Guinness – drinking the health of community

Mike Tuffrey

 

Posted in: Governance, Profiles

Guinness – drinking the health of community

March 31, 1993

Some of Britain’s most long established companies have brewing origins, their very longevity resulting in a sustained track record of corporate community involvement. Among the oldest is Guinness.

In 1759 Arthur Guinness took over the lease of a disused brewery at St James’s Gate in Dublin; today Guinness PLC is the most profitable alcoholic drinks company in the world, with powerful brand names such as Johnnie Walker and Gordon’s, both best sellers world-wide, as well as the ubiquitous Guinness itself. The group employs 25,000 and operates in 30 countries across the globe.

Tradition

Back in the eighteenth century, when the Guinness family provided patronage to the Chapel Schools in Dublin, it is unlikely they would recognise today’s correct jargon of community involvement, stakeholders, corporate responsibility, etc, but perhaps their motivation was not dissimilar – the juxtaposition of explicit social needs, high profitability and a product subject to criticism from certain elements in society. This social concern led in the nineteenth century to the Guinness and Iveagh Trusts, which provided accommodation for the poor and their families in London and Dublin. These Trusts still continue, although now independently administered.

Policy

Today the group describes its policy as “enlightened self-interest” – the need for a company and major employer to invest in the long term prosperity and health of society, for the good both of its workforce and customers and of its future trading prospects. This justification will be familiar to many companies; more developed than simple corporate philanthropy, it falls short of the full rigours of the “business case” theory in not explicitly seeking short-term commercial benefits.

This understatement is most evident in the way Guinness seeks little publicity for its activities. World-wide the total investment in community activities compares favourably with other leading companies, exceeding Per Cent Club guidelines. Yet no separate publicity material is made available; no surveys are undertaken to examine the impact on overall corporate reputation; no communication action plan accompanies major donation decisions.

Again this is not untypical of companies. Many adopt a low-key approach to seeking communication benefits from community activity. However a company that makes its money out of beer and spirits has a number of sensitive social questions to face, especially around young people and alcohol abuse. The days of prohibition and temperance may be long past, but concern about excess drinking is rising up the political agenda. Still Guinness does not promote its community activities to demonstrate social responsibility.

Organisation

In the UK, the community activities are organised through the 12-strong public affairs team at group head office, with responsibilities shared between various staff members. In Scotland there is a full-time community affairs manager, reflecting the importance of Scotland to the company. Contributions are decided by a group-level donations committee, chaired by the Public Affairs Director, Chris Davidson. Virtually all requests for funding received locally by operating divisions are referred to group head office. Support is spread across a fairly wide range of issues:

medical research, health and care

youth and children

environment and conservation

employment and enterprise trusts

community welfare

education

the arts

local and trade charities

employee matched giving

For each of these areas, an executive outside the corporate affairs department acts as an advisor and adjudicator. For example, the personnel director advises on education, employment and enterprise; the sales directors of the operating companies advise on trade and local charities.

Guinness receives more than 5,000 requests for charitable help each year. Only registered charities are supported, and actual donations are channelled through the Charities Aid Foundation. The trend in recent years has been to concentrate support on fewer larger donations, and to seek opportunities to “add value” to the cash donation, for example by involving employees. No strict formula is used to determine the annual total budget allocation, in recognition that this is an area for long term commitments, not short term fluctuations dependent on profitability.

Later this year a pilot scheme will be tested in Scotland to allocate smaller donations, in the range £2,000 to £5,000, on a quarterly basis, saving up applications so they can be compared, rather than decided one- by-one. As part of the scheme, once the decision has been made, local site managers will then have responsibility for managing the donation, ensuring the project meets its objectives and arranging local publicity.

Staff

An employee matched giving fund offers an extra pound for pound to every UK and Irish employee up to £1,000 pa for personal fund- raising efforts. The charities do not have to fall within Guinness’s own charitable donations categories. Interestingly, staff overwhelmingly support medical causes – hospices, research into cancer or other debilitating illnesses, etc – and third world development issues. Corporate concerns, such as education or employment/training, rarely feature.

The feasibility of matching staff donations by employees overseas is now being explored, after an experiment in Hong Kong, to overcome the tax and money transmission and currency difficulties.

Payroll giving is also matched through the fund. Where efforts have been made to promote Give As You Earn, considerable take-up rates have been achieved, rising from 1% to over 40% on some sites. Guinness believes payroll giving is the great untapped resource of community involvement.

There is no formal staff secondment policy, nor are community placements undertaken as part of staff development and training. While encouragement is given to staff volunteering, no formal support through the workplace is offered, nor is the concept promoted.

Monitoring/evaluation

The whole issue of monitoring the programme and evaluating the benefits is rising up Guinness’s agenda. Already major arts sponsorships over £10,000 are tested for value for money. A scoring system, based on weighting for the various expected benefits – profile through a reach and frequency analysis, opportunities for entertaining, the extent of employee involvement, etc – allows different proposals to be compared. In other areas evaluation is little more than ad hoc. For example, staff surveys do not ask about the importance of the community involvement activities in forming attitudes about the group, but the matched giving scheme, along with the employee share option scheme, is cited in answer to open-ended questions about the group. Responses of this sort are monitored.

International review

As the group has grown over recent years, keeping track of the various activities in the different operating divisions world-wide has become difficult. Not surprisingly practice varies widely and until recently no system was in place to monitor and record this activity. So just completed is a review of all charitable donations, social sponsorships and community involvement across the group.

This has not only collated information, but stimulated interest and activity in subsidiaries previously unaware of the possibilities. It has also revealed cultural differences between the main markets, with understanding and activity least in the Far East and most developed in the UK and US. In total, arts, education and health take the lion’s share of resources, with arts strongest in Europe and North America, while education and health is more evident in Africa and the Far East. Over 100 sites world-wide made returns, and more than a third of them offer work experience to schools.

One practical issue that arose was on definitions, such as terminology and concepts in different languages and whether sponsorship in support of brands is charitable or not. Indeed brand sponsorship, mainly on sports, is the largest single category reported in the world-wide survey, but is not included in the FactFile table opposite as part of total community contribution.

The next step for Guinness is to consider a formal group-wide policy, likely to be in the form of guidelines rather than a prescriptive statement. It is likely to focus on the process – setting standards for quality and management – not the substance of activities, so not restricting the possible categories of support.

The future

The draw back of running the UK programme from group head office, rather than decentralising it to operating units, is that the connection with the business, and hence the commercial benefits, is less apparent. This is most noticeable in the case of employees. There is considerable scope for expanding the scale of community activities at little extra cash cost and enhancing employee morale and commitment to the group, if line managers could be engaged. Likewise on communications, scope exists to obtain greater benefit in terms of corporate reputation.

The trends in Guinness towards concentrating support on fewer community groups will continue, with greater emphasis on setting objectives and monitoring performance. After the considerable reorganisation and expansion of the group in recent years, the process of consolidating activity and extending it world-wide will remain a priority.

If Arthur Guinness came back from the grave today, he would recognise a charitable programme in keeping with the traditions he established in Dublin nearly 250 years ago.

FactFile

Guinness PLC

Year ended 31 December 1991

Chairman: Tony Greener

Main business: alcoholic drinks in spirits and beers; leisure activities including sports facilities and the Guinness Book series; associated luxury goods business through Louis Vuitton Mo?t Hennessy

Turnover: £4,067m

Profit before tax: £956m

Employees: 24,800

FT UK top 500 ranking: 8

Charitable donations: £2.7m

Total community contributions: £4.86m

% profits: 0.28% (donations); 0.51% (total)

Memberships: BITC, Per Cent Club, ABSA

Director of Public Affairs: Christopher Davidson

Address: 39 Portman Square, London W1H 9HB

Phone: 071 486 0288 (Fax: 071 486 4968)

Corporate Citizenship Briefing, issue no: 9 – March, 1993

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