Terms of Reference / Executive Summary
With the acceleration of globalisation, businesses have gradually recognised the benefits of providing corporate social responsibility programs. CSR activity is now being undertaken by multinationals around the globe. Vodafone Group, the world's leading mobile telecommunications company with presence in both emerging and mature markets, is in the centre of attention of this thesis. As a mobile telecommunications organization, Vodafone's is responsible for providing exceptional products and services for its customers. It has to consider how it carries out operations in order to build trust with its consumers, employees and other stakeholders. It aims to act responsible in everything it does, being a good citizen in the communities where it operates, and making sure it gets the best employees by providing the best working environment. Its main key objective is to be a responsible company. Vodafone is committed to high standards of ethics, corporate social responsibility and corporate governance that are considered critical to business growth and integrity. The company does not treat CSR as a gesture or add-on; it is part of its core business to achieve sustainable organization success. Vodafone's success is supported by its commitment to ethical conduct in the way it interacts with stakeholders and the way it carry on its business operations.
Pressure has been continuously applied on telecommunication industry to improve business ethics through new public initiatives and laws. There are many important ethical and social responsibility developments that forced Vodafone to continuously incorporate and update their corporate social responsibility policies. Vodafone takes a strategic approach to its ethical and corporate responsibility issues. It has a much publicized and unique CSR policy, and its social responsibility strategy is genuinely and carefully conceived. There are also some external environmental factors that have impacted on Vodafone's business operations worldwide. The importance of these factors has made the company change and updates its ethical and socially responsible approach.
This report is intended for module tutor in accordance with the course requirements. The author has been asked to produce a report that explains corporate social responsibility (CSR) and ethical issues faced by Vodafone since its beginning in 1984 and how the company has tackled each issue to enable them improve its image and continuous growth. The author will take the above issues relating to Vodafone operations in UK only. It has further been asked to add points in report preparation regarding the external environmental factors that have ethically impacted on Vodafone's UK operations at home and abroad. Also to be included in the report are motivational issues with regards to staff Vodafone needs to address should they continuously change as stakeholders become more ethically and environmentally conscious of what businesses do. This report is prepared according to the requirements set by the college. Current ethical policies of the company will be evaluated in detail and recommendations will be provided in the end. Harvard Referencing will be used to reference the literature.
History of Vodafone
Vodafone Group Plc. is one of the world's leading mobile telecommunications company. According to the MINTEL (2010) report, it is the largest telecommunication network in the world based on revenue (market value of around 72 billion). It is a UK based company founded in 1985 (KEYNOTE. 2010). Apart from UK it has a significant presence in US, Europe and the Asia-Pacific region via direct investments, subsidiary undertakings, joint ventures and associates. In these regions it operates in 31 countries with further partner networking in 40 more nations. This multinational group is engaged in supplying mobile telecommunications services and products, includingvoice, data services, text and video messaging and fixed broadband services. It is considered the globe's leader in providing data and voice communication services besides providing internet services. Apart from basic telecommunication services, Vodafone UK is involved in offering integrated mobile and PC communication services, wirelessly through 3G and HSPA, and via fixed line broadband. It also offers to its customers a range of devices to access Vodafone's products and services, including handsets, fixed line telephones, laptops and desktop computers. According to KEYNOTE (2010) market data, Vodafone has more than 300 million mobile customers worldwide that include private customers and corporate consumers.
Vodafone is committed to high standards of ethics, corporate social responsibility and corporate governance that are considered critical to business growth and integrity. The company does not treat CSR as a gesture or add-on; it is part of its core business to achieve sustainable organization success. Vodafone's success is supported by its commitment to ethical conduct in the way it interacts with stakeholders and the way it carry on its business operations.
Aim and Objectives
The aim of this assignment is to discuss Vodafone's ethical and corporate social responsibility issues.
Objectives of this report are as following:
- To determine Vodafone's approaches to corporate social responsibility issues in order to improve its corporate image
- To examine external environmental factors that has affected ethically Vodafone's business operations and to discuss motivational issues regarding to staff
- Critical asses the literature and provide recommendations on Vodafone's ethical and CSR issues
This report is specifically prepared in order to examine the corporate social responsibility and ethical issues faced by Vodafone. Data is collected from Vodafone's official site and related information is included in the report by studying different sources such as market reports, magazines, newspapers, latest articles and journals. All the data collected is secondary data i.e. the data that has already been published or written. Most of the report is qualitative and subjective which is collected, analysed and interpreted to achieve the aim and objectives of this report. The author ensured that all the data collected for this assignment systematic, rigorous, critical, empirical, valid and verifiable. The procedures followed to gather data are also ensured to be relevant, appropriate and justified, and it observed a logical sequence.
Corporate Social Responsibility
Corporate Social Responsibility (CSR) is an important activity for organizations nationally and internationally. With the acceleration of globalisation, businesses have gradually recognised the benefits of providing corporate social responsibility programs. CSR activity is now being undertaken by multinationals around the globe. CSR is about how a company align its behaviour and values with the needs and expectations of stakeholders that include not just consumers and investors but also suppliers, employees, regulators, communities, special interest groups and even society as a whole.
What does CSR means for Vodafone?
As a mobile telecommunications organization, Vodafone's is responsible for providing exceptional products and services for its customers. It has to consider how it carries out operations in order to build trust with its consumers, employees and other stakeholders. It aims to act responsible in everything it does, being a good citizen in the communities where it operates, and making sure it gets the best employees by providing the best working environment. Its main key objective is to be a responsible company. It's not just about making a profit but also to minimize the negative, maximize the positive and to provide benefits to its stakeholders. CSR is a framework which is used for measuring Vodafone's performance against social, economic and environmental parameters. Corporate social responsibility is represented by the contributions undertaken by Vodafone to society through its core business activities, its social investment and programmes and its public policy engagement. CSR has become a fundamental business practice for Vodafone and has gained much attention from its chief executives, chairmen, boards of directors and executive management. The company recognise that a strong CSR program is essential for achieving good business practices and effective business operations. Vodafone has determined that its impact on the economic, social and environmental landscape directly affects the company's relationships with stakeholders.
CSR and Ethical Challenges
Vodafone started operating in 1984 and since start it was faced with business ethics and corporate social responsibility issues. These issues accelerated dramatically during the late 1980s and 1990s; also new millennia started with the demand for more ethical business processes and actions. Pressure has been continuously applied on telecommunication industry to improve business ethics through new public initiatives and laws. Following are some of the important ethical and social responsibility developments that forced Vodafone to continuously incorporate and update their corporate social responsibility policies:
- Over the last two decades consumers became more aware of the social and environmental implications of their decisions, they begin to make purchasing decisions related to their ethical and environmental concerns.
- With globalization, Vodafone encountered new challenges that imposed limits and restrictions to its growth and expansion. Government rules and regulations, tariffs, laws and restrictions and varying standards of exploitations such as labor and resources are some of the issues that arose.
- Increasing global competition and ever changing environment placed a certain pressure on Vodafone to examine its CSR policy and ethical stance.
- The exertion of pressure from different stakeholders on telecommunication industry to behave responsibly and through increased scrutiny and collective activism around corporate behavior; it held business responsible for its actions.
- Another CSR driver is the role of independent mediators, mainly the government, in ensuring that companies are prevented from harming the broader social good that includes people and the environment. Government has been introducing laws and regulations and holding companies responsible to work for the well-being of the society as a whole. Some laws are compulsory and some voluntary.
- Increasingly, businesses persuaded and motivated to be socially responsible because their most important stakeholders expect them to understand and address the social and community issues that are relevant to them.
- Overall, a powerful set of external forces and changes have contributed to the rise in prominence of CSR e.g. increased societal expectations of business voiced, a diminution of the power and scope of government; globalization; heightened media reach, assisted by advances in information technology; and the greater spread of democracy.
- CSR has been important for Vodafone because it influenced all aspects of its operations. Increasingly, consumers want to buy products from companies they trust; suppliers want to form business partnerships with companies they can rely on; employees want to work for companies they respect; investment funds want to support the firms that they see as socially responsible; and non-profits and NGO's want to work together with companies seeking practical solutions to common goals.
- Other reason for adapting CSR is company benefits which include improved financial performance; lower operating costs; enhanced brand image and reputation; increased sales and customer loyalty; greater productivity and quality; more ability to attract and retain employees; reduced regulatory oversight; access to capital; workforce diversity; and product safety and decreased liability.
Vodafone's Strategies, Policies and Practices
Vodafone takes a strategic approach to its ethical and corporate responsibility issues. It has a much publicized and unique CSR policy, and its social responsibility strategy is genuinely and carefully conceived. This strategy reflects the company's mission and values, what it stands for, and is different from the CSR strategy of even its closest competitors. It reflects a deep commitment to CSR and issues that matter most. One of its six global goals is ethical issues. The company has developed eight key Corporate Social Responsibility (CSR) strategies to achieve its goals. These form part of the company's approach to meeting its global goal of being a responsible business. One of the Vodafone approaches is to engage with all important stakeholders in order to understand their expectations on most important the issues, before incorporating these with its business priorities to establish appropriate CR programmes and targets. Vodafone responsibly report on its ethical progress and use the feedback it receives to inform its judgement about CR priorities for Vodafone. Following are some of important approaches the company took to deal with corporate social responsibility and ethical issues to enable it improve its corporate image and growth:
Engagement with stakeholders
Vodafone's success is supported by its commitment to ethical conduct in the way it does business and interacts with key stakeholders. The changes in the environment have forced Vodafone to continuously engage with CR opinion formers and experts as part of its CR dialogues, specifically focusing on environment policy and ethical marketing issues. The company has set up a Corporate Responsibility Expert Advisory Panel comprising of experts on CR issues important to Vodafone. This panel discuss the latest issues like limits of Vodafone's responsibility in several key areas and embedding it core principles into the organizational culture. The company also consult with different NGOs when their focus of campaign on CSR issues is related with Vodafone. Apart from engaging with government and regulators, Vodafone also conduct consumer research to take their views relating CSR and ethics, into account. Meetings take place with investors regularly to discuss latest CR issues and determine the issues most important to them. Vodafone works with its suppliers to improve standards in the supply chain through qualification process and regular assessments. Other stakeholders whose views are regarded highly by Vodafone are employees, industry organizations and local communities.
Corporate governance policy
The company has set high standards of corporate governance which are critical in maintaining stakeholders' trust and business integrity. Vodafone expects all its employees to act with integrity, honesty and fairness. It constantly strives to act according to laws and customs of the nations in which it has business operations. It also adopts appropriate standards of business practice, operate with integrity and observe the culture of every country with respect.
As Vodafone is a listed trading company on London Stock Exchange, it is required to disclose statements regarding compliance with the provisions of the revised Combined Code on corporate governance. The law in some countries requires Vodafone to adapt and disclose code of ethics. It has to report on CSR and ethical issues to all its stakeholders. The reporting promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest; promote the full, fair, accurate, timely and understandable disclosure of the company's financial results in accordance with applicable disclosure standards, including, where appropriate, standards of materiality; promote compliance with applicable governmental laws, rules and regulations; deter wrongdoing; and require prompt internal reporting of breaches of, and accountability for adherence to, the Code.
Vodafone's business principles define how it intends to carry out business and engage with its stakeholders. These principles cover ethical issues including: zero tolerance to bribery and corruption, data protection, health and safety, conflicts and interest, environment, health and safety, transparency and political contributions and lobbying.
It is the Vodafone's strategic policy to comply with all applicable governmental laws, rules and regulations. It pledges to adhere to the standards and restrictions imposed by those laws, rules and regulations. Some of the government's laws relating to CSR and ethics are compulsory while many are voluntary to follow. All stakeholders are expected to work with honesty and integrity. Employees, suppliers, purchasers and other related stakeholders are expected and encouraged to comply with the provisions of all applicable domestic and international laws, standards and principles.
Vodafone does not treat corporate social responsibility as a gesture but as a part of its core business to help accomplish sustainable business success. Vodafone create good image by giving time and finance for good causes to well-known charities. Being a responsible business is one of Vodafone's key objectives. Some key significant CR issues for value creation include: pursuing competition in an ethical way, continually raising standards and achieve CSR targets, environmental challenges, working ethically with stakeholders, providing services ethically to customers and investing in the community.
Responsibilities towards customers and employees
Vodafone is committed to provide consumers with safe, reliable products and services that represent good value for money. The company work to understand and respond to customer needs and to provide them with innovative products and services. Vodafone is bound by law to protect customers' interest and safeguard the provided information by customers. Vodafone maintain relationship with its employees based upon respect for individuals and their human rights. The company pursues diversity and equality of opportunity through employment policies. Training and developing is focused upon and employee participation is encouraged by Vodafone.
Vodafone's environment policy commits it to improving energy efficiency, reducing waste and increasing reuse and recycling. Vodafone is committed to sustainable business practices and policies relating to environment protection. It works with environmental organizations to reduce carbon footprints. Vodafone promotes the use of operational practices that reduce the environmental burden associated with company's operations. The company also supports innovative developments in products and services that can offer environmental and social benefits. The company is concerned about the environment and the impact of climate change. It provides products that can help customers reduce their carbon footprint. The company takes responsibility for own environmental impact. It looks for ways to cut energy use. The company is also working to recycle and reuse old phones and network equipment, alongside cutting back on paper. The company follows Waste Electrical and Electronic Equipment (WEEE) regulations regarding discharging and recycling its equipment. Green purchasing is encouraged and suppliers are asked to provide products with a reduced environmental impact.
Communities and Society
Vodafone is dedicated in its responsibility towards engaging with communities and investing in societies that makes effective use of resources, including support for charitable organizations.
Health and Safety
Health, safety and wellbeing forms an integral part of Vodafone's people management strategy. This policy covers all relevant risks to employees and it is regularly reviewed to ensure that it is up to date with the latest legislation. Vodafone encourages health and wellbeing through a range of programs. The company is committed to the health and safety of its customers, employees and the communities in which it operates.
ethical selling and purchasing
Vodafone has its own Code of Ethical Purchasing (CEP) that describes the standards that companies must meet if they are to be a part of the Vodafone supply chain. The Code is based upon international standards set by the United Nations and the International Labor Organization. It covers issues relating to human rights and the environment. Corporate responsibility is one criterion Vodafone uses to select suppliers and monitor their performance.
External Environmental Factors
As other organizations, Vodafone also effect or is affected by the external environmental factors. Ethics and social responsibility assist company to react to environmental changes. There are many external environmental factors that have ethically impacted on Vodafone's operations which can be divided into social (trends in society), legal, economic, political and technological.
Rules and laws of different nations regulate all telecommunication businesses e.g. 'The Sale of Goods Act 1974' which states that all goods must be fit for the purpose they intended. Vodafone is generally subject to regulations governing the operation of its business activities. Such regulations typically take the form of industry specific laws and regulations covering telecommunications services and general competition laws applicable to all activities e.g. most member states of the EU have now implemented the 'EU Regulatory Framework' for the communications sector, which was adopted in 2002. It aims to encourage competition in the electronic communications markets, to improve the functioning of the single market and to guarantee basic user interests that would not be guaranteed by market forces. The impact of EU Framework on Vodafone was significant. After member states of the EU enacted national laws implementing the EU Framework, Vodafone had to reduce its mobile phone termination rates considerably.
Vodafone stayed to its ethical values no matter what the economic condition of any nation was. Vodafone has ethically contributed to each economy it operates in, and the change in any economic condition never has any negative effect on the company. As the economic condition improves and people earn more money, their requirements also change. One example is of India where people opted for Vodafone when economic condition improved, for its services to the society. Economic conditions are also influenced by political and government policy, being a major influence affecting government decisions.
Technological factors include ecological and environmental aspects, like R&D (Research and Development) activity, automation, technology incentives and the rate of technological change. Research and development (R&D) is a driving force behind economic growth, innovation of new products, and increasing quality of products. The technology is the thing that Vodafone is very proud of. The technological advancement enables the company to make customer relationships stronger because of their customers' trust that built over the years. Many technological advancements has impacted on Vodafone's business operations around the world e.g. the adaption of 3G technology as soon as it was released and the incorporation of internet browsing on mobiles.
Staff motivational issues
Many of the world's largest companies believe employee motivation is a key driver when it comes to corporate social responsibility
Vodafone has more than 10,000 employees working in UK. The company aims to provide a fair, safe and flexible working environment which helps employees feel engaged and motivated. Vodafone works to create a workplace where employees are informed and involved in business activities. External environmental factors like political, economic, technological, ethical, legal and social are changing the nature and way of business. The challenge for the organisation is how will training and motivation of employees continue to be relevant in today's changing business environment? Globalization, fierce competition and ever changing business environment, effects the operations of the company in many ways. This also has an impact on staff motivational issues. With the duty to be socially responsible company and adherence to ethical codes of business, leads the company to continuously update its corporate issues and keep on making changes in its policies and procedures. This affects all stakeholders including employees. Vodafone consider it as a duty to address all the issues related to staff and keep them informed of the latest updates. The company encourages its employees to understand and appreciate business ethics and corporate social responsibility. It provides appropriate training and development to its employees to experience the latest updates in CSR and ethics of the business. Employees are persuaded to participate in volunteer works and make contributions and donations to charities.
Following are some important motivational issues that need to be seriously considered by the Vodafone during and after change as company becomes ethically conscious:
- Change can provide the opportunity for employees to develop and grow their skills but there are times when redundancies are inevitable. When this happens, Vodafone should use is private code of conduct to provide support which includes careers advice and workshops, and links to other companies to highlight employment opportunities.
- Often an employee knows how to perform correctly with all the resources are available, but for a reason that always following CSR is not easy, chooses not to do so, which normally means it is a motivational issue. Vodafone should implement the change slowly and gradually. Regular employee surveys and interviews are a good way to collect employees' grievances.
- A lack of understanding of the CSR and business ethics by employee can cause to lose focus and creates problems for the company as well as low motivation level of employee. By observing and providing feedback can help tackle this problem.
- Sometimes expectations or requirements of the company have not been clearly communicated, creating lack of interest in work. Employees with several tasks and projects on their plates must be clearly communicated and they must know what tasks are to be completed first.
- Vodafone has an equal opportunity policy and believes in diversity of workforce that can cause problems among employees. Lack of coordination and cooperation occurs between them. Vodafone needs to respect and resolve the differences.
- Another reason employees sometimes have no wish to work effectively is because they have no aspirations. This is understandable.
Motivation suggests that the concerned people should be move and act in different circumstances. People are motivated based on their need and sometimes based on the pressure they receive from the working environment. A lack of motivation could be caused by a number of problems, to include personal, family, financial, etc. Vodafone needs to help employees to recognize and understand the negative consequences of their behaviour. They must perform any procedure or come up with a solution to deal with these motivational issues.
Vodafone is the one of the leading multinational network operator in the UK. Handling a big business is great challenge and alongside in the difficulty of handling the business is the different approach in handling the diversified workforce or employees. Clearly, the employees of the company understand the nature of their work and the routine of the operations that is made to sustain the quality performance of the organization. But the Vodafone is not satisfied in simply making the employees meet their highest potential. In fact, Vodafone wants to do the same for their employees. If their employees cannot perform well because of the need for travel, then they will use their advantage in technology to reach them, stay in touch, and be on the guide. Furthermore, Vodafone recognizes the importance of the human resource and organization department for being the responsible for recommending and implementing the appropriate selection of the valuable employees. In addition, the management, training and development policies, all just for keeping the corporate guidelines. Vodafone looks at the function of the human resource as the one responsible for defining and implementing the industrial-relation management policies.
Conclusion: Vodafone's track record of strong stakeholder engagement is likely to serve the company well as we enter the choppy waters of the next decade. As sustainability challenges, such as climate change, human rights and water scarcity, merge with a harsh economic environment, we are likely to see greater scrutiny of companies than ever before. This will take us into new territory where stakeholder engagement and reporting are inextricably linked to become an expression not of what has been done, but rather how the company aspires to engage in the big issues of our time. Companies like Vodafone will be called on to publicly explore issues such as the climate impacts of ubiquitous technology or the human development potential of devices and will be badly needed to contribute creative thinking about how the digital and physical worlds meet."
MINTEL (2010), Mobile Phones and Networks - Re-igniting The Replacement Cycle - UK - January 2010 MINTEL Mobile Phones 2010 KEYNOTE
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