Marks & Spencer – Bucking the trend successfully

Mike Tuffrey

 

Posted in: Governance, Supply Chain

Marks & Spencer – Bucking the trend successfully

February 01, 1993

Marks and Spencer is one of Britain’s most consistently successful businesses, and is one of the biggest corporate donors, but the company follows its own distintive and traditional approach.

The emphasis in recent years has been on achieving business benefit and the commercial pay-back, as budgets come under recessionary pressure. Yet one company – Marks and Spencer – is not only increasing its spending but also insisting its motivation is essentially charitable, and that even if profits were not holding up well, it ought to be spending more because of increased social need.

Philosophy

The name Marks and Spencer is one of the strongest high street brands. Founded over 100 years ago, the company attracts 14 million customers to its stores each week. It consistently scores high in surveys of the general public about “good” companies. Since corporate reputation is not won or lost overnight, part of this strength can be directly attributed to the fact that, from the outset, the company’s founders imbued the business with a philosophy rooted in traditional Jewish philanthropy, starting with staff welfare and addressing wider community concerns.

Today that philosophy of quietly addressing social problems still holds good. The long term business benefit from trading in a prosperous and stable community – enlightened self-interest – is acknowledged and the company is now happy to be given credit for its generosity where that is offered. But it exhibits a remarkable lack of concern for extracting an immediate and direct commercial return for its shareholders from the nearly 1% of profits spent each year.

Programme

Marks and Spencer concentrates in five main areas:

health and care

education, environment and community

arts and heritage

matching funds and local support for stores

secondment

Preference is given to projects in which staff and their families take an interest and to ‘seed corn’ funding of new ideas or less popular causes. Within each category, support is concentrated on specific aspects which are periodically reviewed in the light of changing social need. For example, within health and care, homelessness has assumed greater importance recently and HIV/AIDS is likely to see a similar increase.

In concentrating on certain high priority subjects and adjusting those periodically, the company is not exceptional, although the emphasis on particularly acute social problems perhaps is. The difference on secondment is more pronounced. Many companies have cut back on full time secondments in recent years, restricting them to a few end-of-career placements and instead offering short-term assignments as part of career development. While Marks and Spencer is expanding into these Development Assignments, being one of the first to sign up with Action Resource Centre, it still maintains one of the most extensive full time secondment programmes in the country, with over 30 staff on full-time placement.

Management

A head office unit of ten staff handle in excess of 10,000 requests for funding each year. Only one in ten are successful. Some companies in recent years have concentrated support on fewer groups, saving on administration and achieving more “bang for the buck”. But Marks and Spencer thinks that £500 to a small group can often achieve far more impact than a £5,000 drop-in-the-ocean to a large national organisation – and it can give ten times as many. So the company continues to support a large range of groups.

Each of the policy areas has a committee chaired by a main board director and with staff representation from across all levels of the company. This sets the policy and decides larger donations. Community affairs staff have delegated powers up to £20,000. They devote considerable time to research and vetting projects, aware that a decision by Marks and Spencer to fund is often seen by other grant-givers as a seal of approval.

Increasingly companies are using measures such as internal and external opinion surveys to monitor attitudes and evaluate the impact of the programme. Here again, Marks and Spencer does not. Despite the obvious beneficial impact of community activities on corporate reputation and staff morale, monitoring is by ad hoc feedback rather than systematic assessment.

Staff involvement

A matching fund of £250,000 supports staff fundraising and this is the main vehicle to encourage staff involvement. No formal volunteering programme exists, nor is there any plan to establish one. However reasonable time-off is allowed for school governors, JPs, etc.

Communication

Another general trend in community affairs has been to provide support for the community through projects which offer publicity potential, using this as one of the decision-making criteria. By contrast, Mark and Spencer’s community involvement policy explicitly excludes publicity as an objective. Having made the choice on need-based criteria, then any publicity that follows is welcome, often leaving it up to the community group to organise publicity for their own benefit. Previously a “doing good by stealth” policy applied, so here at least there has been some adjustment to modern trends!

The Annual Report contains the usual community section and internal communication is dealt with comprehensively, with articles in staff newspapers, monthly bulletins for notice boards.

Cause-related marketing

Retailers have the ability to channel their customers spending in charitable directions and some are taking tentative steps, along the lines of “10p of the purchase price will go to help sick animals”. Other than a highly successful charity Christmas card operation, raising around £150,000 for six charities last year, so far other schemes have been considered but rejected.

The future

The big issue for the future is how to react to changes in the r”le and activity of the state. With a programme addressing the very same problems in society which are the public sector’s traditional responsibility, the company is increasingly receiving appeals for money, especially in education and health, to fill the gap left by the state’s withdrawal. Does it refuse to fund, so leaving real need and suffering, or does it try, knowing that corporate giving cannot possibly make up the gap? In the past, despite its Conservative Party connections, Mark and Spencer did not support the original City Technology College programme. For the future, one option is to use secondment to help train teachers in new skills needed to run opt-out schools, rather than to fund those schools directly. These dilemmas will inevitably become more acute, as the changes gather pace in community care, health and education.

As the company fulfils its international ambitions, another challenge is how to apply its founding philosophy in cultures less familiar with charity and corporate philanthropy will increasingly figure. But with less than 10% of sales and profits overseas, this is not a major concern.

Finally, Marks and Spencer needs to consider its leadership r”le in the sector. Already it leads by example, offering advice and help to other companies if asked. It has not yet devoted resources to spreading the message, persuading other companies, since that would take resources away from meeting the front-line social need. However if it could use its power and influence, and so get more companies active, the net effect might be a big increase in help available to the community.

Conclusion

There is a curious dichotomy – Marks and Spencer runs one of the most successful corporate community affairs programmes, making a real difference to the lives of people in need and achieving a formidable corporate reputation, yet shuns much of the current received wisdom about how to achieve success. A deeply conservative company at heart, its thinking can be characterised as “Leave the fancy theories to others – if it ain’t broke, don’t fix it”. And who can argue it is wrong?

FactFile

Marks and Spencer plc

Year ended 31 March 1992

Chairman: Sir Richard Greenbury

Main business: retailing under the St Michael trademark and related financial activities – 8% of sales outside UK

Turnover: £5,793 million

Profit before tax: £623.5 million

Employees: 67,894 (34,957 FTE in UK)

FT UK top 500 ranking: 12

Charitable donations: £3.4 million

Total community contributions: £5.5 million

% of profits: 0.55% (donations); 0.88% (total)

Memberships: BITC, PerCent Club, ABSA,

Community Affairs: Elizabeth Callender and Yvonne Pennicott

Address: Michael House, Baker Street, London W1A 1DN

Phone: 071 268 4646 (fax: 071 268 2614)

Corporate Citizenship Briefing, issue no: 8 – February, 1993

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