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Risk Managers' Forum A brave, new world Working with socially conscious clients By Richard G. Rudolph, Ph.D., CPCU, ARM The insurance agent, broker, underwriter or other vendor of services desiring to do business with larger organizations may increasingly have to face additional restrictions or qualifications. As organizations develop a policy of social responsibility, social consciousness, or social justice, they may insist that vendors providing services and products to them adhere to their social agenda. Therefore, insurance organizations must be aware of the nuances of social consciousness and decide how they will address these situations. One possibility is that the prospective client (or existing client that adopts a social policy) may define its response to social issues by becoming “green” or aggressively promoting environmentally friendly actions, such as the extensive use of recycled paper or by creating carbon-neutral initiatives. Another possibility occurs when the risk management department or insurance purchasing and management function is handled in a socially responsible manner. This may take the form of adherence to extensive disclosures of compensation mechanisms or profit sharing or, more simply, of a code of conduct that forbids gifts or other “business relationship” enhancements like sporting event tickets, rounds of golf, or sumptuous dinners. A third option is when the decision-maker is socially conscious on a personal level, even though the organization for whom he or she works is not. There is nothing really new in these types of scenarios. For a number of years, organizations receiving federal funds or, in some cases state funds, or operating under federal guidelines that give them preferential treatment have been required to ascertain that vendors doing business with the firm also meet minimum guidelines with respect to employee wages, ethnic and gender diversity, minority ownership, and other such parameters. The knowledgeable vendor became aware of these restrictions, guidelines or requirements and did not solicit such business unless able to satisfy the minimum standards. However, there are no federal, state or local laws that define socially conscious behavior. These actions are the choice of the individual organization and its management, and the vendor cannot easily predetermine what might be required to become a vendor to the socially responsible organization. As the number of socially responsible organizations increases, the savvy vendor needs only to perform some additional market intelligence and questioning to prepare for presenting a socially responsible proposal. First, the vendor can gain an insight into a prospect by researching the targeted organization, a task performed most easily by examining its Web site. Most socially responsible organizations will readily identify their social consciousness with a statement on the site. In addition to the Web site, advertising and marketing materials, including the annual report or a 10-K filing for public companies, will often make their philosophy well known. Remember, the organization desires to present itself as a socially responsible citizen working to achieve social goals it believes are important, or to attract business from socially conscious individuals and organizations who desire to affiliate themselves with like-minded people or companies. Second, the vendor can ask for a company mission statement and code of ethics during an initial sales call or a fact-finding interview in addition to other more traditional documents such as product brochures and marketing materials. Mission statements of socially conscious organizations frequently identify that philosophy, either by reference to socially responsible actions or by specific mention of the philosophy. A code of ethics may give quick insight into the organization’s expectations regarding traditional vendor “perks” like sports event tickets, cultural event tickets, gifts, dinners, and the round of golf. Third, the vendor can pay close attention to what is said during a sales call or fact-finding interview regarding ethics and business practices. For example, one of my prospects made a clear statement during the initial interview: “Do not give us gifts of any value over $20. If you give us a box of candy, we will take it to the lobby. You may not take us out to dinner or a ball game—we will take you.” They laid down the rules very quickly that the way to lose their business was to give them anything of value. I later learned the reason I was involved in their business was that the soon-to-be-former broker had ignored this warning, thinking it was just posturing, and had sent the risk manager two tickets to the local ballet. While social consciousness is not just within the purview of large organizations, it does appear that larger firms are more likely to be socially responsible and more likely to promote their philosophy. When I worked for one of the national brokers, we recycled paper aggressively, but we did not make this environmental initiative known to our clients. Perhaps we should have, but at the time (during the ’70s and ’80s), organizations did not publicly identify their social initiatives to any real extent. Now, even a cup of coffee at Starbuck’s comes with a statement of social consciousness and a food container at McDonald’s is clearly emblazoned with the recycling symbol. However, this does not mean that only the largest national vendor handling the largest insureds must be concerned about social responsibility. Smaller insurance buyers, even down to the socially conscious sole proprietor, may wish to affiliate with like-minded vendors. This means that you should consider how adopting a statement of social responsibility might enhance your organization’s professional standing and acceptance in the socially conscious business community. Developing a code of conduct which stresses that your business policy is based on trust, not tickets; on professional performance, not professional athletes; and on diligence, not dinner, may help to restore some of the insurance profession’s luster that has been tarnished by adverse publicity. It’s up to the organization to determine what form its social consciousness should take. Perhaps it is something as simple as a code of conduct or trying to be as “green” as possible. It may be a statement in support of fair-trade items or improving foreign labor conditions. It may be a statement of being “carbon-neutral” or avoiding any conduct that is deleterious to the environment or the human condition. It is important for the vendor, such as the insurance agent, in a world of increasing corporate attention to social justice and responsibility, to become an active participant in that brave new world. * The author |
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