TQM, as defined by Robert Cole, was definitional: as long as
quality was solely associated with outcomes, the product and its attributes, managers had a
difficult time conceiving of improving quality while actually lowering cost. The transition to
understanding that low cost and high quality could co-exist took years to make. It required a
mindset shift towards a process orientation and the dismantling of a second assumption that
continual improvement could not be cost-effective (Cole, 1998, pp. 50-52).
We argue here that parallel counter-intuitive arguments can be made with respect to
responsible practice, as companies implementing TRM-type approaches are beginning to
discover when they begin to consider all of the costs associated with more problematic
management practices. As long as responsible practice is considered only the "do good" or
voluntary stuff of management, there will be resistance to it. Unless the integral nature of
responsibility to managerial decision making and action is better understood, managers will
continue to make unwarranted assumptions. Assumptions that there are trade-offs, that more
responsible practice is more costly than less responsible practice, and that the "hard stuff of
managing responsibly is actually the "soft stuff that cannot be measured thus still abound,
despite the growing body of evidence to the contrary. Challenging these assumptions about
responsible practices necessitates a similar cognitive or paradigm shift in the conception of
the performance implications of responsible corporate citizenship. It is as easy to deny the
relationship between performance and responsible practice, given the traditional assumptions
highlighted above, as it was early on in the quality movement for managers to deny that
quality was an increasingly important competitive factor or that Japanese product quality was
in fact superior (Cole, 1998, p. 48).
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For companies, denial of the positive performance implications of responsible management
creates significant problems. Corporate reputation suffers when labor, human rights, and
environmental activists, such as those demonstrating against globalization in Seattle, Davos,
and Montreal (among other places), begin demonstrating against the practices of specific
companies, as companies like Nike and Shell have found out to their chagrin. Companies
begin to pay attention to responsible practices when, for example, Sweatshop Watch posts on
its website a story about poor labor practices in a company's supply chain. Or when students
protest against child labor on the goods in their university bookstores. Or when UNITE (the
Union of Needletrades, Industrial, and Textile Employees) organizes a protest against a
firm's labor or supply chain practices. Companies that develop responsive systems to engage
with these and other stakeholders, work to provide safe, clean, and globally acceptable
working conditions, provide adequate wages to employees based on local conditions, and
generally treat workers and nature respectfully are increasingly finding out that reputation can
provide competitive advantage. Particularly for companies producing consumer goods, a
reputation for responsible treatment of employees and environment is, increasingly, a source
of significant competitive advantage, as consumers become increasingly aware of and
sophisticated about how, where, and under what conditions their goods are produced (Rust,
Zeithaml, & Lemon, 1999; Fombrun & Shanley, 1990; Fombrun, 1996).
Costs associated with irresponsible corporate behaviors are often hidden or unrecognized,
while the apparent benefits of cutting comers sometimes seem obvious. As with initial
approaches to TQM, companies that begin implementing TRM approaches do not necessarily
do so for reasons of efficiency. They may, in fact, at least initially be bowing to pressure
from labor unions, NGOs, standards-setting bodies, or consumer activists and appointing
"corporate social responsibility" or corporate responsibility compliance officers to assure
compliance with codes or avoid problems that might raise the hackles of activists. In the
early pre-TQM days of quality control, quality was implemented through a separate structure,
with a quality check at the end of the production process by a quality assurance person. Only
when quality became considered integral to the production process and essential
responsibility of everyone involved in production was it truly integrated. In a similar
evolution, TRM systems are mainly now being developed by companies appointing corporate
responsibility officers charged with 'assurance' that the code of conduct, principles, or values
of the firm are being upheld in practice.
It is not always clear to managers what the benefits of more responsible employee or labor
practices are, or what savings can accrue from more environmentally sound approaches. Yet
the results of the ILO / CCC research on management systems and corporate responsibility
suggests that the business case for responsibility may be a strong one, one that too frequently
is unrecognized by businesses today, except among TRM leaders. As with the indirect
impacts and benefits of seeking to improve quality, efforts at improving responsibility
practices can similar positive effects on productivity and quality, as demonstrated in the
following two examples from the ILO research project on management systems and social
performance:
For getting companies to realize the value of doing things the right way, top
management has to be made aware that eventually it will benefit the company. Safe
workplaces are more productive... . We improved the ventilation in [a production
area] and this resulted in defects falling to 2% from 7 or 8%, while productivity went
up 20%.
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We improved airflows, which resulted in a two-degree temperature drop. This along
with other changes resulted in, according to our estimate, an increase in productivity
of 10 to 1 Spercent while cutting defect rates by 75%.
Further, as with TQM, the results of total responsibility approaches to managing are probably
only truly realized in the long, rather than the short term. This quote from the operations
manager at the headquarters of a multinational firm in the supply chain study highlights that
reality:
Doing the right thing reflects good business, not quarter to quarter but over the
lifetime of the company. And it has to be measured that way.
As quality became a business imperative in the 1980s, so we argue will responsibility become
the business imperative of the early 21st century (Waddock & Graves, 2001). And as the
growing focus on quality led to its integration, through TQM, into all aspects of firms'
operations, so we argue will firms increasingly have to take an integrated, total approach to
responsibility. Companies with foresight, companies that want to be on the cutting edge,
already recognize the power that responsible practice can have in the eyes of workers,
suppliers, customers, and communities where they want to locate facilities. And companies
are finding it harder than ever to ignore the reality that one in eight investment dollars are
now screened on one or another social issue, according to the Social Investment Forum
(Social Investment Forum, 2001). In the next section, we will explore similarities in the
emerging approach to TRM and the criteria that underlie comprehensive approaches to TQM.
Performance Excellence in a TRM Approach
What does it mean in practice for a company to take a total responsibility management
approach? What types of behaviors and processes are reflected in such TRM approaches?
Analogous to those found in total quality management and related systems, we have
attempted to identify a baseline set of criteria for performance excellence under TRM
approaches, which we have listed in the first column of Table 1. The rest of the table
presents the Baldrige Award criteria, the Deming Prize, the European Quality Award, and the
Center for Corporate Citizenship's Standards of Excellence in community relations, so that
these systems can be compared.
A variety of criticisms exist concerning the nature of TQM, its various schools and its
successes and failures. These include the argument that TQM does not lend itself to easy
quantification, nor to the measurement of short term results; that TQM presents a simplistic
view of the firm and the manipulability of its employees and processes; and sociological and
labour concerns about TQMs impact on industrial relations and its "construction of consent
amongst workers"(Giroux and Landry, 1998). It is beyond the scope of this paper to argue
these points, or other strengths and weaknesses of what was perhaps the most discussed
management area of the 1980s - quality management. Our presentation of TRM is based on
what we have heard regarding effective responsibility management, and what appeared to us
a surprising similarity to the primary components of what has become accepted as effective
quality management.
In spite of its prominence, "quality disappeared as a major topic in the media and was less
and less a focus of top management's attention" (Cole, 1998: 70). Quality was no longer a
debate, its centrality to competitiveness to a large degree accepted, and its diminished stature
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both in academic and practitioner-oriented journals the result of "a natural process manifested
in the growing normalization of quality improvement as a management activity" (Cole, 1998:
70). In this view, the world's largest firms have accepted quality as imperative, also
accepting as components of good management the basic principles of TQM approaches
embodied in the Baldrige, Deming and European Quality Award prizes. As Table 1
indicates, both total quality and total responsibility approaches provide for an emphasis on
leadership, strategic planning, people management, organizational functions or relationships
beyond employees, measurement, accountability or improvement, and results, though the
explicit focus differs depending on which approach is taken. Table 2 focuses on comparing
TRM approaches to the Baldrige Award criteria for performance excellence because they
have recently been found to be the most comprehensive TQM approach (Curkovic et al.,
2000).
Total responsibility management approaches are based on criteria for responsible practice
similar to those addressed in the Baldrige Award, however the focus of TRM-like
management systems expands well beyond product or service delivery to all of the processes,
systems, and practices that companies develop to implement their vision and strategies (see
Table 2). Thus, TRM approaches represent a total organization concept that incorporates
quality management processes, as well as environmental management practices that have
already been found to be associated with TQM (Curkovic et al., 2000). We have found that
leading companies following total responsibility practices, however, go beyond
product/service quality and environmental management to focus as well on labor and human
rights practices, stakeholder relationships, and accountability for corporate impacts. TRM
approaches used by such firms involve performance measurement and assessment processes
on at least the triple bottom line of economic, social, and ecological indicators. Using
multiple indicators has meant for them that problems and ways of making the system better
can be identified, fed back to managers and employees, and improvements made, and so that
transparency and accountability exist with respect to external stakeholders.
In moving toward total responsibility, we found that companies focus on meeting customers'
requirements, demands, and needs, as they do in TQM approaches. In addition, however,
they recognize the commitments made to other important stakeholders and the importance of
those other stakeholders to the success of their businesses. Global companies - particularly in
certain sectors - have become increasingly aware of the expectations that labor, human rights,
and environmental activists have that they meet and exceed baseline standards, such as those
promulgated by the International Labour Organization or the United Nations through its
Declaration on Fundamental Human Rights. Those firms that appeared to be moving toward
TRM have internalized the belief that internal stakeholders like employees have a right to be
treated respectfully and seek to meet global business labor and human rights standards with
regard to staff, whether they are directly employed by them or are in part of their supply and
distribution chain.
Systems for vision and leadership
In attempting to define what makes up a total responsibility approach to stakeholder
demands, we have identified three major sets of corporate systems that compose a TRM
approach: Systems for vision setting and leadership; systems for integration of the vision into
strategies and practices; and systems for assessment, improvement and learning (see Figure
1). Like TQM, we see TRM beginning with vision setting and leadership commitments. The
13
focus is on developing and communicating throughout the organization as well as to relevant
stakeholders an inspirational and responsible vision, built on a foundation of core values
internal to the company.
Responsible Vision, Values, and Leadership Commitments. In interviews, we heard time
and again how top management commitment to the vision and values is needed consistently
and repeatedly over time. Everyone associated with the company, whether employees,
members of the supply chain, or other stakeholders needs to be able to answer two questions.
The first question is " What business are we in?" The second, and critical question for the
TRM approach relates to core values that the company has articulated, and it is sometimes
called the "enterprise strategy question (Freeman & Gilbert, 1988): What do we stand for?"
Extensive research by James Collins and Jerry Porras in their book Built to Last demonstrates
the importance of corporate vision to long-term success (Collins & Porras, 1996, 1997).
Additional research on these same companies highlights the positive performance
implications they have gained by engaging in responsible stakeholder-related practices
associated with their core values (Graves & Waddock, 2000).
In the process of both developing and integrating a responsibility vision into their
organizations, our research has indicated the importance of top management involvement.
Employees always look upward, attempting to understand what senior management wants,
what it will reward. As many managers have emphasized, if management does not believe in
the vision being articulated, if they see it as a public relations exercise, then there is little
hope for its becoming part of operating practices. On the other hand, if they are involved in
the development of a vision, if they communicate their commitment to this vision on a
regular basis, and they ensure that the vision is supported through reward systems, allocations
of resources and changes in procedures, then the vision will move forward. The following,
told to us by a manager from a multinational operating in China, was typical of what
managers say concerning the role of top management:
With [our social policy], you need to have buy-in from top management. Knowing that
the president was behind it, it got into our performance objectives and made us roll it
out with our [suppliers].
Foundational Values. Two additional elements, as seen in Figure 1, are critical to the vision
setting processes. The first is identifying foundational values, the baseline set of values
below which the company and those in its supply chain knows it cannot go and still be
accepted as a responsible corporate citizen. These foundational values provide what some
scholars term a "moral minimum" (Donaldson & Dunfee, 1999) of acceptable practice, i.e.,
respect for human dignity, avoidance of child labor, freedom of association, and adequate
working conditions. These foundation values have been articulated in numerous international
standards in recent years, perhaps most prominently in the eight fiidamental conventions of
the International Labour Organization and more recently in the Secretary-General's Global
Compact initiative. Many firms have used these fundamental values to set standards for
operation within their supply chains, often in the form of codes of conduct, serving, as stated
by the head of a multinational's responsibility department, as a 'constitution' that determines
what is acceptable and what is unacceptable:
The code is your constitution, your principles and the way you operate. We want to
make sure the code is globally relevant, the same from region to region. Suppliers
need to know where you are coming from.
14
At the same time, we have seen how leading firms do not limit their vision to an explicit
document that sets minimums. Rather, leading firms, in implementing a TRM-like approach,
establish visions that are internalized in the culture of the organization, setting stretch goals
for the organization, not only in terms of profitability or market segment dominance, but in
terms of social performance. As one manager noted, such a change in vision has profound
consequences for the organization:
We are 'an innovation-oriented company targeting developing leading edge products
for [our sector]. Now, the CEO says we don't just want to be the best [company in
our sector], we are going to be the best company, period. Part of that is the [triple
bottom line approach]. This means a lot of things. And that can't be just with regard
to our core operations but must also apply to our supply chain, for all products we
buy. It also stretches to consumers, colleges, suppliers, all our stakeholders.
Stakeholder Engagement Processes. TQM is centered on the role of two sets of
stakeholders in the continuous improvement processes upon which it is based. Firstly, on
understanding and meeting customer expectations. In Japanese, the same word - okyakusama
- is used to refer to both 'customer' and 'honorable guest,' (Evans & Linsay, 1999, p. 147).
The successful TQM-based company seeks to treat the first like the second, maintaining an
open dialogue with customers that allows them not only to meet current needs but to
anticipate future needs. Secondly, TQM relies on employee involvement, taking advantage
of their knowledge, creativity and potential enthusiasm for their job. TRM is similarly
dependent on these two sets of stakeholders, customers and employees, while also looking
beyond these to other stakeholders concerned with the operations of the organization.
As with TQM, many of the leading firms we have examined have worked at establishing
processes whereby they receive input from their range of stakeholders. These stakeholder
engagement processes (Svendsen, 1998) have begun to emerge in recent years as mechanisms
to gain input from key external and internal stakeholders. As with TQM, employees are a
core component of the companies operations, and like with TQM the leading firms appear to
be dedicated to taking advantage of the potential of these employees' capacities to improve
their responsibility practices. This is particularly true with regard to labor practices, where it
is the employees who are both directly impacted and therefore most aware of where
improvement is needed, and where they are responsible for carrying forward the vision of the
organization. In the words of one union representative, 'empowered employees are your best
source of monitoring, they know where the problems are.' And it is these problems that total
responsibility practices are well-suited to eliminating.
As with TQM, total responsibility appears to call for close contact with external stakeholders
as well, often times NGOs and other members of civil society, both to understand and where
appropriate meet their expectations. For example, Royal Dutch Shell has developed an
extensive stakeholder engagement system to avoid the type of surprises that it met from
environmentalists when it tried to dump the Brent Spar oilrig into the ocean some years ago.
With increased recognition that companies are accountable not only to owners, but also to
other stakeholders, leading edge companies now know it is to their advantage to be in
dialogue with activists, NGOs, unions, customers, community representatives, and employees
before they hit trouble spots or make significant changes. Thus, they develop interactive
forums or other forms of stakeholder engagement where they can work with stakeholders to
develop trusting relationships where differing points of view can be expressed and input on
major issues given in a mutually responsive way.
15
Responsible practices in TRM approaches extend to other stakeholders as well. Thus,
owners, customers, communities, and, where appropriate, governments where the company
has facilities or suppliers should also be part of the stakeholder engagement process,
deserving responsible treatment by the firm. Customers, for example, are increasingly aware
of the conditions under which products are produced and make purchasing decisions on that
basis. Additionally, they can readily find out about product quality or any harmful
consequences of product use (Rust et al., 1999), hence marketing practices need to be
monitored and aboveboard. Similar circumstances exist for other major stakeholders, hence
responsibility needs to be integrated into and communicated to primary and critical secondary
stakeholders. Just as quality management requires customer and market knowledge,
relationships, and satisfaction, responsibility management demands knowledge,
communication with, and monitoring of supplier, customer and market, community,
shareholder, government, and media relationships, among others relevant to specific
businesses. While TRM approaches are inherently more complex than TQM approaches due
to the multiple stakeholders involved, they can provide significantly more information to
management that can help the business improve its relationships with these key constituents.
We would not want to imply that stakeholder engagement, done right, is either easy or will
always lead to full stakeholder satisfaction. With quality management, organizations have
had to deal with an increasing complexity of objectives. Rather than just focusing on price
and quantity, they have had to balance these goals with the need to meet customer
requirements with regard to product quality. When considering stakeholder engagement, the
challenge of achieving balance is even more complex, since various stakeholders can have
quite opposing positions with regard to corporate practices, outputs and impacts. For
example, maintaining environmental standards of importance to communities and civil
society stakeholders can result in unacceptable costs from the viewpoint of investors. The
challenge for management in organizations is to the best of their ability balance these
demands, develop understanding amongst stakeholders of the nature of this balance and
attempt to work out solutions that optimize stakeholder satisfaction.
Systems for Integration
Those firms moving toward total responsibility are taking a systems approach to strategy.
This implies the integration of responsible practice not only into the company's corporate and
business strategy but also into all of its operating systems and practices as well. Only with a
system that is integrated overall can a company assure itself that it is consistently achieving
the high standards articulated in its vision, core values, and leadership commitments. Internal
systems, especially reward systems, information, and communication systems, need to reflect
these visions and to pull together toward the common set of goals and objectives that are
articulated. TRM approaches help companies close any gaps that might exist between the
stated vision and values and the realities of practices. No company, of course, is perfect and
TRM approaches provide, first of all, a platform for integrating vision and values into
corporate systems, and as will be discussed in the next section, processes for improvement
where problems are uncovered.
Strategy. The second key element of TRM approaches after vision setting is a breadth of
integration of the responsible vision and values into corporate practices. First, it is clear that
in a TRM approach, corporate and business strategies need to reflect the responsible vision so
that it is communicated to all stakeholders. Such visions can help firms deal with crises, as
16
Johnson & Johnson was guided by its Credo during the Tylenol poisonings of the early
1980s. Perhaps more importantly, a responsibility vision can help a firm in its day-to-day
operations, thereby avoiding crises and operating in a consistently responsible manner, as, for
example, Timberland Corporation is guided by its "make a difference" motto today.
Strategies, the broad operationalization of the visions held by organization, need to clearly
reflect the ultimate vision, since, as one manager pointed out:
When it is part of [managers' individual] strategic plans and people's futures are tied
to it, that their performance level is linked to it, then they will do it.
All firms have a strategy setting process of one sort or other, of varying degrees of formality
and explicitness, where the overall goal of success and carrying forward the organizational
vision is turned into a set of near or mid-term objectives. In this process, we found that the
total responsibility approach entails the inclusion of the organization's responsibility vision
into this objective setting, tying managers' futures to making this vision a reality.
In integrating the vision and values into the strategies of the company another key question
must be answered and that answer in a TRM approach reflects the core values that have been
articulated. That key strategic question relates to processes, particularly the integration of
vision and values into process that will be discussed in the next two sections: How do we do
business here?
Focusing on Human Resources. Integration of the vision and values takes place first of all
in human resource practices. Here we can see two interrelated elements: Human issues are
typically behind the responsibility visions of organizations, in the best case becoming part of
their strategic plans for the treatment and development of staffs; secondly, employees are,
like with TQM, a central component of the systems required to make the vision a reality.
Reaching a firm's responsibility vision requires the commitment and involvement of
managers, the participation of employees throughout supply chains, from the top of
hierarchies to the bottom.
As a first step, we have heard that it requires focussing on building understanding of
employees, and in particular of managers who will have to allocate resources, of the reasons
and benefits of carrying forward the responsibility vision. This entails the development of
supporting materials, training, and regular, consistent, communication. It also entails the
modification of reward structures, evaluation procedures, training, and requirement systems,
all to support achieving strategic objectives that incorporate the responsibility vision. The
role of each of these is indicated by the following comments from managers operating in
Asia:
Education is a key to success. Our employees - everyone - has to know that this [the
responsibility objectives of the firm] is an issue. They have to know what is the
business case [for carrying out these objectives]. What could be the PR problems,
what other drivers downstream could be.
It is a challenge to get management to do it [implement the corporate responsibility
objectives]. There has to be an incentive for the whole company to follow a path. I
have to give incentives to the manufacturing managers [of the MNC] to do things. I
say, if you [one less dangerous but more costly practice], then I will pay you X bonus.
Our factories have had to review their salary and bonus structures, since before it
was all about reaching output levels without considering hours, use of personal
protection equipment, etc. And we have had to try to get them to set this.
17
As mentioned earlier, human resources are, in a TRM approach, both a central element of
implementation, discussed above, and part of the responsibility objectives - presumably,
ensuring the responsible treatment of employees. Integrating a corporate vision into human
resources practices means assuring that high standards (such as those specified in many codes
of conduct and the International Labour Standards) are met. Policies on working conditions,
employment hiring, retention, and dismissal policies, remuneration (wages and benefits),
hours of work, force and child labor, discrimination, promotion, and freedom of association
clearly need to be monitored.
TRM approaches emphasize that these policies need to be upheld within the confines of the
firm itself as well as in companies that are in partnership or suppliers to the firm. The
emphasis on standards within a company's supply chain is particularly critical to TRM
because the boundaries between a multinational company and its supplier are increasingly
blurred, especially in the eyes of activists, consumers, and other stakeholders.
Integration into Management Systems. Meeting the responsibility vision through TRM
approaches appears to be dependent on integrating the objectives that emerge from this vision
into corporate practices, impacts, and relationships, first in HR, discussed above, but then
also into all other processes of the company. In the firms studied this appears to be an
evolutionary process, as stated by one manager:
Integration is not something that happens overnight. It has moved through our entire
organization, but it has to be done step by step.
At the start, and in an on-going process of integration, corporate responsibility and addressing
non-traditional goals - in other words, those of environmental and social responsibility were, we heard, considered something to be handled by compliance or other groups dedicated
to these issues. Addressing responsibility issues, particularly in labor and social areas, was
part of compliance / social responsibility group's task to enforce as they saw fit. With time,
these firms appear to be moving, to greater and lesser degrees, toward management systems
that explicitly and deliberately integrate an understanding and implementation of corporate
responsibility into other parts of their organizations. Key areas include but are not limited to
communication systems, operating, production, and delivery systems, accounting, and
financial systems, and supplier relationships - in addition to the reward and other HR systems
already covered.
As one manufacturing manager explained it, the task of truly carrying out all the elements
that are required by the responsibility vision is 'huge,' with broad implications. Yet from
firm to firm, and from department to department, the requirements can vary. With regard to
moving responsible practices into supplier operations, for example, the role of purchasing
appears crucial, as indicated by the following comment:
No company [supplier] really cares about the rating on the [labor, environment, health
and safety audits], they care about orders. [MNC manufacturing manager in China]
At the same time, as purchasing representatives are only infrequently present in supplier
factories, and as the compliance or responsibility group is limited in size, able to visit and
monitor suppliers only on a sporadic basis, many managers in the firms with heavily
disaggregated supply chains that we reviewed highlighted the role of quality and
manufacturing personnel in supporting responsibility objectives. Yet, as the following
18
comment indicates, the addition of responsibilities for responsibility to those already held by
the quality control group is a point of contention:
For the time being managing [supplier] compliance with [corporate responsibility
objectives] and quality control have been purposely separated. Compliance people
prepare corrective action plans, we think the QC (quality control) people should go on
QC checks and also take these with them, to check the way things are headed. The
synergy would be if QC people were trained in [responsibility requirements]
compliance, then they could do a full package, both in pre-evaluation and follow-up.
The QC taking this responsibility is limited by workload, they have too much to do.
Firms attempting to integrate TRM-type approaches to meeting responsibility visions and
objectives have to consider this impact, the required reallocation of resources and changes in
processes, in a broad range of areas. Like with TQM, where a review of the impact of each
job on achieving a firm's quality objectives is central to the approach, firms implementing a
total responsibility approach appear to have to make a similar and continuously on-going
review. As such, and like with each of the other components of TRM, the implications are
enormous.
Systems for Assessment, Improvement and learning
The great benefit of TQM to management is that it does not expect perfection. Rather, it
focuses on continually improving not just the products or outputs of systems, but also the
processes associated with developing them. Much the same can be said of TRM approaches.
No company is—or is ever likely to be—perfect. Companies can, however, put in place
processes that help them determine where problems exist and, when uncovered, provide for
remediation, innovation, and learning that helps to improve the situation. Assessment,
improvement and learning systems provide a basis for this continual improvement process.
Responsibility measurement system. TRM approaches deal with multiple objectives, thus
measurement and performance systems need to reflect the added complexity of these
objectives. Single bottom-line performance assessment systems are increasingly outdated, as
noted above, with the advent of multiple bottom line auditing systems, holistic performance
assessment models, or balanced scorecard approaches. As stated in the following quote of a
country manager for a multinational operating in Asia, there is a need to quantify what the
current state is in meeting responsibility goals, knowledge that will help the firm make
changes.
You need to measure very well. [...] Quantify where you are, so you know where the
problems are. [Considering overtime as one example of an area addressed by
responsibility objectives] if you know you are working certain amounts past
maximums, you can then push and see how much pain there is. At the start,
managers didn't know - they may be working 29 of 30 days during peak months, and
you won't even know.
Companies can track the effectiveness of specific innovations or improvements only when
they are measuring them well. Information and measurement systems need to support the
decision-making process, allow for tracking of results, and be accessible to those who make
decisions—or have input into decisions. That latter group includes employees in terms of
production processes and the human resource systems that affect employees and employees
of suppliers. While information gathered can be complex because it is being gathered on at
19
least the triple bottom line of traditional economic, plus social and ecological indicators, it is
only useful to management when it is integrated and adapted to specific situations.
Appropriate measures can improve performance, because as the accounting axiom goes, what
gets measured and rewarded is what gets done. Thus, TRM approaches cover far more than
simple productivity and financial performance because responsible practice is integral to all
of a company's operations. Human resource practices need to be assessed to ensure that they
are in line with the core values and codes of conduct the company has established. Customer
and marketing practices, as well as product quality, need to be assured to processes, such as
the ISO quality standards or the Baldrige, Deming, or European Quality Award standards
(see Table 1). Community relations performance can be assessed, for example, by the Boston
College Center for Corporate Citizenship's standards of excellence (see Table 1). Social
auditing methods, such as internal responsibility audits of employee, community, quality, and
environmental processes (Waddock & Smith, 2000) or more stakeholder-oriented auditing
techniques like those of AccountAbility in England (Zadek & Evans, 1993), can provide
useful information, although similar methods can also be developed and applied in-house.
The companies studied in our research are undertaking, to varying degrees, a process of
building up information systems that support their responsibility measurement requirements.
Keeping track of performance against objectives, following up on action plans established
after compliance audits in suppliers, ensuring reductions in the use of toxic substances or
monitoring accident rates all require some sort of measurement and information systems.
Given the relatively recent emergence of the broad-based pressures to act responsibly,
though, such systems are often in early stages of development.
We have found that the nature of the systems required, and in some cases being developed, to
support an integrated, total approach to responsibility is pervasive and multi-dimensional. By
multi-dimensional we mean that information systems provide inputs at the corporate level on
success of organization-wide efforts, or on crises that require top-level action; they also
provide inputs at the country level and within factories or operations dispersed around the
globe, to flag local issues that require consideration. As with TQM, where inspection,
measurement and analysis are expected to take place at the place where the work occurs, such
systems can extend responsibility measurement to the lowest levels in the hierarchies of
firms, providing individual managers and employees guidance to problem solving.
By pervasive, we mean that it appeared that the integration of responsibility objectives into
decision processes requires wide access to information on the results of responsibility
measurement. Data gathering for the information systems was, in the best cases studied,
pervasive throughout the firms, ranging from audits, both external and internal, accident
reporting systems, suggestion boxes, best practice exchange networks, supplier databases,
and so on. As one of the managers suggested, you need to 'quantify everything' in order to
manage it. At the same time, for responsibility to impact on purchase decisions or
management performance reviews, for example, then information on performance has to be
available - a concept addressed in the next section.
Transparency and Accountability. The responsibility measurement system is the key to
providing necessary information for improving the system to organizational decision-makers,
and doing so in a cost-effective (and even, sometimes, profitable) way. Access to
information and its reporting methods can provide a dynamic tension that moves a company
forward, supporting its continuous improvement of practices. The use of information, its
20
transparency and the resulting levels of accountability, work both internally and externally to
support the firms achievement of responsibility objectives.
Internally, with measurement systems stretching up and down through the organization,
access to information can help managers determine whether actions need to be taken to
improve practices. Visibility helps ensure that this access to information is taken advantage
of, putting pressure on those who can influence the process of achieving responsibility goals
to make choices that are based on responsibility considerations.
Transparency and accountability is also focussed externally. Managers interviewed stressed
that a responsible company knows that it is accountable to multiple stakeholders for its
operating results, financial performance, and stakeholder and ecological impacts. In many
cases, data from the responsibility measurement systems are used to produce responsibility
reports addressing internal and external (or boundary-spanning) practices and the impacts of
corporate activities. Through transparency, i.e., the issuance of not only financial but also
social and environmental reports (or, better, an integrated version of all of these), we have
observed how companies can develop better relationships with key stakeholders, such as
activists, customers, employees, and communities, not to mention owners. In addition to the
supportive pressure to improve that result from transparency and its attendant accountability,
they also can lead to the development of trust with key stakeholders through the provision of
data perceived as both valid and reliable.
Remediation, Innovation and Learning for Improvement. The responsibility
measurement system is also essential to improvement processes. Only after appropriate
measurement and assessment is done through the responsibility measurement system do
companies have the information needed to improve the responsibility of all of their operating
systems. The information gathered through the responsibility measurement system needs to
be fed back to managers, employees where relevant, and other stakeholders so that gaps
between vision, values, and performance can be remedied. As the quality approaches
articulated through the Baldrige Award rightly have noted, continual improvement in
processes and outcomes is both feasible and necessary.
Implementing a responsibility vision is an on-going, cyclical process of continual remediation
for wrongs, improvement, innovation, and organizational learning. The responsibility
measurement system provides managers with guidance and structures that encourage
responsible practices and provide an emphasis on continued organizational learning and
development, pushing it toward ever more responsible practice. Remediation links to the
foundational values agreed upon by the international community and the specific
responsibility vision of the corporation by focusing on continually learning and improving
practices that may meet basic standards but could be performed better. Further, remediation
provides a mechanism for immediately eliminating practices that are found to be intolerable
under the foundational values.
TRM: An Integrated System
The total responsibility management practices we have observed in our research, and
presented here in what is admittedly a brief outline, represent an integrated manner of
implementing responsibility objectives, with elements that work together rather than
independently or in isolation. Each element reinforces and is interdependent with the others
21
to create a context in which all stakeholders involved in the system are aware of the vision,
values, and strategies, and are informed about the practices that are being used to achieve that
vision. This, of course, includes employee and supplier practices, as well as environmental
practices that move the organization toward sustainability for the long term. Sustainability
can also be applied to communities involved with any corporation, both in the ecological
sense, but also in the sense that communities are integral systems themselves that need to be
healthy and self-sufficient over time.
TRM, as described here, is a process and set of standards or goals to be achieved, but not a
strict set of guidelines for performance. Rather, taking a TRM approach to implementing
responsibility objectives provides a framework within which a company can plan and
organize responsibility for its practices and impacts. As such TRM can be seen as a tool
similar to those developed for quality management that will be implemented in unique ways
by each company that adopts this approach.
Self-assessment is a critical component of TRM. While we believe that external evaluation,
monitoring, and certification are important, TRM is basically a self-monitoring framework
that can help a company figure out where its problem areas are and work toward
improvements. By identifying stakeholders and the impacts that company practices have on
them, and by engaging in a dialogic process to improve its stakeholder relationships, a
company will be better prepared for problems when they do arise — and more likely be able
to avert many stakeholder-related problems altogether.
We do not suggest that the elements that make up quality management can be directly
translated into those that address responsibility within organizations. Rather, we suggest here
that there are a great many of the accepted TQM elements that do match with those that our
research indicates lead to effective responsibility management. In particular, the concepts of
long term focus, management commitment, systems orientation, integration of responsibility
throughout the organization, measurement, feedback, learning and employee involvement all
appear to be central to the effective management of both quality and of responsibility. Like
with quality, the broad implications of these elements for the firm and the requirement that all
impacting factors be considered and adjusted - that responsibility be integrated into the
organization - imply the total element of a TRM approach.
Throughout the ILO research into responsibility management, as well as in a variety of other
forums, we have heard how management is looking for the solution, something that can be
done now to take care of the increasing pressures they face to act responsibly across the range
of their operations and down through their supply chains. Yet, as we have found, there is no
simple solution, that the commitment effective responsibility management requires is both
broad and deep for the firm. Yet to ignore this fact, looking to codes of conduct or
monitoring and verification systems to make the problems go away, is to ignore the reality of
what it takes to implement corporate objectives that are impacted by almost all components
and activities of a firm.
We argued earlier that companies today are facing a proliferation of standards, principles,
demands for accountability, and new more holistic auditing and reporting standards.
Similarly, in the early days of TQM, there were a variety of approaches companies could
follow to achieve higher quality products and services. Eventually, however, the
establishment of the ISO standards and major awards, such as the Baldrige Award, Deining
Prize, and European Quality Award, basically agreed on a process approach to quality. In
22
large measure it was when there was a degree of "rationalization" of approaches to quality
management that it became feasible to compare the quality performance of one company to
another—and for companies to benchmark their own performance against standard.
TRM approaches can potentially provide a means for integrating external demands and
pressures for responsible practice, calls for accountability and transparency, the proliferation
of codes of conduct, managing supply chains responsibly and sustainably, and stakeholder
engagement into a single approach for responsibility practices within the firm. Are any
companies now implementing complete TRM systems? Not in our view. But as in the early
days of TQM, the pieces are in place in many companies and, recognizing the need for
integration as a means of controlling the complexity they would otherwise face, many
companies are clearly beginning to move in the direction of total responsibility management.
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25
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Table 2. Baldrige Criteria Compared to Total Responsibility Management (TRM)
Baldrige National Quality Award Criteria for
Performance Excellence, 2001
Total ResDonsibilitv Management Criteria for
Performance Excellence
•
Leadership: includes organizational
leadership (including top management
commitment) and public responsibility and
citizenship.
•
•
Strategic Planning: includes strategy
development and deployment.
•
Human Resource Focus', includes work
systems, employee education, training, and
development, employee well-being and
satisfaction.
•
Customer and market focus: includes
customer and market knowledge,
relationships, and satisfaction.
•
Information and Analysis', includes
measurement and analysis of organizational
performance, and information management.
•
Process Management', includes product and
service processes, business processes, and
support processes.
•
•
•
•
•
•
Business results: includes customer-focused
results, financial and market results, human
resource results, and organizational
effectiveness results.
•
•
Source:
htto://www.aualitv.nist.aov/2001 Criteria.Ddf.htm
Note: Order is shifted to match TRM order.
27
Vision setting and leadership systems.
Responsible vision, values, and leadership
commitments development:
• Built on foundational values
• Incorporating input from stakeholder
engagement processes
• What business(es) are we in?
• What do we standfor?
Integration into Strategy:
• Integrates core values and responsible
practice into corporate and business
strategies.
• How do we do business here?
Human resource responsibility: includes
employee relationships, especially meeting
codes and standards, respectful treatment of
workers, responsible working conditions and
systems, empowerment, communication,
training, and development for direct
employees and those in the supply chain.
Responsibility integration management
systems: integrates responsible practices and
systems into all corporate functions,
including knowledge, communication, and
monitoring of supplier relationships,
customer and market relationships,
shareholder relations, community relations,
government and public affairs
Responsibility Measurement system:
provides a multiple bottom line set of
assessment, auditing, and monitoring
procedures that provide performance data
and information.
Improvement: remediation, innovation, and
learning. Feedback from responsibility
measurement system used to improve
performance, remediate problems, and
innovate
Results: Responsible performance,
stakeholder, and ecological outcomes.
Transparency and accountability for results
and impacts: communication of performance
results on multiple bottom lines internally for
management use and to external
stakeholders.
Endnotes