Balancing People, Planet and Profit: An Analysis of the Impact of Corporate Responsibility on the Policy and Strategy at Schiphol

Worldwide, the attention and awareness on Corporate Responsibility (CR) increases in the business and social world. More information is available which encourages society. One of the spear points of society are the CO2 emissions. Mapping these emissions showed that aviation has a 5% share within these emissions of which airports are responsible for again 5%. Society became more aware of CR and together with an increased media attention, the pressure on the business world increased. Society expects that the business-world would not only do something about their CO2 emissions, but to become corporately responsible. CR is more than planet alone. It is about the balance between people, planet and profit. Where for many firms the focus was solely on profit, it was suddenly expected to balance profit in relation to people and planet. Firms rushed into CR without really understanding the concept such as with Schiphol Group, the operator of Amsterdam Airport Schiphol. This rush caused the over-organized and unstructured CR policy that currently exists at Schiphol. Thereby Schiphol applied CR to its business with the wrong motive. CR was implemented for the sake of having it and to avoid negative opinions of not having CR, which caused several problems Schiphol faces today. The first problem is that the CR policy is unstructured and over-organized today. Second, there is no balance between people, planet and profit in decision-making. Third, there is a blurred view on CR reputation and expectations from stakeholders. This research addresses all three problems, so that the main question can be answered by subsequently answering four sub-questions. Main research question: What is the current role (influence) of CR at Schiphol, how can this be improved and what are the potential benefits for the future (in order to become and stay Europe’s preferred airport)? To answer the first sub-question, a comparison between the scientific CR literature and the practice at Schiphol is made to identify similarities and differences between those two. The definition of CR is broadly the same, except that the Schiphol definition lacks elements as ‘in line with business strategy’ and ‘people, planet and profit’. Combining theory and practice, CR is in this research defined as: Integrating a balance between people, planet and profit fully in a company’s strategy and operations based on intrinsic motivation in order to create value for its stakeholders and itself, today and in the future. The theory at Schiphol shows that nowadays the knowledge about what should be the right motive for CR is present, but in practice the motive for Schiphol is still mainly to maintain support for its position. Because of its big contribution to society Schiphol has the obligation to be corporately responsible. This mix between self-interest and social obligation is good, but the focus is now more on damage control than on optimizing benefits. Scientific theory showed that the right motives for CR are mostly of strategic self-interest: to gain a competitive advantage or grasp financial benefits. When firms are coerced into CR or are doing it for the good cause, CR is far less efficient and effective. Both society and firms are better off when firms use CR strategically than when they are coerced into making such investments. With strategic use as a motive, the implementation process is more efficient and has less resistance. Therefore it is recommended that Schiphol should change its current CR strategy by integrating the CR strategy within its business strategy. Scientific theory showed that strong inspirational leadership, open communication to all stakeholders, an integrated CR and business strategy and projects that balance PPP are essential success elements of this change. Afterwards the intended benefits such as financial profit, increased reputation, employee welfare and in the end a competitive advantage can be reached. There is confusion today due to the from origin profit-based focus and the insufficient existence of the important elements to change the mindset. At the same time this are the opportunities for tomorrow. The seeds to realize a change in mindset are already seeded with examples as the CR Ambassadors, Guerillas and theGrounds. They enlarge the awareness on CR, but it costs time to turn these seeds into a flourishing plant. The answer to the second sub-question focusses on the analysis of the current perspectives that are present at Schiphol with Q-methodology. This is important knowledge in order to increase the chance on successful implementation and raise the shared acceptance for the new required CR policy. The Q-methodology studies the subjectivity of individuals on a certain issue, here CR, by ranking statements from mostly agree to mostly disagree according to a given distribution. The statements are based on the scientific literature and interviews with various people at Schiphol. The respondents with different functions, age, gender and CR involvedness ranked the statements from a ‘me as a Schiphol employee’ perspective. After a factor analysis and varimax rotation, four perspectives were identified: the communicative believer, the strategic changer, the balanced profiteer and the numerical collaborator. The communicative believer consists of relatively many managers and states that “CR is a thing for believers” and “something you have to believe in as an organization, it is a mindset”. Having this mindset, being corporate responsible and being transparent and complete in communication on CR towards stakeholders are a competitive advantage to realize future growth for Schiphol. The strategic changer perspective represents a relative large share of directors and has a more strategic view on CR. Currently Schiphol is capable enough to realize a successful CR strategy but “without profit, there is no airport and no opportunity to give the profit back to people and planet”, while “CR is the reason to exist today and for the long-term future”. However, to get there a strategic change in the right direction is necessary to actually make CR a success. The balanced profiteer represents the old profit-based culture and is more preserved and internally focused. They recognize CR, but profit first, which together with strong leadership and an internal focus on an improved interwoven CR strategy characterize this perspective. The numerical collaborator focusses on collaboration with stakeholders and addresses a sectorial approach. They stand for a good numerical foundation with a no-nonsense Calvinistic approach to deal with CR: “meten is weten”. “CR is part of our life nowadays and given the social function of Schiphol, we should contribute to CR”. “But in the end it is still business and we have to have something left”. The statements which are mostly agreed upon are: 1) strong leadership/management agreement from the top is required in order to successfully implement CR at Schiphol, 2) CR strategy should be in line with Schiphol’s business strategy, 3) CR strategy plays an important role in the license to grow, 4) in order to successfully implement CR and ensure consistency, all levels in the organization should apply and integrate CR, 5) CR gains a competitive advantage. Most disagreed statements are 1) Schiphol should stop with CR, 2) I see CR as something unwanted; an extra effort with no results, 3) Transfer passengers choose Schiphol for its CR reputation, 4) current CR organization and strategy is sufficient, 5) CR related guidelines for decisions-making forms are not needed. These perspectives lead to consensus on 1) Schiphol should continue with CR, 2) the inclusion of stakeholders is important to define the strategy which 3) should be implemented on all levels in the organization to ensure consistency and 4) guidelines for decision-making forms are needed, which is further analyzed by designing a new framework for the decision-making process. But more important are the statements on which there is disagreement: 1) people, planet and profit are equally important for Schiphol, 2) CR will make Schiphol Europe’s preferred airport, 3) decisions on investments always need a positive business case, 4) Image is more important than people and planet, 5) Schiphol should take control and stimulate other stakeholders in a sectorial approach for CR and 6) CR activities should always be strategic and contribute to the competitive advantage of the firm. Hence there are four perspectives present at Schiphol, it can be concluded that the overall view on CR is quite positive with shared and consensus statements. But these different perspectives are present in different levels of the organization, which are a cause of the sabotage of the current strategy. Also there is indeed a difference between saying and doing at Schiphol: the perspectives show the well awareness on the theory but also that change is wanted and required because current actions and policy are lacking. The consensus and mostly agreed statements are highly accepted in the organization and it is recommended to directly implement those as far as possible. Awareness on the existence of the disagreement is necessary and is an opportunity to smoothen the implementation of the CR strategy. Given the conclusions on the Q-methodology results, the following recommendations and implications are relevant for Schiphol: 1) Create a clear, consistent definition on CR which contains the right terminology. 2) Focus on expansion and growth (license to grow) instead of staying in business (license to operate). 3) Create more understanding and insight in the CR-benefits and the contribution to a competitive advantage. For instance by workshops, improved communication and quantification of the CR-benefits. 4) Integrate and align the CR strategy with the business strategy. So no separated CR strategy. Activities and projects should be aligned to this strategy to optimize their contribution. 5) Create incentives and inspiration from the top by showing commitment to and the importance of CR for Schiphol. This improves the implementation of the CR policy as well as the external and internal exposure. This implicates that the CEO is responsible for the CR performance which should also be linked to the salaries and bonuses of managers. 6) Communicate the existence of different perspectives throughout the whole organization by workshops for instance. 7) A positive business case of projects in investments-decisions is not always required. 8) Schiphol should take a wait-and-see role in the sectorial approach to address CR. The answer to the third sub-question is ‘The Balanced Framework’. This framework is designed to create more awareness in the organization on balancing people, planet and profit in the decision-making process. The goal was to create a framework to make a balanced and general valuation of people, planet and profit in decisions whether or not to invest in projects based on the existing process. It is important to incorporate people and planet within the profit measurement systems, to raise efficiency but even more to show the contribution of people and planet to profit. The literature review of scorecards, investment tools and other frameworks was input and inspiration for ‘The Balanced Framework’. Negative aspects were avoided and the positive aspects of those frameworks were taken into account. Based on these, the main requirements were transparency, simplicity, flexibility and accessibility. The framework is transparent by giving more insight in the valuation of a decision and helps to set the balance between PPP, but not too much by still distinguishing the scale and weighting phase. It is simple in use and can be accessed directly; currently the framework is applied to the pilot-project Lounge 2. Furthermore, the framework is able to incorporate lessons learned during use and can be adjusted towards user preferences. The biggest change compared to the current decision-making process is that a project is split up in three components: people, planet and profit. The first phase of the decision-making process is scaling PPP. Relevant aspects per P for a project need to be selected from a list of roughly 15 indicators with corresponding units, which is a selection of Schiphol’s 17 CR themes and others sources such as the Global Reporting Initiative (GRI) for Airport Operators. This list of aspects and indicators is mutually exclusive and commonly exhaustive. The contribution of the selected aspects through the project is calculated, after which the impact on strategic objectives of Schiphol for each aspect is determined. This process of scaling towards strategic objectives enforces that all aspects are on the same scale, interpretable by the IC and so that projects are better in line with the business strategy. The scores are filled in on the decision-form after which it is checked by the controllers and submitted to the Investment Committee (IC). The weighting of the aspects by the IC is the second phase of the decision-making process. First the aspects per P are reduced to five, if this not already the case. Second, a sum of 100% will be divided between the 3 P’s. Thereafter this ascribed percentage is divided between the aspects per P. This division is dependent on the current balance between PPP that is determined by the IC and the CR strategy. In a pro CR case: people, planet and profit are equally important for Schiphol, so each gets 33.3%. But more in line with the current situation due to the old habits and current financial crisis, a division of 25% people, 25% planet and 50% profit is more plausible. The percentages and the strategic impact scores are multiplied with each other, so that the highest score represents the recommended project based on strategic impact. This advice is not binding, but stimulates discussion on the go or no go of a project and gives an indication of the effects of people, planet and profit aspects of a project on the strategic objectives of Schiphol by plotting projects on PPP axis to validate the choice-behavior of the IC. The framework is verified with Schiphol employees and the literature on decision-making processes. The validation with a pilot-project Lounge 2 is still in progress, the relevant aspects per P are selected and currently calculated, but the first feedback was merely positive. Essential first step in the road ahead is to let experts define the value ranges of percentages per aspect to transform these to the strategic impact score. Then the framework will be general applicable. Afterwards the framework can be used and will increase the awareness on the balance between people, planet and profit in the decision-making. This will stimulate the CR culture within Schiphol and give ‘hand and feet’ to the forthcoming business strategy which incorporates CR. In the answer to the fourth sub-question, the value of a CR reputation for an airport among transfer passengers at Schiphol is determined. A conjoint analysis with a stated-choice model based on a multinomial logit (MNL) framework suit the use to determine the willingness to pay for and utility of having a CR reputation. The CR reputation is important since it is affects the business performance of a firm. Furthermore, the negative impact or damage of a CR reputation is bigger than the possible positive impact. The transfer passengers are an important stakeholder in the business performance for Schiphol since they account for 40% of the total amount of passengers. A survey among transfer passengers was conducted, whereby they were asked to choose between different airports of transfer (alternatives) on a fictitious flight. The aspect with the most influence on this choice was the transfer time (41%) followed by ticket price (32%), airport quality (18%) and CR reputation (9%). Although the CR reputation is the least important aspect in this experiment, it still accounts for 9% in the decision for transfer passengers, which is if realized a huge increase in passenger amounts given the competitive aviation industry. The utility is only positive when the airport has an excellent CR reputation. Having a poor or average reputation has a negative utility and will not have much influence on the decision by transfer passengers. Furthermore, having an excellent CR reputation is worth \u8055.29 per passenger compared with an average reputation. So transfer passengers are willing to pay \u8055.29 extra for an excellent CR reputation. So, for Schiphol it is worthwhile to excel on CR reputation. Based on this experiment with transfer passengers, the CR reputation plays a role in the decisions with 9% and having an excellent reputation is rewarded with \u8055.29. Given this knowledge, Schiphol should continue to invest in activities and projects that affect the CR reputation in a positive way to obtain an excellent CR reputation. Focus hereby on experience and communication. Make the CR-initiatives, specifically planet related, more tangible and visible to let the passenger really experience CR. Participate in national and international CR or sustainability rankings and use top-rankings for communication. Communicate more transparent and complete towards all stakeholders. Furthermore, conduct further research on the value of a CR reputation among other stakeholders and how the willingness to pay of ±\u8055 can be obtained after an excellent CR reputation is obtained in collaboration with the airlines via airport fees or with the shop-retailers via higher rent or premium prices for products. To conclude, this confirms the theory that a CR reputation pays off and that the investment will be rewarded. Overall, this research provided an overview of the current state of CR at Schiphol. There are four different perspectives, but in the end they represent a positive view on CR. It also showed that a change is required to acquire the benefits of CR, which there certainly are. Hereby, more inspiration and commitment from the top is an important first step to stimulate and activate the belief in CR. It is known on which issues there is disagreement, which should be communicated throughout the organization to increase the awareness on existence. This will unite Schiphol on the CR issues and will incorporate CR in the culture on the long-term. Thereby ‘The Balanced Framework’ that is designed in this research is an excellent tool to support this required change. It increases the awareness on the importance of having a balance between people, planet and profit in decision-making process by making a more conscious decision at all levels in the organization. Investments are required today, to benefit in the future from a competitive advantage. After all, having an excellent CR reputation will pay off.Systems Engineering Policy Analysis ManagementTransport and LogisticsTechnology, Policy and Managemen