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AstraZeneca’s New Path:AstraZeneca’s New Path:
Linking Business Performance Linking Business Performance to to
Social PerformanceSocial Performance
Cristin Gendron & Gabrielle ScheerCristin Gendron & Gabrielle ScheerHaas School of Business, UC BerkeleyHaas School of Business, UC Berkeley
April 25, 2007April 25, 2007
AZ Liaison: Paul NicholAZ Liaison: Paul Nichol
2
Pharma Industry Suffers In ReputationPharma Industry Suffers In Reputation
Issue
Goal
THE GREAT DISCONNECT
The mission of the pharmaceutical industry revolves around patients. The goal is to create medicines that treat and prevent their diseases, ease their
suffering and improve their quality of life.
America’s pharmaceutical companies are not trusted by stakeholders or the general public.
AstraZenecaUS
PharmaceuticalIndustry
ProjectApproach
Recommendations
3
Corporate Reputation DOES MatterCorporate Reputation DOES Matter
- Stakeholders inaccurately believe drugs make up a large % of total healthcare costs
- Pharma execs and stakeholders showed a gap in perceptions on issues affecting corporate reputation
- Need for more transparency in industry
Key Findings
- Low awareness of AZ and generally low favorability score
- Most important thing to stakeholders industry acts responsibly & ethically
- Favorability drivers – safety, pricing and honesty/transparency
Key Findings
PricewaterhouseCoopers Study:‘Recapturing the Vision’
2006
Lombardo Consulting Study:‘AZ Corp. Reputation Research’
2005
AstraZenecaUS
PharmaceuticalIndustry
ProjectApproach
Recommendations
Reputation Has Direct Link to Bottom Line:5% rise in reputation affords 3-5% increase in market capitalization*
*Source: PricewaterhouseCoopers
4
Project Scope Defined & ExpandedProject Scope Defined & Expanded
Overall CSR/Business
Strategy & Measurement
CSR IndexC&E Index
AstraZenecaUS
PharmaceuticalIndustry
ProjectApproach
Recommendations
Intended Scope:
Build C&E Index
Realized Scope:
-Build C&E Index
- Expand to overall CSR index
- Provide strategic recommendations
to match
Intended Scope:
Build C&E Index
5
Competitive Landscape AnalysisCompetitive Landscape Analysis
Merck Novartis Novo Nordisk Pfizer
Compliance Management Strategic Compliance
Strategic Value
Resource Magnitude
Breadth of Activities
Scope of Activities
AstraZenecaUS
PharmaceuticalIndustry
ProjectApproach
Recommendations
Integration
Metrics
CSR Stage
Legend: High Medium Low
6
AstraZeneca SWOT AnalysisAstraZeneca SWOT Analysis
STRENGTHS
• Proactive Approach to CSR – CSR Council– PAP– Scorecard– Stakeholder Engagement (BSR)– Corporate Reputation Survey (Lombardo)
• Leadership support– BI unit creation
• Risk Management– Code of Conduct (IRM)
WEAKNESSES
• Lack of focus in CSR strategy • Lack of ‘bigger picture’• Functional Groups act in silos
– Unaware of what other groups are doing
• Lack of robust metrics• Disconnect between Global and US efforts
THREATS
• Fear of damaging reputation from increased transparency
• It takes time to see movement of business indicators
• Difficult to show link between business indicators and CSR indicators
OPPORTUNITIES
• To be a thought leader in CSR arena• To improve pharma industry reputation• To improve AZ reputation• To bolster sales
AstraZenecaUS
PharmaceuticalIndustry
ProjectApproach
Recommendations
7
Summary of RecommendationsSummary of RecommendationsAstraZeneca
USPharmaceutical
IndustryProject
ApproachRecommendations
• Create actionable links with mission and core competencies
• Collaborate CSR activities within business units and stakeholders
• Focus on value creation – do a few things well rather than all things poorly
• Leverage existing CSR strategies
Strategy Measurement Communication
• Steps to create an index
• C&E Index
• CSR Index
• Not Communicating is NOT an option
• Stories trump numbers 10 times out of 10
8
Link Strategy w/ Mission & CompetenciesLink Strategy w/ Mission & Competencies
Strategic #1Recommendations Measurement Communication
Mission Statement: Discovering, developing, and delivering innovative, meaningful healthcare solutions
Putting the health of patients first - helping to empower and inform Rewarding work environment that inspires our employees
Core Competencies:Research and Development
CommercializationSix Key Therapeutic Areas
CSR Strategy*:Striving to make the right decisions
Being open and honestCreating a healthy workplace
Providing access
*Source:AZUS CSR Summary Report, 2006
9
Link Actionable Items to StrategyLink Actionable Items to Strategy
Strategic #1Recommendations Measurement Communication
Human Resources
EnvironmentalImpact
Pricing Strategy
ProductPipeline
Sales & Marketing
Access to Medicines
Patient Safety
InformationTransparency
Clinical Trials
Animal Rights
Philanthropic
CSR Strategy*:
Striving to make the right decisions
Being open & honest
Creating a healthy workplace
Providing access
*Source:AZUS CSR Summary Report, 2006
Publish ALL Clinical Trial Results
10
Integrate CSR Internally & ExternallyIntegrate CSR Internally & Externally
Strategic #2Recommendations Measurement Communication
Legal
Human Resources
SHE
Patient Assistance
Internal Comm.
Sales & Marketing
Compliance & Ethics
Public Policy
Corporate Comm.
Commercial
IntegratedCSR
Patients
Investors
Activists
Providers
Regulators
Employees
Community
Media
11
Focus on Value CreationFocus on Value Creation
BENEFIT TO CORPORATE REPUTATION
LEVEL OF CSR INVESTMENT
VALUE CREATION
RISK MITIGATION
PRICING
PATIENT SAFETY
ENVIRONMENT
HUMAN CAPITAL
ACCESS TOMEDICINES
PHILANTHROPY
ANIMAL RIGHTS
INFORMATIONTRANSPARENCY
Strategic #3Recommendations Measurement Communication
12
Leveraging Existing CSR StrategiesLeveraging Existing CSR Strategies
Strategic #4Recommendations Measurement Communication
AZ US can leverage established ‘best practices’ from other sources to help inform internal CSR strategies
AstraZeneca (Global)
NovoNordisk
Other PharmaCompanies
OtherCompanies
13
Summary of RecommendationsSummary of RecommendationsAstraZeneca
USPharmaceutical
IndustryProject
ApproachRecommendations
• Create actionable links with mission and core competencies
• Collaborate CSR activities within business units and stakeholders
• Focus on value creation – do a few things well rather than all things poorly
• Leverage existing CSR strategies
Strategy Measurement Communication
• Not Communicating is NOT an option
• Stories trump numbers 10 times out of 10
• Steps to create an index
• C&E Index
• CSR Index
14
StrategicRecommendations Measurement – C&E Communication
Steps in Creating a CSR IndexSteps in Creating a CSR Index
The goal is to put a ‘measure’ on the CSR activities AZ US has undertaken
STEPS*: 1. Select indicators
2. Ensure a common scale among indicators
3. Adjust indicators for favorability
4. Weight indicators appropriately
* Adapted from Jay Alden’s “Measuring the Unmeasurable”
15
Proposed C&E IndexProposed C&E Index
StrategicRecommendations Measurement – C&E Communication
Dimension Key Indicators Scale Favorability Weighting
ERC Ethics Survey Survey ‘Score’ Set max = 100 positive High
Helpline Data # incidents reported Set max = 100 negative Medium
Audits Reports % ‘green’ audits Set max = 100 positive High
Training Metrics % employees trained
Set max = 100 positive Low
Scorecard % of objectives met or exceeded
Set max = 100 positive High
Corporate Board Oversight
Board is actively involved in CSR
Set max = 100 positive Medium
C&E Linked to Individual
Performance
C&E objectives on employee’s
performance plan
Set max = 100 positive High
16
Corporate Sustainability IndexCorporate Sustainability Index
StrategicRecommendations Communication
Dimension Link WeightEconomic
Product Pipeline, R&D Sales, Margin, Investing, Mkt Share Low
Pricing Strategy Sales, Mkt Share High
Clinical Trial Data Retention, Investing, Recruitment, Sales Medium
Code of Conduct / Compliance Sales, Investing Medium
Corporate Governance Sales, Investing, Mkt Share Low
Risk Management Sales, Investing, Mkt Share Medium
Sales & Marketing (overlap)? Sales, Margin, Investing, Mkt Share High
Environment
Animal Rights Sales, Investing Low
Energy Efficiency Margin, Sales, Investing Low
Social
Labor Practice Indicators Sales, Margin, Investing Medium
Human Capital Development Retention, Recruiting, Sales, Margin Medium
Access to Medicines Sales, Margin, Investing, Recruiting, Retention Medium
Patient Safety Sales, Margin, Investing High
Measurement - CSR
17
Summary of RecommendationsSummary of RecommendationsAstraZeneca
USPharmaceutical
IndustryProject
ApproachRecommendations
• Create actionable links with mission and core competencies
• Collaborate CSR activities within business units and stakeholders
• Focus on value creation – do a few things well rather than all things poorly
• Leverage existing CSR strategies
Strategy Measurement Communication
• Not Communicating is NOT an option
• Stories trump numbers 10 times out of 10
• Steps to create an index
• C&E Index
• CSR Index
18
Communication is CriticalCommunication is Critical
Pharmaceutical industry has
an unfavorable reputation
StrategicRecommendations Measurement Communication #1
NOT communicating is NOT an option!NOT communicating is NOT an option!
Use stories to communicate CSR activitiesUse stories to communicate CSR activities
Examples of companies who chose not to communicate and found that it was the wrong strategy:
Nike and McDonalds
Hypothesis:AZ can fly under
the radar
FALSE!!FALSE!!
Within pharma, AstraZeneca is
not very well known by the general public
77%
62%
7%
30%
23%
52%
10% 10%
90%90%
48%
70%
93%
38%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
AstraZeneca Pfizer Eli Lilly GlaxoSmithKline Novartis Bristol-Myers Squibb Merck
Aware Not Aware
19
Tactical Recommendation: ImplementationTactical Recommendation: Implementation
StrategicRecommendations Measurement Communication
Take A Phased Approach to CSR Strategy
Phase I: PRIORITIZE
Phase II: EXECUTE
Phase III: MEASURE
Phase IV: MONITOR
20
Implementation GuidelinesImplementation Guidelines
StrategicRecommendations Measurement Communication
Phase I: PRIORITIZEPRIORITIZE
– Reassess priorities to maximize value creation– Revise CSR strategy to ensure it is appropriate, action oriented and consistent with
objectives– Benchmark and leverage existing CSR leadership
Phase II: EXECUTEEXECUTE
– Begin integrating key focus areas within business units, core operations, communications– Bolster top-down buy-in via consistent and timely communication with executives
Phase III: MEASUREMEASURE
– Validate appropriate indicators for CSR index– Establish baselines and set clear goals
Phase IV: MONITORMONITOR
– Adhere to plan of reevaluating strategy and metrics on a regular basis given changing industry and business operations/needs
21
Project BenefitProject Benefit
This project proved beneficial in both an academic and business environment.
• Internal Value (to class/team: Cristin Gendron & Gabrielle Scheer)– Access to Paul Nichol, a leader in AstraZeneca’s CSR efforts– Informative and friendly interactions with all contacts (AZ and BSR)– Participation in CSR Council Meetings– Educational and professional development experience
• Gained understanding of the critical elements of successful CSR program• Learned about the importance of a robust compliance and ethics program• Developed benchmarking methodology
• External Value (to AstraZeneca)– Provided an independent, outside assessment of AstraZeneca and competitive
landscape within Pharma CSR– Provided some benchmarking metrics as an opportunity for AstraZeneca to learn
from peers– Provided strategic recommendations in addition to measurement suggestions
22
AcknowledgementsAcknowledgements
Lastly, we would like to acknowledge the entire CSR Council for taking the time listen to our recommendations.
Many thanks to Paul Nichol for being our primary resource at AstraZeneca and the CSR company advocate.
Additional thanks to our interviewees for providing insight into AstraZeneca operations and providing additional research/literature:
Sandra Cumpston Marie Martino
Laura Commike Kellie McElhaney
Emily Denney Michael Seiders
Karissa Laur Heidi Thear
&
AppendixAppendix
24
CSR Is So Much MoreCSR Is So Much More
Source: Quantifying the Business Case, Chris Tuppen
Reputation
Retention &
Recruitment
OperationalEfficiency
Increased Sales
building trust in a company is a long uphill climb, but losing it can have dramatic effects on share price and customer loyalty;
employees want to work for responsible companies who care for their workforce and contribute to society;
CSR can improve the bottom line through material efficiency, and energy and waste minimization;
cause-related marketing, eco- and ethical labels and new product innovation can influence the top line.
AstraZenecaUS
PharmaceuticalIndustry
ProjectApproach
Recommendations
25
Reputation is Key to Business OutcomesReputation is Key to Business Outcomes
BusinessGoals
BusinessGoals
BusinessStrategies/Activities
BusinessStrategies/Activities
BusinessOutcomesBusinessOutcomes
Products & Services
Emotional Appeal
Workplace Environment
Vision & Leadership
SOCIAL REPONSIBILITY
Financial Performance
Perceptions ofCompany
Perceptions ofCompany ReputationReputation
Purchase
Invest
Remain Loyal
Boycott
Disparage
Recommend
Behaviors Toward Company
Behaviors Toward Company
Employees
Consumers
Investors
NGO’s
Government Officials
Media
StakeholdersStakeholders
Source: Adapted from Harris Interactive, 2003)
StrategicRecommendations CommunicationMeasurement - CSR
26
CSR Continuum Growth StagesCSR Continuum Growth Stages
Low High
Scope of Activities
Metrics
Integration
Strategic Value
Resource Magnitude
N
N
N
N
Nn
Nn
Nn
Nn
Nn
P
P
P
P
P N
M
M
M
M
M
Legend: M: Merck N: Novartis Nn: NovoNordisk P:Pfizer
AstraZenecaUS
PharmaceuticalIndustry
ProjectApproach
Recommendations
27
Defining the Stages of CSRDefining the Stages of CSR
Source: Simon Zadek, ‘The Path to CR’, 2004)
AstraZenecaUS
PharmaceuticalIndustry
ProjectApproach
Recommendations
Defensive
Compliance
Managerial
Strategic
Civil
The characterization of CSR in various stages
deny practices, outcomes or responsibilities ("It's not our job to fix that")
adopt a policy-based compliance approach as a cost of doing business ("We'll do just as much as we have
to"); Merck, Pfizer
embed the societal issue into core management processes ("It's important to the business"); Novartis
integrate the societal issue into core business processes ("It gives us a competitive edge"); NovoNordisk
promote broad industry participation in CR ("We need to make sure everybody does it")
28
Strategic Value
Metrics
Merck
• Separate from CR report
• 2 of 6 board committees related to CSR (corporate governance, public policy/social responsibility) – don’t appear connected to top
• Office of Ethics, Office of Diversity/Work, ESHAC (safety/health)
• Key issues: human rights, political advocacy, S&M, DTC advertising, privacy considerations, worldwide withdrawal of Vioxx
• Doesn’t adequately address pricing/access and patient safety
• $2.1B to $4.2B R&D Expenditures from ’99 to ’04 (12% - 18%)
• $326M to $979M Total Contributions/Donations/PAP (2% - 4%)
•Patient Access Programs (mainly discounts, little free, no capacity)
• Basics in animal rights, quality standards, information transparency, etc
• Depth: Ethics centers, Mectizan (full scope)
• Clear current metrics but lacking in historic, baseline and goals
Integration
Resource Magnitude
Breadth of Activities
Depth of Activities
Source: Merck CR Report, 2006
Benchmarking: MerckBenchmarking: Merck
29
Strategic Value
Metrics
NovoNordisk
• Combined in Annual Report
• Balanced scorecard as company-wide management tool – aligned with employee incentive program
• Operate by the “Triple Bottom Line” Principle included in vision
• “Values led company”: mainly focused on diabetes
• Recognize stakeholders as more than just shareholders
• Pricing/access and patient safety/transparency clearly a focus
• 15.9% to 16.3% R&D as % of sales from 2002 – 2006
• Contributions/Donations not listed in CR report
• Focused set of goals created from 10-year strategic planning process
• Includes education programs, infrastructure, etc
• Difficult metrics such as jobs added in market (including impact on supply chain) and eco-intensity ratios (EIR)
• Historic trends provided; baselines and goals are not (nor growth)
Integration
Resource Magnitude
Breadth of Activities
Depth of Activities
Source: NovoNordisk Annual Report 2006
Benchmarking: NovoNordiskBenchmarking: NovoNordisk
30
Strategic Value
Metrics
Novartis
• Metrics combined w/ Annual Report• Responsibility for implementation lies w/ Exec. Committee– have a Corporate Citizenship Steering Committee (senior execs. from HR, HSE & C&E)• In Board of Directors there is an Audit & Compliance Committee
• Address major industry-specific issues including patient safety/transparency and pricing/access• Believe in link between CSR and business performance
• 2% (% net sales) spent on Access Programs• 19% (% net sales) spent on R&D
• 4 primary focus areas: patients, ethical business conduct, employees & the environment
• Signed UN Global Compact (first pharma company to sign in 2000)•Provide drugs to developing countries, NGOs, the WHO, US patients without insurance• Tries to organize and engage with stakeholders (especially patients)– e.g. diabetes patient groups and access to quality healthcare advocates in Europe• Set up Novartis Foundation for Sustainable Development & Institute for Tropical Diseases
• KPIs clearly monitored and tracked; no baselines or goals
Integration
Resource Magnitude
Breadth of Activities
Depth of Activities
Source: Annual Report 2006, Corporate Citizenship Report
Benchmarking: NovartisBenchmarking: Novartis
31
Strategic Value
Metrics
Pfizer
• Separate from Annual Report, only summary; CSR details only provided online and difficult to navigate
• Recognize stakeholders as more than just shareholders
• Address pricing/access as focus (“top priority”)
• Difficult to focus given pipeline covers wide variety of disease areas - obesity in Ireland?
• $7.4B in R&D (15% of sales)
• >2M patients received 14.7M Rx via Pfizer Helpful Answers in ’05
• Employee Volunteerism through global health fellows program; 90 fellows up to 6 months in over 15 countries
• good governance, ethical research, environmental health, health promotion, stakeholder engagement, clinical trial transparency
• no focus
• Signed Global Compact, 2002
• Little – only ireland example
• hard to find – doesn’t look like they have
Integration
Resource Magnitude
Breadth of Activities
Depth of Activities
Source: Corporate Citizenship Report, 2005
Benchmarking: PfizerBenchmarking: Pfizer
32
Link Strategy w/ Mission & CompetenciesLink Strategy w/ Mission & Competencies
Strategic #1Recommendations Measurement Communication
Mission Statement: Discovering, developing, and delivering innovative, meaningful healthcare solutions
Putting the health of patients first - helping to empower and inform Rewarding work environment that inspires our employees
Core Competencies:Research and Development
CommercializationSix Key Therapeutic Areas
CSR Strategy*:Striving to make the right decisions
Being open and honestCreating a healthy workplace
Providing access
*Source:AZUS CSR Summary Report, 2006
33
Examples of Strategic CSRExamples of Strategic CSR
Strategic #1Recommendations Measurement Communication
EXAMPLE 1:HEWLETT PACKARD
EXAMPLE 2:PEDIGREE
Strategic alignment of business interests and CSR program
• Pedigree Pet Adoption Drive• Provide Food for Adopted Dogs
• Education on Adoption• Front page of main website
CLEAR LINK
Misalignment of competencies and CSR strategy
• $50 of purchase price goes to LiveStrong Foundation – pure
monetary donation• Difficult to find on website
UNCLEAR LINK
?
34
Strategic #3Recommendations Measurement Communication
BENEFIT TO CORPORATE REPUTATION
LEVEL OF CSR INVESTMENT
OFFENSIVE CSR
DEFENSIVE CSR
SOCIETAL EXPECTATIONS
GAINS PLATEAU ONCE COMPANY NEARS SOCIETAL
EXPECTATIONS
GAME CHANGING CSRREQUIRES GREATER INVESTMENT BUT
CAN DRIVE PEER DIFFERENTIATION
SWEET SPOT
Move Towards Game Changing CSRMove Towards Game Changing CSR
35
CSR IndicatorsCSR Indicators
Pricing / Access
Patient Safety
Net Sales Growth
Brand Net Sales Growth
Exp/Net Sales Ratio
Contribution Growth
InformationTransparency
Reputation
Strategic #3Recommendations Measurement Communication
Access to Medicines
HumanCapital
Human Rights
Philanth-ropy
Environ-ment
36
Why Measure?: Measurement GoalsWhy Measure?: Measurement Goals
StrategicRecommendations Measurement Communication
*Source: Kellie McElhaney, 2007
• Align investment with value
• Inform management decisions
• Help you maintain the integrity of your work Let the numbers do the talking
• Contribute to reporting, communication, and branding
37
StrategicRecommendations Measurement – C&E Communication
Defining Compliance in Pharma IndustryDefining Compliance in Pharma Industry
‘Compliance’ in the pharma industry:
Government price reporting
FDA promotional and reporting regulations
Fraud & Abuse regulations
Good Manufacturing
Laboratory or clinical practices
Clinical trial requirements
Employment antitrust and trade laws
Safety, Health & Environment (SH&E) regulations
And the list goes on…
38
StrategicRecommendations Measurement – C&E Communication
Creating a Compliant & Ethical CultureCreating a Compliant & Ethical Culture
Adherence to external laws and regulations
External Laws and Regulations
Compliance&
Ethics Program
Internal Policies and Procedures
Compliant with external regulations & promotes
ethical culture
Communication
Communicate about two sets of rules, why they’re important & consequences for violations
Compliance Vision
To be recognized and respected as a premier
compliance & ethics function that enables AZ to “win the right way” by delivering
innovative & proactive solutions that put patient health first
Compliance Mission
To implement a best-in-class compliance
program that addresses the key
compliance risks facing the business and establishes and
embeds an ethical corporate culture
39
StrategicRecommendations Measurement – C&E Communication
Rationale for Weight AdjustmentsRationale for Weight Adjustments
• High Weighting:– ERC Ethics Survey and Compliance linked to Performance sections
are critical because they directly support the views/beliefs of employees– Scorecard and Audit Reports provide critical objective assessments of
Compliance and Ethics Program performance and outcomes
• Medium Weighting:– Corporate Board Oversight is relatively important as it shows that the
company is serious about having the C&E programs integrated into the company fabric and that there is top leadership buy in
– Helpline Data is important because it comes directly from employees (similar to ethics survey) but has been weighted for mix of negative and positive favorability
• Low Weighting:– Training Metrics are important, however, they should not be given too
much priority because these are presumed a baseline exercise
40
Building the C&E Index: ExampleBuilding the C&E Index: ExampleStrategicRecommendations Measurement – C&E Communication
DimensionKey Indicators
(Measure)Weighting Favorability Weighted Score
Ethics Survey Survey ‘Score’ x 10 Positive (add) 700
Helpline Data # incidents reported x 5 Negative (subtract) ---
Audits Reports % ‘green’ audits x 10 Positive (add) ---
Training Metrics
% employees trained
x 1 Positive (add) ---
• Assume ERC Ethics Survey score ranges from 0 to 250• Set Max Value = 100, therefore set 250 = 100• Assume AZ US value came back at 175• Set up a proportion, where 175/250 = x/100• Therefore, x = 70• Set weightings = 10 for ‘high’, 5 for ‘medium’ and 1 for ‘low’• Sum Weighted Scores
C&E Index = Weighted Sum
Building C&E Index: ExampleBuilding C&E Index: Example
41
StrategicRecommendations Measurement – C&E Communication
Benchmark: Johnson & JohnsonBenchmark: Johnson & Johnson
• The core value in building out a comprehensive C&E program is integration.
• is a company that has made their internal message simple: follow The Credo
Integrity &
Credo-based Actions
Leaders at J&J live Credo values; build trust; tell the truth;
initiate transparency into problems and demonstrate genuine caring for people
42
EconomicEconomic
StrategicRecommendations Measurement - CSR Communication
Dimension CSR Indicators Business
IndicatorsProduct Pipeline, R&D Types of Products, global health
implications
% of net sales invested in R&D
Sales, Margin, Investing, Mkt Share
Clinical Trial Data Information transparency of outcomes (e.g., Novartis communication ALL prelim trials)
Sales, Mkt Share
Code of Conduct / Compliance
Adherence – (% of green audits, ethics survey results, helpline data)
Retention, Investing, Recruitment, Sales
Corporate Governance Active oversight by BIAT Sales, Investing
Risk Management Defensive v. offensive issues and opportunities
Sales, Investing,
Mkt Share
Sales & Marketing Positive v. negative outcomes Sales, Investing, Mkt Share
Red font indicates items overlapping with C&E index
43
EnvironmentalEnvironmental
StrategicRecommendations Communication
Dimension CSR Indicators Business
Indicators
Animal Rights Audit results Sales, Investing
Energy Efficiency Energy (million GJ)
Water Use (million m3)
Emissions
Waste
Supply Chain
Margin, Sales, Investing
Measurement - CSR
Red font indicates items overlapping with C&E index
44
SocialSocial
StrategicRecommendations Communication
Dimension CSR Indicators Business
Indicators Labor Practice Indicators Driver Rights, International Labor
Layoffs/Managed Attrition
Sales, Margin, Investing
Human Capital Development
Training metrics
Incentive Alignment (Linkage between C&E , CSR & employee performance assessment)
Misconduct reported
Diversity in Workplace
Retention, Recruiting, Sales, Margin
Access to Medicines Breadth/Depth of Program ($ invested, people treated, resources utilized, etc)
Community Partnerships
Sales, Margin, Investing, Recruiting, Retention
Patient Safety Number / Extent of patient risks sited Sales, Margin, Investing
Pricing Strategy Discounts provided to developing nations
Price discrimination strategies
Sales, Margin, Investing
Measurement - CSR
Red font indicates items overlapping with C&E index
45
CSR Indicators Link to BusinessCSR Indicators Link to Business
Pricing / Access
Patient Safety
Net Sales Growth
Brand Net Sales Growth
Exp/Net Sales Ratio
Contribution Growth
InformationTransparency
Reputation
Strategic #3Recommendations Measurement Communication
Access to Medicines
HumanCapital
Training Investment
Innovation
Market Share
Employee Recruitment
Employee Retention
Productivity
46
Communications Strategy ConsiderationsCommunications Strategy Considerations
Source: Kellie McElhaney, 2007
StrategicRecommendations Measurement Communication
• You cannot not communicate
• If you do not communicate your CSR, you cannot leverage maximum business benefits (consumers, employees, partners, investors, new markets, etc.)
• If you do not manage your CSR communications strategy, someone else will do it for you!
• There are risks, as with every communications strategy, but there are worse things for which to be criticized (than trying to do good)
• Communicate more broadly than to only consumers