DOING WELL BY DOING GOOD

An article from Fortune magazine, “Why Doing Good is Good for Business,” discusses Dov Seidman, “a Los Angeles-based management guru who has become the hottest adviser on corporate virtue to Fortune 500 companies.” Following is an excerpt from the article:

“Seidman has built a highly successful business on the theory that in today’s wired and transparent global economy, companies that ‘outbehave’ their competitors ethically tend to outperform them financially. More than 400 companies, including Pfizer, Wal-Mart, and Procter & Gamble, have hired Seidman’s firm, LRN, to analyze their corporate cultures, rewrite their codes of conduct, and give ethical-compliance training to employees…in a world where disgruntled employees and unhappy customers can trash you globally in the time it takes to dash off a nasty blog posting or upload a cellphone video, it’s becoming harder to manage reputation the old-fashioned way, by hiding behind lawyers and crisis-management consultants. Ultimately, the only way to enjoy a good reputation is to earn it by living with integrity.”

Like all industries and companies, the entire horse-racing industry and many of the companies in it are vulnerable to unfavorable publicity. A racetrack, for instance, is in the gambling business, which is a moral issue for some people and groups. What’s more, alleged and actual cases of animal abuse are always difficult for racetracks and owners and breeders and trainers and veterinarians.

As with gambling companies, alcohol-related industries and firms are sometimes looked upon as offering a product that is not socially redeeming. Constellation Brands, the world’s leading producer of premium wines, is a prototype for a company offering a controversial product that is trying to behave responsibly and with integrity. Constellation Brands is “a member of the Global Alcohol Producers Group (GAP Group), an informal coalition of 16 leading international beverage alcohol companies that are engaged in discussions with the World Health Organization (WHO) and other key stakeholders as they examine the potential ways to effectively address responsible consumption of alcohol around the world.” (Click here to see the company’s “Global Code of Responsible Practices for Beverage Alcohol Advertising and Marketing.”)

Racing, as an industry, can improve its standing among the public with social-responsibility initiatives like those addressed by Constellation Brands. For instance, sustainable business practices come to mind. Farms are agricultural enterprises and racetracks are quasi-agricultural businesses. Each can have a favorable societal impact through practices that are environmentally friendly. Making provisions for dealing with problem gamblers is another important facet of social responsibility.

Philanthrophic initiatives also fall into the category of social responsibility. For example, many racing organizations promote the welfare of backstretch workers and the rescue and adoption of racehorses. The people running them and their volunteers labor in relative anonymity doing God’s work…by taking care of those who cannot take care of themselves or who need a helping hand.

Keeneland comes to mind as a prototype for a company that has a reputation for running a highly reputable racing and sales organization, while, at the same time, contributing so much in the way of charitable donations to various Central Kentucky worthy causes. The Belmont Child Care Center is another stellar illustration. The Center was formed to help the children of racing families and is named Anna House. Laura and Eugene Melnyk gave a lead gift of $1 million and the child-care facility is named in honor of their daughter. The Farish family’s $1 million gift to the Permanently Disabled Jockey’s Fund is still another example.

It is difficult to quantify a cause and effect between social responsibility, on the one hand, and increased profitability on the other. Yet, subjectively at least, the notion makes sense that good corporate citizens do better financially over the long haul than companies that skirt laws and ethical mores. An industry or a company that earns the reputation for being upstanding will attract and retain customers. In other words, nice guys do not mostly finish last. (Some empirical evidence comes from a 2003 study that found the most trusted major automakers in the United States, Japan, and South Korea were also the most profitable. It will be interesting to see what effect Toyota’s current problems with sticking accelerator pedals have on its profitability over the next several months and years.)

Every industry has its share of demons to cope with. Sea World, a family entertainment company, was vehemently criticized by animal rights groups in the wake of the recent tragic death of a trainer, who was killed by a whale during a performance. Racing has been pummeled by the likes of negative reports about late postings, breakdowns, illegal medication, slaughter, and food purging by jockeys. These cannot be eradicated, but they can be tempered by adherence to practices that reflect caring for human and equine participants. I am not talking about merely crafting lofty-sounding codes of conduct, but rather, living what is espoused in such expectations for behavior.

Some people will no doubt say that this is naïve…that racing is already in enough economic trouble without taking on additional costs. My reply would be that racing cannot afford to act irresponsibly because doing so will badly damage the industry in the long term.

A trainer at a well-known racetrack saddened me with his narrative of another trainer who let his horses stand in stalls that had not been cleaned in days. I asked him why racetrack management had not done something about it. He basically said they did not care or turned a blind eye. If management confirmed that this allegation of animal neglect were true, they should have taken remedial action in a hurry. Contrast this complicity in an outrage with the positive actions of racetracks that dedicate stalls where owners can take horses they cannot afford to keep, as long as the owners forfeit their rights to the animals.

I would like to see every major racing business (racetracks, farms, sales companies, veterinarian clinics, etc.) develop and publicize formal statements of codes of conduct centered around social responsibility, ethics, philanthropy, and sustainable business practices. Most of all, I would like to see them, as the vast majority already are, live up to what is espoused. Further, the cheaters and bad apples who embarrass the sport of racing should not be tolerated by everyone else. As Arthur Hancock so cogently stated, “get rid of the thugs and drugs.” 

Call me Pollyannaish and unrealistic. But in the scheme of things, doing good for your customers, employees, and horses is great for business. Call it enlightened self-interest. Call it sustaining an industry.

Copyright © 2010 Horse Racing Business