Transforming Capitalism from Within
"...if our relationships are so fundamental to our well-being, why do we
keep forgetting to take account of them in our strivings? Wouldn't we be
better off if we got into the habit of viewing all our endeavours
through a lens that focused on their implications for our relationships?" Ross Gittins, Sydney Morning Herald economics editor, writing about Transforming Capitalism from Within. Read the whole article here."Transforming Capitalism" is a fresh approach to the purpose, performance and assessment of companies based on the idea that stakeholder relationships lie at the heart of companies.
report is based on several years of research into the concept of 'relational
companies', culminating in the creation of a Relational Business Charter.
The ten points of the Charter are below; for more detail, read the executive summary or download the full 72 page report by Jonathan Rushworth and
Michael Schluter. The printed version can be ordered from our online
On the basis of this Relational Business Charter, a framework for assessing the
social impact of corporates is being developed in South Africa, in response to
the King III corporate governance requirements.
The Relational Business Charter and proposed Relational Ratings Agency will
permit companies to be scored on their "relational rating".
Their relational scorecard will complement financial and environmental
indicators to act as a guide for investors, customers and potential employees.
Join the debate!
To discuss the Transforming Capitalism from Within report, please visit our blog and express your own comments and views. We
look forward to having you join the debate!
The Ten Points of the Relational Business Charter:
will be recognised for the purposes of the Charter as having a relational ethos
and operating in a relational manner if it has the following characteristics:
1. Set relational goals. The company includes a Relational business
objective in its constitution, and demonstrates commitment to implement it,
providing appropriate training to investors, directors and employees.
2. Create stakeholder dialogue. Dialogue is promoted among all
significant stakeholder groups, through regular face-to-face meetings and,
where that is not possible, through regular on-line communication.
3. Demand shareholder transparency. There is direct and transparent
(named) ownership of a significant proportion (perhaps 25%) of the shares by
individuals (or family trusts).
4. Encourage long-term ownership. A high proportion of the shares
are owned on a long-term basis (which may be incentivised by issuing additional
shares to long-term shareholders).
5. Safeguard work-life balance. There is evidence of management
having respect for the interests of employees (e.g. with regard to length of
working hours, atypical hours, and other employment conditions).
6. Lower pay differentials. The dignity of all employees is respected by
minimising remuneration differentials within the business (taking, for example,
a 20:1 ratio between top and bottom as a benchmark)
7. Build supplier partnerships. Suppliers are treated fairly and
with respect, paid promptly, and given support to develop their businesses.
8. Respect customers & communities. Customers and the local community
are treated fairly and their concerns are respected (e.g. with regard to
service provided and payment terms).
9. Promote financial stability. The risk of company financial
instability is minimised to protect the company and its stakeholders (assessed
with reference to debt:equity ratios and/or levels of interest cover).
10. Fulfil social obligations. Obligations to wider society are
fulfilled, assessed with reference to the percentage of profits paid in tax in
the country where those profits are earned and also the percentage of profits
spent on corporate social responsibility.