Reed Elsevier Study 17/6/10 11:09 Page 1
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Corporate Responsibility and stakeholders
Curriculum Topics • Internal stakeholders • External stakeholders • Stakeholder conflict • Benefits of stakeholder focus
Introduction The company now operates in more than 200 locations worldwide and annual revenues for 2009 were £6 billion. Revenues are Reed Elsevier is a leading provider of professional research largely from subscriptions to its titles. It employs around 32,000 information to organisations around the world. It publishes people including IT specialists, editorial teams and marketing, journals, books and databases and manages exhibitions and sales and customer service staff. To enable the business to focus events. Its well-known titles - such as New Scientist and The on specific customer needs, the company has four divisions. Lancet - appear both in print and online. Reed Elsevier has a worldwide customer base working in many fields, including 1. Elsevier – publishing science and health information to promote science, research and the law, as well as in public and academic research and discovery ® libraries and commercial organisations. This includes around 2. LexisNexis – A leading global provider of content-enabled 11 million scientists who access information direct from workflow solutions designed specifically for professionals in the Reed Elsevier’s ScienceDirect database – the world’s largest legal, risk management, corporate, government, law online library of full-text research papers. enforcement, accounting, and academic markets. Across the globe, LexisNexis provides customers with access to billions of Reed Elsevier was formed in 1993 when the businesses of the searchable documents and records from more than 45,000 British publisher Reed International and the Dutch publisher legal, news and business sources. Elsevier NV merged. The Reeds were Methodists and took a 3. Reed Exhibitions – organising events, exhibitions, conferences philanthropic approach to the business. This means that they for over 44 industry sectors applied the present-day idea of Corporate Responsibility (CR) 4. Reed Business Information – producing trade journals, within the company. They promoted health and safety for their blogs and web directories to deliver information to users workers and better standards of living. worldwide.
C16th – Elsevier family sets up 1894 – Albert E Reed sets up 1970 – Reed becomes 1982 – Reed 1993 – Reed Elsevier booksellers and printers newsprint manufacturing in Kent, UK Reed International Ltd International PLC established
1880 – Jacobus George Robbers sets 1979 – Elsevier Press becomes 1991 – Elsevier acquires up publishing company in Holland using 1951 – Elsevier Press Inc set up in USA Pergamon Press in UK Elsevier name Elsevier Scientific Publishing
Merged: Two or more companies joined. Corporate Responsibility (CR): The responsibility of an organisation to a range of stakeholders including the community and society at large. GLOSSARY
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Reed Elsevier’s values guide the behaviours of its people toward Employees at all levels are also an important internal stakeholder providing the right products and services to enable the company to group. Reed Elsevier needs to retain its diverse and talented grow. Reed Elsevier’s values also affect the strategies it develops employees who bring professionalism and energy to their roles. for both internal and external stakeholders. It aims to respond to This helps the business to provide the highest levels of customer all their needs through innovative products and services. service, attract new customers and retain existing ones. To encourage this, Reed Elsevier has set up various initiatives internally, for example: • All employees are offered training on the Reed Elsevier Code of customer focus valuing our people Ethics and Business Conduct to ensure best practice. 80% had completed the course by end of 2009. VALUES • As LexisNexis’ risk information services involve access to boundarylessness passion for winning consumer data, 12,000 US employees in the division completed training on data privacy and security in 2009. innovation • Flexible or home working across the business supports the work-life balance of employees, enhances performance and productivity and reduces employee stress. Corporate responsibility is an integral part of the business. • ‘Boundarylessness’ – the company’s different divisions act as one Matching financial and non-financial performance provides a organisation - provides opportunities for staff to take advantage win/win outcome for the business and its stakeholders. of internal transfers and promotions to develop. This enables Reed Elsevier’s market leadership comes from focusing on the them to make a contribution to the whole of Reed Elsevier. needs of all of its stakeholders – internal and external. ‘We realise we must manage well issues that affect all businesses – Suppliers also hold a stake in the company to which they provide governance, people, health and safety, customers, supply chain, materials and services. For example: environment and community. Constant engagement with • As part of the company’s Socially Responsible Supplier stakeholders, including shareholders, employees, communities, programme, suppliers are asked to sign the Reed Elsevier governments, and members of civil society, help us refine these Supplier Code of Conduct. This sets out the standards which it material CR issues.’ (CR Report 2009) expects its suppliers to meet. Suppliers must follow all relevant laws, promote best practice and respect environmental This case study shows how Reed Elsevier’s business benefits from conditions, such as using sustainable sources for paper or meeting the needs of all of its stakeholders. dealing responsibly with waste products. • Authors who provide the journal articles for Elsevier’s scientific Internal stakeholders publications are also suppliers. They have the opportunity to put the final version of their work on their own institution’s Reed Elsevier’s internal stakeholders have a range of interests in website as well as having it published through Elsevier. the different parts of the company and its activities. External stakeholders Shareholders are key internal stakeholders. As investors, they take a financial stake in the company by purchasing shares. They External stakeholders are those individuals or groups outside the will look for the best return on investment which is usually made business. To differentiate the company from other information in the form of a share of the profits. providers, Reed Elsevier focuses on CR performance. • CR strategies benefit shareholders by making the business attractive to investors and improving its share value. Customers expect good value, high-quality products and great • By reducing costs and therefore improving revenues and service. Reed Elsevier achieves this through close relationships and efficiency, Reed Elsevier steadily increases the dividends paid consultation with the customer. It conducts widespread surveys of to its shareholders. customer opinion.
GLOSSARY Values: What a company stands for. Shareholder: A person owning or period (usually one year) relative to the Employees: The people who work for Strategy: Long-term business plan of holding a share or shares of stock; a long-term capital employed. Calculated an organisation. an organisation. stockholder. as: operating profit/long-term capital Suppliers: Growers or providers of Stakeholders: Individuals and groups Investors: Those who put money into a employed X 100. goods and materials. with an interest in an organisation and venture. Dividends: A share of the company's Customers: Individuals or organisations the decisions it makes. Return on investment: Profit over a profit paid to shareholders. that buy a product.
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These identify the value customers place on its services and This programme encourages staff to work together to make a products and highlight potential improvements. In this way, difference in local communities. It increased volunteering by 10% in customers have a real role in helping the business to develop and 2009 over the previous year: grow. This results in longer-term relationships where customers feel • It provides education for disadvantaged young people. they have an input into the services offered. It builds loyalty and Initiatives range from reading support to charity fundraising. creates the potential for increased business. • During 2009, employees around the world donated 14,000 books for local and developing world readers. • Reed Elsevier has a formal policy of donating unwanted book Scientists Healthcare providers stock to institutions to provide more access to information. Legal Educators Reed Elsevier profession Society customers Reed Elsevier’s CR approach impacts on society in several ways: Students Industry • In line with its Code of Ethics, it promotes responsible Research advertising and a transparent editorial policy for its publications. • Reed Elsevier is committed to reducing use of energy, water and paper in its publishing processes and using sustainable materials Reed Elsevier customers come from the public, commercial and wherever possible. In 2009, it reduced paper use by 7% over academic sectors, from many professions and geographic regions, the previous year, took approximately 10% of its power needs which is reflected in the spread of its business divisions, for example: from renewable electricity and reduced emissions from travel by • Elsevier’s scientific publications provide critical research 6%. The company uses video conferences and web seminars to information to support innovation and development. They have save on travel costs and reduce its contribution to carbon enormous social value and may affect lives across the world. emissions. It has a network of Environmental Champions and The division’s online medical data provides vital information to employee-led Green Teams to promote greater recycling and doctors in hospitals. Video, text and animation of medical reduced energy use throughout the business. procedures help doctors and students learn. • Reed Exhibitions drives forward sustainable practice in the • LexisNexis provides online solutions to help professional users global meetings and events industry. It has implemented the to access a wealth of information quickly to support their jobs British Standard (BS 8901) for sustainable event management on a daily basis. For example, a lawyer may prepare for a legal in nine independently audited and certified exhibitions in the trial using earlier case law. last year.
Partners Potential stakeholder conflict Reed Elsevier has established partnerships across its different It is important for a business to balance the interest of its various divisions. For example: stakeholders. Different stakeholder groups have different priorities: • Elsevier promotes science, technology and medical information For example: programmes. The Elsevier Foundation promotes the work of • Shareholders expect the business to make a profit and receive libraries and scholars in science, technology and medicine. • Over the last five years, Reed Exhibitions has given free space a return on their investment. at the London Book Fair to Book Aid International which • Employees require good working conditions if they are to be annually provides 500,000 books – including those donated retained. from across Reed Elsevier – to readers in the developing • External stakeholders such as investors may want to see world. This enables the charity to engage with a wide range of evidence of how a company responds to environmental issues potential book and financial donors. before committing money to the business. • Partners in the supply chain, such as one of Reed Elsevier’s printers in China, also benefit from its responsible approach to production. By applying the Code of Conduct, the printer found that improved conditions led to better quality output, lower turnover of staff and greater employee loyalty.
Community Reed Elsevier’s initiatives make a difference to communities around the world. The RE Cares programme is supported both centrally and in all business divisions.
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Stakeholder conflict arises when the needs of some This results in employees feeling encouraged, involved and stakeholder groups compromise the expectations of others. motivated – which leads to improved efficiency. Improved A business has to make choices which some stakeholders might efficiency reduces costs which increases sales and improves not like. For example, the cheapest supplier goods, which can revenues – which contribute to higher profitability. Attracting and help keep prices down for customers, must not come at the keeping good employees means the business will achieve its expense of ethical practice by suppliers. objectives and meet the expectations of customers.
Some activities may not give immediate financial return on Customers want good quality products and services that are value investment but support the business’ ethical standards. Such for money. Reed Elsevier listens to its customers and meets their policies need to be communicated and explained to all needs with innovative ideas that create cost-effective and stakeholders involved, so they understand the longer-term value convenient solutions to their business challenges. For example, they provide. For example, investment in ‘green’ energy (such as Reed Elsevier’s online services provide customers with the from solar or wind farms) may be more expensive but can help opportunity to cross-link, cross-reference and search for the company reduce its environmental footprint. information. This has helped to ensure more than 50% of revenues now come from online products and services. Supporting employees may also lead to trade-offs. Reed Elsevier employees are offered development opportunities so that they can Reed Elsevier’s CR activities focus on doing what is relevant for the reach their potential. Reed Elsevier will have to justify this business and its stakeholders. Some decisions may not generate investment against the opportunity cost of using the time and immediate return on investment. However, long term, they can resources for other purposes. It will also have to assess the benefit the company by attracting investors looking for ethical potential downside of not training its employees. This could companies, greater employee retention and higher quality services include losing good people to other organisations or mistakes which meet the needs of consumers. happening through lack of training. Conclusion
A focus on stakeholders provides a way of keeping all aspects of Corporate Affects all Translates into the business in balance. Reed Elsevier pays close attention to the Responsibility stakeholders business benefits expectations and needs of all its stakeholders. neither the publisher nor the client can be held responsible for errors of omission or commission. for errors neither the publisher nor client can be held responsible Corporate Responsibility touches on all aspects of the business and strengthens Reed Elsevier’s business. The company believes that by The benefits of a stakeholder focus living up to its responsibility to contribute positively to its employees, customers, society and the environment in the carrying out of its Businesses do not work in isolation. They affect the lives of people business, it has a sustainable business model leading to growth. in the global community in many ways. Reed Elsevier believes it must be accountable to communities and give something back. 1. Use a diagram to illustrate the main internal and Through employee community work, for example, its people not external stakeholders in Reed Elsevier. only make a difference to local communities around the world, 2. Explain the difference between a stakeholder and a QUESTIONS they also demonstrate publicly Reed Elsevier’s values. shareholder. 3. Analyse the potential for conflict between different ‘Valuing People’ is a stakeholder focus which is important to groups of stakeholders. Explain why it is important for Reed Elsevier. The company recognises and values its people. Reed Elsevier to engage in consultation with them. This focus provides benefits in the form of motivated and loyal 4. Evaluate the benefits to a business of focusing on the employees. Challenges, opportunities and rewards for all workers needs of all stakeholders. are part of Reed Elsevier’s approach to supporting its people. GLOSSARY Stakeholder conflict: Situations in Return on investment: The return on Opportunity cost: The cost of the next which different stakeholders have the funds invested in the business. best alternative use that a resource or different priorities. capital could be used for. The Times Newspaper Limited and ©MBA Publishing Ltd 2010. Whilst every effort has been made to ensure accuracy of information, The Times has been made to ensure Newspaper Limited and ©MBA Publishing Ltd 2010. Whilst every effort
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