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

Comments

  1. This is not only intelligent, but it pitches the ideas in a way that the business side can understand. Horse people ought to want to do the right thing anyway (yeah, I know, I know…) but the business side needs to see it as dollars and cents, with something in it for them. You have explained it in language they ought to be able to understand.

  2. Professor Shanklin wrote:

    …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.”

    _____________

    I agree. Not only are a growing list of independent list of bloggers using their channel as a soapbox, but now more than ever horse racing forums are discussing the ugly side of racing with hopes that it will bring about corrective action.

    Credit also goes to the news aggregators which do not hold back items of abuse on the racing scene.

    Lately we’ve had Michael Gill in the news, overpaid executives who fail to lead their organizations. Corruption/collusion at the state level that prevents progress at the racetracks in New York and New Jersey.

    In a business that has had it easy for decades to hide the ugly truth, no makeup will make our “Phyllis Diller” become more attractive in this high-tech era.

  3. D. Masters says

    “….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. …”

    Actually, I think racing is in the sports and entertainment business…gambling isn’t the only aspect. And yes, it certainly seems to be the focus of tracks as it is the easiest investment with the highest return. Maybe that’s is the problem.

    It’s a sport first with a ton of entertainment value. The focus on the gambling revenue, from crap cards, cheap claimers, saturation/duplication, high take-out and betting parlors that suck off the track without investment there are the primary culprits in the demise of racing. Plus it takes a ton of time, interest and smarts to understand the race game…something the average NFL or NASCAR fan neither has the smarts or patience for.

    But it’s only my opinion and I’m one of those that follow racing because of the beauty of the sport, horses and their supporting cast of characters…not because of betting. Stupid me.

  4. D. Masters says

    Forgot to add…yes, doing well by doing good in the 21st, high tech, instantaneous info Century is smart business. Thanks for the blog entry.

    NTRA…anyone listening or even at home????

  5. I was blasted by a racetracker for suggesting the same moral code about a poorly cared for horse. I would like your permission to link this article to my blog. Please read when you have time.

  6. D. Masters says

    Mr. Shanklin:

    Donna posted a question. And your answer is?

  7. Bill Shanklin says

    D. Masters,

    The answer is that the racetracker is uninformed and/or has a callous attitude toward innocent animals that can’t take care of themselves. Such a person should not be in charge of racehorses and such people do damage to the entire racing/breeding enterprise. Several high-profile cases have been in the news recently.

    Look for a post late this week on horseracingbusiness.com concerning the rescue efforts by Dallas and Donna Keen’s registered not-for-profit organization.

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