Managing Organizational and Nature Environments

There is still a tendency to focus on the internal workings of an organization and ignore the importance of new stakeholders or new trends in the external environment. Once again we meet our old friends, time and relationships.

Many activist stakeholders groups, from consumers to environmentalists to special interest groups, are giving managers signals that certain relationships have been ignored for that a different time frame is necessary. For example, several external events in the past few years put managers on notice that the relationship between the genders is changing, and the time horizon for change is short: the confirmation hearings or Supreme Court nominee Clarence Thomas, the Navy’s Tailhook scandal, and the 1993 Supreme Court ruling, Harris v Forklift Systems (1993) on hostile environments for employees in the workplace. As a result many corporations adopted new policies, or began to implement training programs to respond to these external events. Those who do not respond will face a number of challenges, including legal actions from their employees. Sexual harassment can cost corporation billions of dollars a year in lawsuits, turnover, lost productivity low morale, and absenteeism. Some research has shown that 90 percent of Fortune 500 companies have dealt with sexual harassment complaints, 33 percent have been sued at least once, and about 25 percent have been sued repeatedly. One estimate is that the problem costs the average large corporation $6.7 million a year.

Similarly environmental pressure groups have given the signal that they will use any available means from legal challenges to civic protest such as tree spiking to get organizations to pay attention how that may be damaging the environment. Increased concern about the natural environment means that new human relationships must enter the organizational equations, and the move from cost benefit thinking or the sustainable development concept means that the time frame has changed to become more immediate.

It is interesting to note that since the greetings of McDonald’s and replacement of the clamshell, the fight against polystyrene has lost a great deal of its venom. Don Jacobs, executive director of hospitality services at the University of Pennsylvania, switched back to polystyrene cups after six years of doing without. Paper has proved inferior to polystyrene, particularly with regard to warm beverages such as coffees, and the improved image of plastic has made customers more amenable to using it.

The teaming of EDF with McDonald’s demonstrates the value of stakeholders working together to protect the environment. It has prompted other similar efforts such as a project between EDF and Prudential. Johnson & Johnson, Time Warner, Nationsbank, Duke University and McDonald’s to promote the use at recycled (or otherwise environmentally preferable) paper Currently only 6 percent of the 22 million tons of printing handwriting paper produced is recycled. Stepping up paper recycling as the American institute has noted, because every ton recycled reduces the use of landfills by three cubic yards.

In August of 1993, it was announced that, by the end of the decade, products as Time Warner magazines Band Aid boxes, and Prudential insurance policies would all be made of environmentally preferable paper. This endeavor reflects a trend toward coalition building away from resorting to legal and regulatory channels. In addition, it provides for workable solutions. The real value of the task force is that we are working with actual users of these products. You find what works in a business setting.

The specific goal of the task force lies in prompting paper companies to recognize the ready market or recycled paper. The paper industry is the most capital intensive one in the United States. They are not going to invest in new technology without the assurance of demand. The fact that companies such as Prudential (which spends $300 million on paper each year) are turning to recycled paper coupled with the Clinton Administration’s directive that federal agencies which buy 300,000 tons of paper each year increase their usage of recycled paper, sends a clear signal to paper companies that their investment in recycling efforts will pay off.