Colgate Palmolive in Postapartheid South Africa : Business Technical

• Colgate Palmolive in Postapartheid South Africa
• Mission Statement
• CASE QUESTIONS
• Social Responsibility Activities Through Community Projects

The Colgate-Palmolive Youth for South Africa program, started in January 1993, highlights the positive side of today's young people. It is aimed at encouraging youth groups to become more responsible to their communities, and rewards their efforts in diverse ways, as follows:

• Support is given to the Institute Of Natural Resources project in KwaZulu, which includes

water purification and basic sanitation work.

• Funding is provided for the St. Anthony's Aged Center in Johannesburg.

• Colgate-Palmolive organizes and manages the nonracial Colgate 15-km Road Race, which attracts more than 4,500 runners each year. A percentage of the entrance money, matched by Colgate-Palmolive, is given to the Retinitis Pigmentosa Organization.

• Assistance is provided to the House of Mercy drug and alcohol rehabilitation center run by St. Anthony's.

• Colgate-l'almolive sponsors the running costs of the St. Francis House for the terminally ill.

• AIDs Education Programs include sponsorship of an AIDs awareness page in school exercise books piloted by the Johannesburg City Council Health Department, as well as in-house programs for Colgate-Palmolive employees.

• The Medunsa/Colgate Mobile Dental Unit provides treatment to underprivileged communities in the northeastern Transvaal.

- Mobile Dental Units provide treatment to underprivileged communities in South Africa. Colgate-Palmolive sponsorship has enabled the Departments of Community Dentistry at the Universities of Witwatersrand, Pretoria, and Medunsa to operate the three units currently providing this much needed service in both rural and urban areas.

• The Business Development Training - East Rand Townships Project offers basic business skills training courses. This program gives opportunities to informal businesses to develop and create additional job opportunities in these areas of high unemployment.

- Colgate-Palmolive supports the nonracial Eagle Tumbling Club, which offers gymnastics and tumbling training to children; it also covers transport and equipment costs.

• The Durban Lifesaver project sponsors the training and equipment needs of black lifesavers.

- Assistance and funding is provided to the Daveyton Physically Handicapped Training Center, where a workshop offers sheltered employment.

• A Mobile Health Clinic has been built, using a bus, and is utilized in the expanding township of Vosloorus

• Health education programs are provided by medical and dental students at rural clinics as part of the Medunsa - Children's Clinic and Community Program. Funding is provided for a dental clinic located next to the children's medical ward at the provincial hospital

adjoining Medunsa, and treatment is given free of charge by final-year Medunsa dental students.

SOURCE: David T. Beatty, School of Business, Hampton University, Virginia, 1994. Used with permission. Copyright 1995 by David T. Beatty. This case is presented as a basis for educational discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

John Carlson frowned as lie studied the translation of the front-page story from the afternoon's edition of the Meillat, a fundamentalist newspaper with close ties to an opposition political party. The story, titled “Footwear's Unpardonable Audacity,” suggested that the company had knowingly insulted Islam by including the name of Allah in a design used on the insoles of sandals it was manufacturing. To com pound the problem, the paper had run a photograph of one of the offending sandals on the front page. As a result, student groups were calling for public demonstrations against Footwear the next day. As managing director of Footwear Bangladesh, Carlson knew he would have to act quickly to defuse a potentially explosive situation.

1. What method did Carol use to probe stake- holder opinion about Colgate-Palmolive's social responsibility initiatives in South Africa? Assume you have arrived from the United States to manage your firm's operations in a foreign country, what are the advantages and disadvantages of using this method to discover what employees think?

2. Colgate-Palmolive is politically active in a post apartheid South Africa as part of its social responsibility initiatives. Should American firms continue their political activism in a post apartheid South African society? What implications does your answer have for U.S. firms conducting similar activities in other countries, or foreign firms conducting similar activities in the United States?

3. If you believe trade union criticisms that Colgate-Palmolive is selling several products in South Africa under the umbrella of social responsibility activities, what ethical issues need to be considered?

4. From your reading of this case, what specific knowledge and skills do you believe American managers need to learn?

Second, she learned of the overwhelming support of all employees to the SR initiatives of ColgatePalmolive. Indeed, she'd been frequently stopped in hallways and on factory floors by employees who thanked her and the company profusely for, among other things, helping their kids with school bursaries receiving funds for school fees for employees (on the condition they pass their subjects), and nutritional classes. She learned from her briefing by senior management that the primary mission of the firm's SR efforts was to “accelerate economic empowerment through education by developing formal and informal educational skills and motivating communities to become self-sufficient” (see a list and description of specific SR activities of Colgate- Palmolive at conclusion of case). In fact, the firm had “adopted” seven schools that could approach an employee committee with requests for anything from photocopying ink to teacher and pupil upgrading programs.

'third, she learned that Colgate-Palmolive sponsors professional nurses to help daycare centers, schools, and community groups with primary health care education.

Fourth, she learned of the strategic initiative of top management to institute a formal “affirmative action” plan for black employees that would be implemented as a strategy to accelerate economic empowerment and remove any barriers to advancement into senior corporate positions.

Fifth, Carol listened to the appreciative comments from union leaders and community activists about the “social justice” role the firm had performed

for its surrounding communities. She learned the firm had become politically active to assist neighboring communities in two ways. First, she discovered

that Colgate-Palmolive had provided legal assistance to members of a neighboring squatter camp who had been intimidated by the local town council while

steps were being taken to solve the squatter problem. Second, she discovered that although the American firm explicitly advocated nonalignment with any political party, initiatives were in place, at the request of community leaders, to provide “democracy training” as a social justice program. Indeed, materials she studied indicated that the firm sponsored lectures for the community by academics and other experts on specific subjects, such as voting procedures of issues connected with a bill of rights (these courses were offered for both white and black groups and communities).

Finally, Carol found out that the SR projects that “worked” and achieved Colgate-Palmolive's mission were ones in which people who were beneficiaries of the project were actively involved in formulating and implementing each activity. Colgate-Palmolive followed the process of consultation with all stakeholders throughout their SR initiatives.

Carol paused, however, to reflect on a number of disturbing issues that had surfaced in personal interviews with some trade union leaders and community activists. In one of her meetings with trade union shop stewards, they argued that union leaders, not management, should direct and manage Colgate- Palmolive's SR budget since they believed their constituency was the primary stakeholder group who were recipients of the firm's SR activities.

Carol countered that the SR budget should remain with the Foundation since Colgate-Palmolive's unionized workforce comprised only 50 percent of employees and the firm had to ensure fair representation for all employees. Besides, Carol indicated to the shop stewards that the firm's SR activities were for “underprivileged” communities represented by all employee stakeholder race and ethnic groups.

Carol speculated on another issue that had surfaced with trade union leaders that made her Un-comfortable. She wondered about the extent to which union leaders were genuinely interested in the

- needs of their community. She considered whether, based on her interviews with union leaders, they were more inclined to support issues to gain “political” favor with their followers inside the firm than the company's stakeholders and surrounding communities outside the firm. For example, she remembered a discussion she'd had with union leaders about the best method to provide bursaries to the children of employees. Union leaders pressed hard to have ten bursaries that paid all fees. What's more, the union wanted to announce this decision to employees as a concession they'd obtained from management. On the other hand, she argued for shared responsibility of bursaries where parents paid a nominal amount and Colgate-Palmolive contributed the remainder so that the budget would allow for an additional 20 bursaries and thus provide funding assistance to more in need. She believed this alternative was consistent with the notion that “shared help” is more effective than a “hand-out” in the firm's commitment to economic empowerment for underprivileged communities;

Finally, Carol reflected on an issue that several union representatives had raised during her interviews. Some leaders saw a dilemma for the firm. They pointed out that the firm was self-serving in promoting SR initiatives because a number of products were “sold” under the umbrella of social responsibility activities. For example, one leader described how the firm had supported primary healthcare education activities for a local community. He conceded that parents and children who received healthcare and nutritional hand-outs, posters, and other reading materials featuring a cartoon and logo depicting the “Colgate Smile” were helped by the program. On the other hand, they also received information promoting the “purchase” of oral care products sold by Colgate-Palmolive. He queried her, “Is it right to help underprivileged communities while at the same time also promoting your products to these communities?”

Carol frowned as she considered these issues; then the phone rang and she had to dash out, reminding herself to gain closure on the issues facing her.

After a month of intense contemplation, Carol Lewis decided to accept the position of head of Colgate- Palmolive Foundation (South Africa). Carol learned in her job interview that the American subsidiary, based in South Africa, was committed to extending its leadership role in generating social responsibility (SR) activities in a post apartheid South Africa (see appendix).

“Ever since 1967, when four dental educators first went into the surrounding black townships to educate residents about teeth that can be strong and healthy through receiving daily care and nourishment, investing in communities where the firm earns its living had been - and would continue to be - integral to its South African mission,” Vice President David Moore told her.

Indeed, Carol had studied the American firm and learned that Colgate-Palmolive had achieved an outstanding Category I rating on the Sullivan Code for South Africa (see Exlubit Cl-i). She discovered that compliance to the code requires a firm to direct 12 percent of its salary budget to social responsibility efforts. And she knew the company meant business about their SR activities. The firm had recently launched the $3 million Colgate- Palmolive Foundation. Many South African firms believed this level of achievement was beyond even their financial reach.

So Carol was glad to have been selected to lead Colgate-Palmolive's SR initiatives. With more than $100 million annual sales and a workforce of 600 employees, she believed that the American firm could continue to build on its stellar track record (see Exhibit Cl-2 for Mission Statement).

After a month spent doing MBWA (management by wandering around) on the job, Carol had listened to the opinions of individual and group stakeholders in the firm. She had learned about the kinds of SR initiatives they thought the firm should consider in a post apartheid South Africa.