When the going gets tough…

Corporate responsibility in tough times

By Barbara Johnson

(This article first appeared in BeautyNZ Magazine March/April 2009. Updated August 2011)

Remember Enron? You should. The 2001 collapse of this United States power company, and the involvement - and collapse - of one of the world’s biggest accountancy firms, sent shock waves around the corporate world. And why should you remember it? Because if you have even a one-person home-based business in rural or suburban New Zealand, this corporate failure has added probably $200 to your annual compliance costs.

In recent years, we have all watched from the sidelines as bank after bank has fallen on its knees. Most of the activities of these organisations have been within the law, but many were still morally ambiguous. How did the CEO of Lehman Bros justify a salary package of $34.4 million in 2007? And we are all now becoming well-versed in the mechanics of how the collapse of financial systems in the US was fuelled by loans of 120% of the price of over-valued properties to people who could never hope to repay them.

What does this have to do with you and me? Aren’t we far removed from all this? 
Well, it seems not, if Enron is any indicator.

The current train wreck that is the world’s banking systems wasn’t just caused by the fat cats on Wall Street paying themselves huge bonuses. If the moms and dads on Main Street hadn’t been seduced by loans to buy houses they couldn’t afford, or to consolidate their debts to fund all sorts of lifestyle costs, then the crash couldn’t have happened.

So to a greater or lesser extent, we have all had a hand in the current financial situation. Which leads to a opportunity to re-think corporate responsibility.

Corporate responsibility isn’t just for the big players. What happens in business affects us all, and if we are to hold anyone accountable, we must each start with ourselves.

No matter what the size of our businesses, corporate responsibility is personal responsibility.

Oh, no! Don’t business owners hear enough about responsibilities?

Well, I believe that responsibility has two sides. As a business owner, not only am I responsible to others, but they in return have a responsibility to me.  I can look at each group of people that my business comes in contact with, and ask myself, “What can these people expect from me, and what should my business expect from them in return?”

Potential contacts, or stakeholders, if you prefer, might include yourself and your family, your staff, clients, suppliers, government agencies, and the wider community.

It may be a worthwhile exercise to list these groups, and list what you consider your responsibilities are to them, and theirs to your business. Set alongside your goals and your forecasts, the results of this exercise may give you some useful insight into your business and how it sits in your marketplace. What non-negotiable values do you hold, and what effect does this have on your business?

A business that has clear guidelines about what is acceptable, appropriate and professional will be a better place to do business from and with. It might be a good time to be getting more assertive about what you want in return from others, and you may find as I have, that this exercise can be a useful starting point.

Knowing who you are and what you are about may not only make your business more attractive to clients, it may make those marketing and costing decisions clearer – making it easier to get tougher!


Oborn & Johnson is a friendly, down to earth company, located in Takapuna, North Shore City. We have been specialising in accounting, tax and related services to businesses, investors, trusts and individuals, for over 35 years.

www.oborn.co.nz