A special role for country citizens?

Anne Moroney,

Chief Executive, Barossa & Light Regional Development Board

Company Towns, a town’s company; rural businesses play a special role in the community – or do they? As significant business goes global, and shareholder returns are increasingly in focus, has the bond between a country town and its key businesses become frayed or are notions of mutual responsibility still strong?

Regional business has long been vested with a sense of responsibility for the welfare of the town or immediate region. It drew its workforce from this region, the founder’s family was from the region and most likely held significant positions in the local community: mayor, church warden, justice of the peace. Anecdotally at least, there was a sense of mutual responsibility.

Significant changes in workforce, markets and the business environment impacted on this relationship over the last twenty years: 

· Improved transport and mobility

· Globalization of markets

· Imported key personnel

· Mergers & takeovers changing company culture

· Focus on shareholder returns

· Focus on cost cutting rather than supplier relationships

· Emphasis on technology rather than people

Recently, reflecting on cultural changes associated with increasing emphasis on sustainability, I wondered where we in regional Australia were headed in our relationships with rural business.

I found opportunities (over a glass of wine, naturally) to ask a number of large company personnel from within and around my regional area to comment on their sense of the “content” of good corporate citizenship, the benefits to the company and how transparent should the company’s citizenship activities be. The response depended largely on whether a company was new to the region or had a presence for a number of generations. An interesting hybrid was companies, operating in the region for several generations, but taken over by multi-nationals. Further, in rural areas, utilities and infrastructure providers are investing in community through sponsorship of local events and institutions. They seek better communication with a community through supporting community causes.

Few I spoke to were keen to be identified in a discussion on contribution to the community. The reason for this reticence varied. In family owned or family controlled businesses the older generation was reluctant to “puff off” about contribution to the community, it wasn’t what one does:  you give anonymously or at least quietly. “The two generations represented on the Board are against publicizing their donations to community projects, but for very different reasons,” said one family company spokesman, “the older generation from a sense of modesty, the younger from an angst of raising expectations of every community group “

Beneficiaries vary from independent achievers in sport or the arts to local clubs and societies, supporting infrastructure development and community projects. Their “ask” from small communities for donations for a myriad of causes is significant. Fundraising for schools, sporting clubs and larger community infrastructure projects is a constant pressure on regional business. With the most philanthropic of cultures, some assessment and prioritizing is required. Some firms opt for donations to the Community Foundation with that body making allocation decisions.  Wine companies, large and small, field constant requests for donations of wine. Few refuse, though the cost can be significant. For larger projects some prioritization is required. One scheme in operation is the Foster’s Community Grants scheme that invites employees to nominate a “cause” of their choice for a donation for $250. Consistently new businesses to the region, or those parts of a multinational group, are more willing to accept the marketing benefits of being transparent with their community support programs. For private companies, especially those that have their origins in the region and an historical association, the giving process is mostly confidential with much of the community unaware of the extent of contribution.

Companies are not so secretive of support through local supply chains, though a failure by some to make more of the “regional story” could mean that they do not sufficiently appreciate the value to the local community of buying and using local suppliers and services. The expectation of good corporate citizenship in rural Australia includes a strong component of support for local businesses, whether through purchasing of services or, where at all feasible, use of local suppliers. The realities will vary from industry to industry but the premium attached to a product that carries the authenticity of regional input should not be overlooked, nor understated. For example, in a region with a reputation for outstanding small goods, historically supported by a local pork industry, logic demands that the local product be used in production. That those who do support local suppliers have achieved outstanding success supports this. Regional Wines should feature regional grapes – and whilst labeling laws mean that identifying your wine as from a particular region requires a degree of truth in the statement, the promotion of “Regional Heroes” to drive awareness of the intrinsic value and characteristics of regional wines will help direct larger operators to suppliers at their doorstep. 

Inputs other than raw product require consideration. Machinery, components how to source what you need locally, or at least identify the competitiveness of the local offer? Whilst bulk buying from, for example, China might save dollars in the first instance, is the greater responsiveness and ability to manufacture to specifications and to order of a local supplier actually more cost effective overall? The case for the development and promotion of regional industry capability networks is strong. The benefit to the firm’s carbon account from fewer “miles” in the supply chain is increasingly relevant.

It must be observed that there appears to be underutilization of the opportunity for business to bask in the glow of being a regional hero through supporting regional industry, and thereby putting prosperity back into the community. Not to forget project support: funding a research or innovation project between you and a supplier or distributor builds closer relationships, provides marketing opportunities and builds a culture of collaborative innovation.    

 Services?   Naturally, a two way street. Service providers need to identify opportunity in local business and make sure that the standards of service and expertise offered are aligned with the needs of larger enterprises in the region, if they aspire to serve them. From the enterprise, an open mind and willingness to consider local options will facilitate.

In my survey of business on local supply chain content the focus of the response was clearly on the raw product and, to some extent, transport. However there are many opportunities for adding value through engaging regional businesses at other points in your value chain, adding to regional prosperity and gaining community support for your enterprise and loyalty in future workforce contests. The flow -on benefits are strong:  the business case for improved infrastructure is more readily made where there is broadly based economic growth. Supporting community infrastructure projects also pays dividends beyond promotion and marketing. In-demand employees are attracted to regions where facilities deliver best quality of life.

Regional workforce development is another win-win scenario for regional companies. Frequently, there is likely to be limited opportunity for youth to gain workforce skills or experience. By offering structured work experience for a maximum number of local youth, a company contributes to workforce skilling and realization of opportunity. It also gets a first hand appraisal of the next wave of workers and with careful management is in a good position to have first choice of local talent. As workforce numbers shrink this is an increasingly important link to make.

Carbon accounting and concern with carbon miles provide further opportunity to benefit from regional value chains. Working hand in hand with your regional community to create efficiencies and savings in energy and resources could provide opportunities for a business to substantiate its case and add to its credit bank. Creating a whole of community response is good for the environment and good for marketing. With workforce resource pools shrinking, a strengthening of community relationships has the potential to repay multiple dividends for those identified as employers of choice.

Good corporate citizenship and highlighting quadruple bottom line achievements can open up communication with the regional community. Help the community to understand your needs and challenges and they are more likely to facilitate your plans for growth. Whilst corporate philanthropy remains an important role of regional businesses, the opportunity to drive growth through community focused value chains presents opportunity for return.

The sophistication of small to medium business with a commitment to principles of sustainability has opened up new opportunities for good corporate citizenship. My observation is that small to medium enterprises (SME) in the region are more likely to act from a sense of putting something back into the community, to lead by example and to instill in staff a culture of community support and patronage. I came across several examples of firms rewarding staff by supporting staff chosen charities with staff opting to contribute – e.g. through share of tips – too. 

Barossa businesses, especially wine businesses have a good track record in supporting organizations that of themselves offer community services – for example Barossa Enterprises, which provides employment opportunities for people with a disability. By purchasing wine boxes or contracting this agency to label or package wine products, the wine industry has helped this enterprise flourish and extend into operational vineyards, creating both interesting work and training opportunities for this increasingly recognized workforce sector. Collaborative recycling initiatives in the wine industry, led by Tarac Technologies, also build community capacity for a sustainable future.

The consumer has a role too. For small to medium business, this is an important role. The two- way support stream is critical – build prosperity and integrity in the community by supporting local business and buying (and help the retailer stock) locally produced goods and services. For the larger, export focused companies the support of the consumer might be less obvious (does the amount of Steingarten Riesling locally consumed benefit Orlando?) – however regional branding is built on belief and passion and on the story and culture of a region - even for the large corporate, belief and passion for regional products and services puts fire in the regional brand as it talks to the visitor and to the rest of the world. 

So is there any conclusion? I think so. In today’s environment of commercial innovation and changing, ever widening marketplaces, there is a need to look at corporate citizenship from new perspectives. Rational drivers include future workforce security, building more attractive, rural areas with better facilities to attract and retain in-demand staff, community support for expansion and development, better supply chain relationships and control, better environmental management stories and facilitating environmental regulation compliance. Small and medium business is also evolving a leadership in community values and collaborative enterprise.

So is there a conclusion? I think so: despite the global market and choice and opportunity and China, despite vigorous focus on shareholder returns, there is still a place, an important place, for a strong symbiotic relationship between a regional company and its value chain – somewhat nurtured by the imperatives of a carbon constrained environment. An observed difference is the emergence of the SME as the regional hero rather than the larger corporate, now often global businesses with a “multicultural”, rather than regionally aligned, focus. The Barossa Region has great examples of collaborative supply chain success building the regional brand strongly. And it’s getting better – in a world of change and innovation, it has to.