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Meeting the Challenges of Globalization

01 October 2002

(Photo: Edward Peters)

'I felt that things were not right in top management. There were contradictory policy decisions from the US and there was very poor communication.

Jacqueline Lammerée: poor communication

Jacqueline Lammerée resigned her legal affairs post at WorldCom, six months before the accounting black hole in the American telecoms giant was made public. WorldCom filed for Chapter 11 bankruptcy protection in July.

Lammerée, now a legal affairs director at Priority Telecom in the Netherlands, says there was an esprit de corps among the workforce at WorldCom, and she admits she found it difficult to leave. But she had suspected dishonesties. 'I felt that things were not right in top management. There were contradictory policy decisions from the US and there was very poor communication. The European management didn't clarify things. There was so much difference between the workforce and the leadership.'

'Rules are very important,' she told the 29th annual Caux Conference for Business and Industry, 20-24 July. Organized by Caux Initiatives for Business, it attracted 300 people from 26 countries. A first-time participant, Lammerée says she was struck both by the expertise of the speakers and the spirit of the conference, including the emphasis on personal integrity and responsibility in business.

Don Cowles: fundamental change at US multinational

Don Cowles, a senior executive from Alcoa aluminium corporation, also welcomed the emphasis on accountability. The US multinational had gone through a 'fundamental change over the past 10 years,' he said. 'In the early 1990s we moved to a values-driven model.' This, he said, reflected the Principles for Business published by the Caux Round Table group of senior executives. He saw in the company's new values 'a reflection of my own faith. It gave me a whole new energy.' Every employee had a stake in safety and Alcoa now claimed to have America's best safety record. A lesson learnt in a Brazilian plant, for instance, would be communicated worldwide to Alcoa's 350 facilities within 24 hours.

Participants from the industrialized and developing countries emphasized the 'asymmetrical development' of globalization, in the words of Kimon Valaskasis, founding president of the Club of Athens, and a former Canadian ambassador to the Organization of Economic Cooperation and Development. There were no global anti-trust laws, nor any global accounting standards, he said. Globalization was 'like an Olympic competition, but without any rules or referees'. Half of all global trade was between subsidiaries of multinationals. The WorldCom and Enron accounting scandals 'would have been scarcely possible before globalization', he claimed. Organized crime and terrorists benefited from a world without borders and rules, and governments had been slow to catch up. The new Club of Athens aimed to look at issues of global governance, bringing together 'thinkers and actors'.

A workshop during the Caux Conference for Business and Industry

Dr Frances Pinter, a Visiting Fellow at the London School of Economics, said that non- governmental organizations were often supported from the 'ill-gotten gains' of corporations 'who then end up being attacked on the streets of Seattle. So we live in a very intertwined world.' She emphasized that civil society gave a voice to citizens, but too many people were still left out of global civil society altogether through lack of representation.

Indian industrialist Sarosh Ghandy said it was possible to be competitive in a global market 'and still follow the path of social consciousness and maintain values'. 'Competitiveness is not merely a function of how closely one watches the bottom line or cuts costs,' said Ghandy, Managing Director of Telcon, a Tata Industries joint venture with Hitachi, which manufactures construction equipment in Bangalore.

Ghandy estimated that Tata Steel (Tisco) and Tata Engineering (Telco), 'spend around $20 million a year on providing facilities for their employees'. These ranged from housing, education, health-care including private company hospitals, family planning and welfare, to subsidized power supply, rural village development projects, and community forestry. Despite these costs, 'Tata Steel produces the cheapest steel in the world, and exports its products all over Asia, Europe and America,' he said. Tata Engineering maintains 68 per cent of India's market share in commercial vehicles, including trucks and buses, and exports them to 45 countries.

Globalization, however, had forced both Tisco and Telco to downsize drastically. 'Realizing the miseries that would be created among thousands of people, each company devised liberal severance schemes to protect the salaries of displaced employees up to their retirement. The human asset is the greatest asset and should be treated as such.'

Emphasizing the role of consumer choice in globalization, Andrea Cooper, a British manager with the consumer products multinational Procter and Gamble, said her company would never knowingly condone illegal or unethical dealings anywhere in the world. She pointed out that one in six shoppers would buy or boycott products because of a brand's or manufacturer's reputation.

The emphasis on personal choice impressed Hein Bogaard, an economist from the Dutch Foreign Ministry's Department for Sustainable Economic Development. 'People are ready to ask what they can do themselves. I've been to many conferences where people say the World Trade Organization or our governments should do this or that. But what we can do as a company, or as a person within a company, beyond the law - that gives a very different spirit to this conference compared with others. I come away with an energy to do things, to write, to continue discussions with people I've met here.'

One of the CCBI organizers, Dutch financial analyst Menso Fermin, said the conference had advanced his thinking 'on the role I can play as a socially responsible consumer and investor - but also in improving integrity, responsibility and accountability in my consultation work'. Co- organizer Stephen Greisdorf, a financial consultant from Washington DC, added: 'Globalization is a fact, like air and water are facts. But I am unwilling to accept that my choices have no impact on this trend. It is only by choice that the asymmetries of globalization can give way to hope and opportunity, missing from so many lives around the world.'

But perhaps the 'asymmetries of globalization' were most starkly illustrated by Emmanuel Ndejoule from the Central African Republic, now living in Paris. How, he asked, could he explain to his family, living in a remote village back home, that he worked with information technology on artificial intelligence? The Internet and e-mail were completely foreign to them. They had no electricity and globalization was passing them by completely.

OPPORTUNITY KNOCKS

Suresh Vazirani

'Globalization is here to stay. So we might as well make it an opportunity rather than seeing it as a threat,' said Suresh Vazirani, founder and managing director of Transasia Biomedical in Mumbai, India. The company manufactures diagnostic machines for blood diseases and exports them to 30 countries. It is India's market leader. But it faced severe competition from American, German and Japanese manufacturers when, between 1995 and 1997, the Indian government reduced import tariffs from 40 per cent to five per cent, in compliance with World Trade Organization rules.

'We realized that globalization was not only for these countries but also for us,' Vazirani said. 'We reduced our costs and decided to compete with all the other players in the world. Efficiency was the key - how to reduce man hours.' The company was manufacturing 5,000 machines annually for the domestic market, but calculated it could produce 20,000 annually for the world market.

The efficiencies introduced allowed Vazirani to transfer 30 of the company's 350 employees to research and development, rather than making them redundant. 'We are now technically as advanced as Japanese and European products,' he claimed. The company sells to Germany and is breaking into the Japanese market. It now employs 450 people and anticipates a turnover this year of $20 million.

Vazirani said he spends up to 60 per cent of his time tackling corruption issues. He told, for instance, how two 'petty government officials' had demanded a bribe of $100 for a licence to operate a fountain in the company's lunch area. Yet no such licences had been issued for 20 years, Vazirani found. His was the first case of its kind at the magistrate's court and it took his lawyers four years, costing $4,000, to deal with it.

Above all, he concluded, there was a need 'to develop a compassionate and caring society, through a lot of individuals making personal choices'.

SKILLS-BASED TRAINING

Andrea Cooper

In 2000 Andrea Cooper, a manager in the consumer products multinational Procter and Gamble, became a lead member of her company's 10-strong community relations initiative in Harrogate, Yorkshire. On the face of it, the spa town of 100,000 people had few problems, with full employment and a low crime rate. So the team decided to give skills-based training to teenagers, 'in order to give lasting benefit to the community', in line with a corporate theme of 'improving the lives of the next generation'.

They enrolled the support of the local member of parliament, 10 P&G managers, six head teachers, 20 local businesses and many local voluntary organizations. Over six Sundays, local business managers trained 16- to 18-year-olds in personal development skills, ranging from swinging on 50ft-high trapeze ropes to time management and communications skills. The 20 teenagers were then placed with a local charity. They were each given £500 and access to a business mentor and were charged with leading a project within their chosen charity. 'The charities benefited immensely as the skilled young leaders were able to deliver significant results,' Cooper said. 'What we have delivered across the two years has been truly amazing and was heralded by the UK General Manager as P&G community relations at its best.'

The experience had given her a great sense of pride in her company, she told the CCBI conference. 'A recent report claims that 80 per cent of employees consider a company's ethics more important than a higher salary. The project is now delivered twice a year by a new generation of young managers, who through their own personal involvement are also benefiting.'

Michael Smith

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