Nestlé buffs its image with its living wage policy

July 4, 2014

The global consumer goods giant Nestlé develops its living wage policy. Will the approach help it avoid further lapses in Corporate Social Responsibility?

In June 2014, Nestle announces an extension of its policy of paying the living wage to employees. From 2017, the company will pay contractors in a similar fashion to its own workers.
[For an explanation of the minimum wage concept see this BBC article]

The unrepentant chocolatier

In 2009, the Economist examined Nestlé’s history and current strategy in an article entitled The unrepentant chocolatier.

The potted history reveals how a little Swiss firm making chocolate products became the World’s largest manufacturer of food products by revenues, ahead of Kraft, an American multi-national.

The stated plan is to strengthen future growth through a move into ‘wellness products.’ The Economist notes the commercial logic of the plan, but identifies a dilemma for Nestlé

The Dilemma

The Dilemma is suggested in the title of the article. Nestlé is seeking to reposition itself as a thoroughly ethical company,. Yet it will persist as a purveyor of many products seen as unhealthily loaded with carbohydrates and fats. The Dilemma has some similarities to challenges that facing the giants in the soft drinks and the alcoholic beverages markets.

The dilemma is made tougher for Nestlé for its historical record of association with stories damaging to the company’ brand. These include the baby milk scandal in Africa, and more recently the bottled water product with chose affinity to branded tap water, and meat products of dubious origins.

The company hopes to promote a policy that preserves its hard-earned revenues from its indulgence brands and grows new brands associated with the ‘noble cause’ of functional foods and wellness products.


‘The unacceptable face of capitalism’: how history repeats itself from Lonrho to the Marikana Massacre

June 18, 2014

In the 1960s, The Lonrho group was memorably labelled by Prime Minister Edward Heath as representing the unacceptable face of Capitalism. Fifty years later, this week, a much re-structured organization was accused in the same terms by Sir Richard Needham, a board member in tendering his resignation

The original Lonrho [London and Rhodesian Mining and Land Company] was built into a conglomerate retaining its focus mainly in Africa by controversial entrepreneur Tiny Roland. His leadership style and practices gave him the reputation of a ruthless operator. Board room battles and attempts to oust him in 1973 resulted in the notorious outburst in Parliament by Edward Heath. Roland continued to be a high-profile and contentious figure as he expanded the influence of Lonhro, eventually being removed as Chairman in another board room coup, twenty years later.

He repeatedly attracted controversy in his business dealings including an obsessive pursuit of Harrods and the House of Fraser, and feud against the Fayads in the late 1970s.

A more serious set of allegations surrounded his deals with the Libyan government, at a time when the United Nations was considering sanctions in connection with the Lockerbie bombing. “To me, Gaddafi is a super friend,” Rowland explained. “Don’t talk to me about morality and proper behaviour. I pay my taxes here. Gaddafi and Lonrho are a perfect fit.”

After Roland’s departure, Lonrho went through various divestments and name changes. Controversy continued to stalk the emerging corporations. The mining division emerged as Lonmin plc, which earned unwelcome publicity and financial rating through the Marikana miners’ strike in 2012 in which 34 miners were killed.

In 2014, another controversy broke out in the corporate entity retaining the name of Lonrho.

When it comes to assets, a majority stake in a Mozambique hotel is all that links the sprawling, Africa-focussed Lonrho conglomerate which was built up by controversial businessman Tiny Rowland in the second half of the last century and the overhauled group today. Yesterday, that slender asset link was joined by a corporate governance connection, as the former trade minister Sir Richard Needham quit the board of Lonrho following a row about pay and transparency.

In his resignation letter, Sir Richard alluded to Lonrho’s one-time reputation under Mr Rowland:

“You will remember only too well that the allegations, years ago, that the company was dubbed an unacceptable face of capitalism, dogged its reputation. It would be a pity if history was to repeat itself,” Sir Richard wrote. [June 11th, 2014]

In essence, the corporate governance complaints against Mr Rowland’s old Lonrho and executive chairman David Lenigas’ new Lonrho – a vastly slimmed down operation largely dedicated to agribusiness – are quite different. Sir Richard’s concerns about the new Lonrho centre on the proposed hike in the salary of Mr Lenigas, from £500,000 to £750,000 – and the way he allegedly rushed it through.

Lessons of history?

Mining has always been a tough industry often operating in extreme environmental conditions. Pioneering leaders have to deal with the other powerful leaders seeking the best deals for their institutions and their personal interests. The protagonists often share combative instincts. Roland, for example worked with the notoriously unpredictable Colonel Gadhafi . He also had no apparent qualms about engaging in bitter personal battles with the Fayads, and former allies with whom he had fallen out.

His successors at Lonmin are embroiled in investigations of the deaths of 34 of its mine workers in Marikana. In the ‘new’ Lonrho, the disputes and resignations continue. The company is said to be risking resurrecting the unwanted tag as the unacceptable face of capitalism.

Today, the leader may find it harder to shrug off criticism in the words of Tiny Roland “Don’t talk to me about morality and proper behaviour”. Even if the company pays its taxes, global institutions are finding it easier to recognize the intricate way in which ethics and profits are inter-connected and exert pressure accordingly.


African Entrepreneurs suffer from venture capital shortage

February 14, 2014

African EntrepreneursLocal Entrepreneurs in Africa are disadvantaged by a lack of venture capital

In an article for Computer World, [November 2013] journalist Rebecca Wanjiku suggests several factors that may be contributing to a shortage of funds for new technology start-ups. There is no parallel with the vibrant venture capital hubs such as Silicon Valley in America or the University spin-off science pars flourishing in Cambridge [American or English versions].

The perceived challenges of businesses operating in Africa as well as the higher costs of due diligence and inexperience of the investors and entrepreneurs in the region have all worked to dampen the growth of venture capital funding for tech start-ups and mid-level businesses on the continent, according to industry insiders.
Local start-ups have held discussions and wondered whether their lack of success in raising big money had racial overtones. Companies run by whites seem to be luckier in securing funds. The problem, however, seems to be more about the perception of inexperience and a lack of contacts than race.
“I don’t think it’s about being white or black, it’s about your network; highly networked Kenyans have an easier time too,” added Erik Hersman, founder of the iHub Nairobi, a co-working space for techies.
“Innovative early stage ventures with the potential to yield high social and environmental impact and requiring less than $500,000 in financing remain the most difficult segment of the SME pipeline to reach,” said Ben White, founder of VC4Africa. VC4Africa is an online portal that brings together 13,000 entrepreneurs, VCs and angel investors interested in Africa. It was kicked off at the annual congress of the African Venture Capital Association in Dakar, Senegal, in 2007. Last year, VC4Africa start-ups secured $80,000 in funding while companies seeking expansion secured an average of $237,000 in funding.
VC4Africa works with entrepreneurs in 40 African countries but the number of start-ups and growing companies seeking funding outstrips the available capital. The lack of in-country funding mechanisms and lack of tech-specific financial facilities from the public sector most likely means that the problems will persist.

Leadership challenges

Leadership challenges abound. The contrast with the developments emerging in China, is stark. A similar sense of the availability of entrepreneurial venture backing is reported in India.


Don’t Miss “The Queen of Katwe”

February 13, 2013

The Queen of Katwe jacket image

Book alert: The Queen of Katwe is a must-read for chess players and all who wonder at human triumph against adversity

Top of my reading list this week is a story of a little girl who wants to become a chess champion. As sports writer and author Tim Crother puts it bluntly and contentiously in his book:

“Phiona Mutesi is the ultimate underdog… to be African is to be an underdog in the world. To be Ugandan is to be an underdog in Africa. To be from Katwe is to be an underdog in Uganda. To be a girl is to be an underdog in Katwe.”

More to follow

Review comments welcomed from any LWD subscriber


Mo Ibrahim: “A good African boy who did not forget his people”

November 12, 2010


Posted By Frances Nicholls

The Sudanese-born British entrepreneur, Dr Mo Ibrahim, founder of the African mobile phone operator Celtel, philanthropist and self-made billionaire was asked in a CNN interview what legacy he would like to leave. He replied smiling that he would like to be remembered as “A good African boy who did not forget his people”

In a global context, the only African “boys” who grab the headlines in western media are generally not the “good” ones. “Good” implies an ethical approach to leadership. So can “good” boys or girls succeed in leading Africa? The example of Mo Ibrahim shows they can.

Born in Sudan 1946, Mo Ibrahim, an electrical engineer by profession, worked in the UK for BT before starting Celtel in 1998. Following the sale of Celtel to MTC of Kuwait he started the Mo Ibrahim Foundation, committed to promoting and encouraging ethical leadership and transparency in a region characterized by corruption and poor leadership. The Ibrahim Index which rates African countries on governance and the Ibrahim Prize (worth more than the Nobel peace prize), are the organisation’s most publicly known initiatives. They have received criticism and praise they have received, as well generating discussion on leadership issues in the region.


Another Change Master?

Many a political leader can be said to have abused the word “change”. Only time can tell whether a vision becomes reality or not. Whether running Celtel, or leading his foundation, Ibrahim is a change agent and his leadership is characterized by encouraging others to believe in his vision. Not only can he be described as taking an ethical approach to leadership, he is transformational. He involves his team by allowing his vision to become their vision. He tackles both the West’s tendancy for negative and patronizing approachss to Africa as well as Africa’s own dilemmas of ethical leadership. Indeed for the last 2 years, no leader has won the Ibrahim Award because, as he states himself, there has been no leader in Africa who has deserved it.

Walking the Talk

Even before the idea of the foundation had come into being, back in Celtel days, Ibrahim was leading by example. Any transformational, and indeed ethical leader needs to be able to sell themselves first before selling their ideas to others. Even the journalist Michela Wrong, well known for her success in uncovering yet another African saviour turned despot, was uncharacteristically positive in her write-up. Importantly, Ibrahim’s own story is an inspiration to others showing that big business can be done in the region ethically. His ethics in leadership goes further than “tokenism”, but comes from an internal belief in a cleaner way of doing business and importantly he actually puts this belief into practice.

Through the systems he developed at Celtel, Ibrahim made it very clear to employees and the government that bribing was not their way. Ethical in his approach, he also achieves this in a way that echoes the concept of transformational leadership through inspiring the moral beliefs and behaviour of his employees.

The foundation

Ibrahim was able to put his personal charisma and well-earned cash to good use to further promote and encourage clean governance in Africa. His ‘team’ or his agents for transformation are no longer just confined to a company or organisation, he is influencing the public and business community at large in Africa and also the international community. Indeed the foundation, run by his daughter Hadeel, boasts of members such Mary Robinson, ex-President of Ireland and former UN High Commissioner. Robinson says it was Ibrahim’s vision that inspired her to become part of the foundation.

When talking about people’s response to the prize, his daughter Hadeel notes,

“People responded partly to the notion of the prize, but also to my father as someone who will get things done…. He is consumed by the desire for excellence in all he does.”

By leading by example, and through articulating his vision clearly, he not only espouses transformational leadership qualities, but he has opened many minds to how ethics and success in Africa can help achieve change.


Richard Harvey: A case example of servant leadership?

December 23, 2007

richard-and-kay-harvey.jpg

Update Feb 2011

Richard Harvey, chairman of P Z Cussons, was the subject of a post in 2007 in which he was presented as an example of servant leadership

Original post [2007]

Richard Harvey ‘retired’ from his high-profile job as head of the Aviva financial organization to what he called ‘the gap year I never had’, as a charity worker in Uganda. In doing so, he seems to illustrate the concept of servant leadership

Servant Leadership is a term that crops up in leadership texts. It sits uneasily with other leadership concepts which emphasize superior personal characteristics, greater drive and motivational needs. It attracts those in search of a spiritual counterweight to the economic thrust of much of the literature, and particularly to the so-called dark-side of leadership.

Let’s take as a given, for the moment, that servant leadership exists. If so, Richard Harvey can stand (‘serve’) as a good example of the genre, when good can mean exemplary as well as of high moral standing.

Background

Nearly a year ago (January 2007) a news story broke in the UK. My earliest reference comes not from my usual business sources, but from the Sun Newspaper, which reported:

One of the City’s most powerful figures is quitting his £1.9million-a-year job to do charity work in Africa. Richard Harvey will step down in July as boss of Aviva, which owns Britain’s biggest insurer Norwich Union. The dad of three, 56, is swapping his London office ..to live amid mud huts and grinding poverty for a year. Mr. Harvey and his wife Kay, who have a £2million house in swanky Chelsea, West London, were inspired to work in Africa after their daughter Jenny took a gap year there. He said: “Kay and I are going to have the gap year we never had.”

The spiritual and mundane dimensions

A cursory examination of Richard Harvey’s business career suggests a rather conventional high-achiever. After a degree in mathematics at The University of Manchester, he pragmatically switched from his intended career as a nuclear engineer into accounting. There followed a succession of increasingly successful jobs in which he demonstrated considerable business skills not without controversy.

In March 2004 Harvey ..came under heavy criticism, this time by members of Parliament in the Treasury Select Committee, for accepting what was described by the Manchester Guardian as “bumper raises” when millions of policyholders were suffering shortfalls on mortgages and pension plans.

The previously hidden private life of the business leader was later to become more publically known. It appears that that the family holds strong religious convictions, which helped overcome the trauma of a serious illness to Kay Harvey. Richard is believed to provide serious but discrete financial support to various charities.

It turns out that the couple’s ‘gap year’ involved them on behalf of Concern International

This has since received publicity through a BBC programme about the charity efforts scheduled for screening over the Christmas break [2007].

Idealism and pragmatism

Servant leadership tends to create an idealistic picture of someone. We should not ignore the dilemmas facing business leaders. A strong sense of values needs a healthy streak of pragmatism to survive and thrive. As Mr Harvey’s charitable activities were gaining publicity, his pension arrangements also were the subject of news attention [March 2007]