Corporate Responsibility and stakeholders

S T R AT E G Y

Introduction
Reed Elsevier is a leading provider of professional information solutions to organisations around the world. It publishes journals, books and databases and manages exhibitions and events. Its well-known titles - such as New Scientist and The Lancet - appear both in print and online. Reed Elsevier has a worldwide customer base working in many fields, including science, research and the law, as well as in public and academic libraries and commercial organisations. This includes over 11 million scientists who access information directly from Reed Elseviers ScienceDirect database the worlds largest online library of full-text research papers. Reed Elsevier was formed in 1993 when the businesses of the British publisher Reed International and the Dutch publisher Elsevier NV merged. The Reeds were Methodists and took a philanthropic approach to the business. This means that they applied the present-day idea of Corporate Responsibility (CR) within the company. They promoted health and safety for their workers and better standards of living. The company now operates in more than 200 locations worldwide and annual revenues for 2012 were over 6 billion. Revenues are largely from subscriptions to its titles. It employs around 30,000 people including IT specialists, editorial teams and marketing, sales and customer service staff. To enable the business to focus on specific customer needs, the company has five divisions.

2. LexisNexis Risk Solutions provides data and analytics that allow customers to evaluate and manage risks associated with transactions and to improve performance 3. Reed Business Information producing trade journals, blogs and web directories to deliver information to users worldwide 4. LexisNexis Legal & Professional provides legal, tax, regulatory news and business information and analysis to legal, corporate, government, accounting and academic markets 5. Reed Exhibitions organising events, exhibitions, conferences for over 44 industry sectors. Reed Elseviers values guide the behaviours of its people toward providing the right products and services to enable the company to grow. Reed Elseviers values also affect the strategies it develops for both internal and external stakeholders. It aims to respond to all their needs through innovative products and services.

customer focus

valuing our people

VALUES
boundarylessness innovation passion for winning

Corporate responsibility is an integral part of the business. 1. Elsevier publishing science and health information to promote research and discovery Matching financial and non-financial performance provides a win/win outcome for the business and its stakeholders.

C16th Elsevier family sets up booksellers and printers

1894 Albert E Reed sets up newsprint manufacturing in Kent, UK

1970 Reed becomes Reed International Ltd

1982 Reed International PLC

1993 Reed Elsevier established 1991 Elsevier acquires Pergamon Press in UK

1880 Jacobus George Robbers sets up publishing company in Holland using Elsevier name

1951 Elsevier Press Inc set up in USA

1979 Elsevier Press becomes Elsevier Scientific Publishing

Curriculum topics covered: Internal stakeholders External stakeholders Stakeholder conflict Benefits of stakeholder focus

Reed Elseviers market leadership comes from focusing on the needs of all of its stakeholders internal and external. We focus on our unique contributions as a business where we can make a positive impact through our knowledge, resources, and skills including: universal sustainable access to information, advance of science and health, promotion of the rule of law and justice, and protection of society. (CR Report 2012: http://reporting.reedelsevier.com/cr12/) Reed Elsevier is committed to using its extensive networks and expertise to facilitate the exchange and dissemination of useful information. Now in its third year, the Reed Elsevier Environmental Challenge was launched to identify innovative projects that provide sustainable access to safe water where it is presently at risk and/or access to improved sanitation. To help in the formulation of proposals, Reed Elsevier offered access to its products to more than 140 applicants in 2012. The winning project, from the Centre for Affordable Water and Sanitation Technology, will provide ironamended Biosand Filters to villages in Nepal. Second prize went to Sanergys sustainable sanitation system for the slums of Kenya. Reed Elsevier has a growing portfolio of products and services that advance environmental knowledge and understanding. In 2011, it supported the UNICEF report, Childrens Vulnerability to Climate Change and Disaster Impacts in East Asia and the Pacific. In 2012 it continued to help UNICEF plan in-depth research in Indonesia and the Philippines exploring a methodology for childcentered disaster risk reduction and risk-informed child social protection through providing access to journals and data, subject experts, and assisting with editing, designing, printing and disseminating the final report. This case study shows how Reed Elseviers business benefits from meeting the needs of all of its stakeholders.

to put the final version of their work on their own institutions website as well as having it published through Elsevier. Employees at all levels are an important internal stakeholder group. Reed Elsevier needs to retain its diverse and talented employees who bring professionalism and energy to their roles. This helps the business to provide the highest levels of customer service, attract new customers and retain existing ones. To encourage this, Reed Elsevier has set up various initiatives internally, for example: All employees are offered training on the Reed Elsevier Code of Ethics and Business Conduct to ensure best practice. 100% had completed the course by the end of 2012. By the end of 2012, 100% of employees had completed anti-bribery training. Flexible or home working across the business supports the work-life balance of employees, enhances performance and productivity and reduces employee stress. Boundarylessness the companys different divisions act as one organisation providing opportunities for staff to take advantage of internal transfers and promotions to develop. This enables them to make a contribution to the whole of Reed Elsevier.

External stakeholders
External stakeholders are those individuals or groups outside a business. To differentiate the company from other information providers, Reed Elsevier focuses on CR performance. Customers Customers expect good value, high-quality products and great service. Reed Elsevier achieves this through close relationships and consultation with customers. It conducts widespread surveys of customer opinion. These identify the value customers place on its services and products and highlight potential improvements. In this way, customers have a real role in helping the business to develop and grow. This results in longer-term relationships where customers feel they have an input into the services offered. It builds loyalty and creates the potential for increased business.

Internal stakeholders
Reed Elseviers internal stakeholders have a range of interests in the different parts of the company and its activities. Shareholders are key internal stakeholders. As investors, they take a financial stake in the company by purchasing shares. They will look for the best return on investment which is usually made in the form of a share of the profits. CR strategies benefit shareholders by making the business attractive to investors and improving its share value. By reducing costs and therefore improving revenues and efficiency, Reed Elsevier steadily increases the dividends paid to its shareholders.

Scientists

Healthcare providers

Educators

Reed Elsevier customers

Legal profession

Students

Industry Research

Authors who provide the journal articles for Elseviers scientific publications are also internal stakeholders. They have the opportunity
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Reed Elsevier customers come from the public, commercial and academic sectors, from many professions and geographic regions, which is reflected in the spread of its business divisions, for example: Elseviers scientific publications provide critical research information to support innovation and development. They have enormous social value and may affect lives across the world. The divisions online medical data provides vital information to doctors in hospitals. Video, text and animation of medical procedures help doctors and students learn. LexisNexis provides online solutions to help professional users to access a wealth of information quickly to support their jobs on a daily basis. For example, a lawyer may prepare for a legal trial using earlier case law. Suppliers Suppliers also hold a stake in the company to which they provide materials and services. For example: As part of the companys Socially Responsible Supplier programme, suppliers are asked to sign the Reed Elsevier Supplier Code of Conduct. This sets out the standards which it expects its suppliers to meet. Suppliers must follow all relevant laws, promote best practice and respect environmental conditions, such as using sustainable sources for paper or dealing responsibly with waste products. Partners Reed Elsevier has established partnerships across its different divisions. For example: Elsevier promotes science, technology and medical information programmes. The Elsevier Foundation promotes the work of libraries and scholars in science, technology and medicine. Over the last nine years, Reed Exhibitions has given free space at the London Book Fair to Book Aid International which annually provides over 500,000 books including those donated from across Reed Elsevier to readers in the developing world. This enables the charity to engage with a wide range of potential book and financial donors. Partners in the supply chain, such as one of Reed Elseviers printers in China, also benefit from its responsible approach to production. By applying the Supplier Code of Conduct, the printer found that improved conditions led to better quality output, lower turnover of staff and greater employee loyalty. Community Reed Elseviers initiatives make a difference to communities around the world. The RE Cares programme is supported both centrally and in all business divisions. This programme encourages

staff to work together to make a difference in local communities. More than 30% of employees volunteered through RE Cares in 2012: It supports education for disadvantaged young people. Initiatives range from reading support to charity fundraising. RE Cares Champions awarded nearly $400,000 to more than 50 charities in 2012. In 2012, Reed Elsevier announced the winners of the second RE Cares Recognising Those Who Care Awards to highlight the outstanding contributions to RE Cares of eight colleagues and four staff teams. Reed Elsevier has a formal policy of donating unwanted book stock to institutions to provide more access to information. Society Reed Elseviers CR approach impacts on society in several ways: In line with its Code of Ethics, it promotes responsible advertising and a transparent editorial policy for its publications. Reed Elsevier is committed to reducing use of energy, water and paper in its publishing processes and using sustainable materials wherever possible. It has seen a 33% reduction in paper between 2008 and 2012, sourced 33% of its electricity from renewable sources and prevented an increase in water consumption despite growing business revenue by nearly 15%. The company uses video conferences and webseminars to save on travel costs and reduce its carbon emissions. It has a network of Environmental Champions and employee-led Green Teams to promote greater recycling and reduced energy use throughout the business. Reed Exhibitions drives forward sustainable practice in the global meetings and events industry, working to improve environmental performance at its shows through implementation of the BS 8901 standard, which became an internationally recognised ISO 20121. In 2012, 69 office locations gained green status by achieving five environmental standards as part of the Reed Elsevier Standards programme. 13 locations achieved seven or more standards and were designated as green+, meaning they are the best performing locations in the business.

Potential stakeholder conflict

It is important for a business to balance the interest of its various stakeholders. Different stakeholder groups have different priorities, for example: Shareholders expect the business to make a profit and receive a return on their investment. Employees require good working conditions if they are to be retained. Investors may want to see evidence of how a company responds to environmental issues before committing money to the business.
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www.reedelsevier.com

Valuing People is a stakeholder focus which is important to Reed Elsevier. The company recognises and values its people. This focus provides benefits in the form of motivated and loyal employees. Challenges, opportunities and rewards for all workers are part of Reed Elseviers approach to supporting its people. This results in employees feeling encouraged, involved and motivated which leads to improved efficiency. Improved efficiency reduces costs which increases sales and improves revenues which contribute to higher profitability. Attracting and keeping good employees means the business will achieve its objectives and meet the expectations of customers. Stakeholder conflict arises when the needs of some stakeholder groups compromise the expectations of others. A business has to make choices which some stakeholders might not like. For example, the cheapest supplier goods, which can help keep prices down for customers, must not come at the expense of ethical practice by suppliers. Some activities may not give immediate financial return on investment but support the business ethical standards. Such policies need to be communicated and explained to all stakeholders involved, so they understand the longer-term value they provide. For example, investment in green energy (such as from solar or wind farms) may be more expensive but can help the company reduce its environmental footprint. Supporting employees may also lead to trade-offs. Reed Elsevier employees are offered development opportunities so that they can reach their potential. Reed Elsevier will have to justify this investment against the opportunity cost of using the time and resources for other purposes. It will also have to assess the potential downside of not training its employees. This could include losing good people to other organisations or mistakes happening through lack of training. Customers want good quality products and services that are value for money. Reed Elsevier listens to its customers and meets their needs with innovative ideas that create cost-effective and convenient solutions to their business challenges. For example, Reed Elseviers online services provide customers with the opportunity to cross-link, cross-reference and search for information. This has helped to ensure that 64% of revenues now come from online products and services. Reed Elseviers CR activities focus on doing what is relevant for the business and its stakeholders. Some decisions may not generate immediate return on investment. However, long term, they can benefit the company by attracting investors looking for ethical companies, greater employee retention and higher quality services which meet the needs of consumers.

Conclusion
A focus on stakeholders provides a way of keeping all aspects of the business in balance. Reed Elsevier pays close attention to the expectations and needs of all its stakeholders. Corporate Responsibility touches on all aspects of the business and strengthens Reed Elseviers business. The company believes that by living up to its responsibility to contribute positively to its employees, customers, society and the environment in the carrying out of its business, it has a sustainable business model leading to growth.

Corporate Responsibility

Affects all stakeholders

Translates into business benefits

1. Use a diagram to illustrate the main internal and external stakeholders in Reed Elsevier. (2 marks)
Exam-style questions

The benefits of a stakeholder focus

Businesses do not work in isolation. They affect the lives of people in the global community in many ways. Reed Elsevier believes it must be accountable to communities and give something back. Through employee community work, for example, its people not only make a difference to local communities around the world, they also demonstrate publicly Reed Elseviers values.
Reed Elsevier | Corporate Responsibility and stakeholders

2. Explain the difference between a stakeholder and a shareholder. (4 marks) 3. Analyse the potential for conflict between different groups of stakeholders. Explain why it is important for Reed Elsevier to engage in consultation with them. (6 marks) 4. Evaluate the benefits to a business of focusing on the needs of all stakeholders. (8 marks)