HOW MULTINATIONALS MANAGE THE PUBLIC: LESSONS FOR ENGINEERS

ADDRESS BY ENGR. FEMI ODUMABO, GENERAL MANAGER, POLICY, GOVERNMENT AND PUBLIC AFFAIRS, (PGPA) ON “HOW MULTINATIONALS MANAGE THE PUBLICS: LESSONS FOR ENGINEERS” AT THE 2011 MECHANICAL ENGINEERING DISTINGUISHED LECTURE (MEDL) IN LAGOS

Distinguished Ladies and Gentlemen,

I am pleased to be part of this important event. I am particularly delighted for the privilege of delivering an address on this occasion of the 2011 Mechanical Engineering Distinguished Lecture. I thank you all for the opportunity.

The topic: “How Multinationals Manage the Publics: Lessons for Engineers” was carefully chosen. It reflects the appreciation of the dynamics of relationships among the multinationals and their stakeholders and also portends some lessons for the engineers and the engineering profession, especially in this era of globalisation.

First, who are the multinationals and who constitute their publics? Multinational corporations are enterprises that manage production or deliver services in more than one country. In terms of investment, a multinational corporation typically involves a foreign direct investment flow, in one or more countries. Some multinational corporations are very big, with budgets that exceed some nations’ Gross Domestic Products (GDPs). Multinational corporations can also have a powerful influence in local economies, and even the world economy, and play an important role in international relations and globalisation.

In Nigeria today, multinationals could be found in various sectors of the economy. Examples are GSK (GlaxoSmithKline), Procter and Gamble (P&G), Unilever, PZ, Virgin, Pfizer, Accenture, British Airways, Air France, KLM, Ericsson, PWC – Prime Water House Coopers.

In the oil and gas sector, we have Chevron, Shell Petroleum Development Company (SPDC), Exxon Mobil, Agip, Saipem, Schlumberger, Halliburton, Petrobras, TotalFinaElf, Worley Pearson (Deltaafrik in Nigeria), BG (British Gas), Addax, Sinopec and others. So, who are the publics of multinationals and how do the corporations manage them?

Businessdictionar.com defines ‘Publics’ as communities of people at large (whether or not organized as groups) that have direct or indirect association with an organization. For the purpose of this presentation, the identified publics of the multinationals include Government at all levels, Communities, Consumers, the Media and Civil Society groups, Employees, Nongovernmental organizations, International Organizations and other multinationals (competition).

Over the years, we have seen growing interactions among the multinationals and government of various countries where they operate. While the relationship is sometimes hindered by policy issues, the multinationals however can have a significant impact on the government policies.

Cases abound where multinationals have threatened to close operations in some countries when faced with unfavourable government regulations. Other times, the organizations apply corporate lobbying directed at a range of business concerns, from tariff structures to environmental regulations. Some multinationals lobby tariffs to restrict competition of foreign industries. For example, in an effort to reduce health care costs, some countries have tried to force pharmaceutical companies to license their patented drugs to local competitors for a very low fee, thereby artificially lowering the price. When faced with such threat, multinational pharmaceutical firms may simply withdraw from the market, which often leads to limited availability of advanced drugs. In some of these cases, governments have been forced to back down from their efforts.

In Nigeria, the oil/gas industry is one sensitive area with great socio-economic implications to the country. The International Oil Companies (IOCs) most times find themselves contending with policy issues in the industry. In partnering with the government for Nigeria’s socioeconomic development or for influencing policy making in the industry, the oil operators sometimes front common platforms such as the Oil Producers Trade Section (OPTS), Nigeria Gas Association (NGA) among others. OPTS for instance, recently supported the Amnesty programme of the Nigerian government with the sum of $30 million. NGA also is galvanizing industry support for the Nigerian Gas Master Plan.

Individually, the multinationals interact with government and their agencies to support socioeconomic programmes both at the Federal, State and Local Government levels. Partnering with the Nigerian government, Chevron, for instance, has demonstrated its industry leadership and commitment to boosting Nigeria’s major oil/gas capital projects, Nigerian Content, corporate responsibility/community development, etc.

Indeed, multinationals have to also manage communities’ expectations of jobs and contract opportunities for the people; provision of social amenities; agitation for clean environment; request for sundry donations etc. In managing these expectations, multinationals have occasionally extended their largesse to these communities in various forms. But do these gestures really provide the avenue for sustainable development in these communities? The answer unfortunately is No. The truth is that managing communities’ expectations requires painstaking efforts at establishing process of engagement.

That was why in the oil/ gas industry, for instance, Chevron pioneered the establishment of a new community engagement model known as the Global Memorandum of Understanding (GMoU) in 2005. Based on the principles of sustainability, partnership, and accountability, the community-driven and community-owned development process creates a platform for constructive relationships amongst the company and the relevant stakeholders such as government, NGOs and the communities in participatory sustainable community development.

Chevron also established the Participatory Partnerships for Community Development (PPCD) in 2009 to leverage the strengths of CNL, NGOs and other organizations to help increase the capabilities and level of activities of the Regional Development Committees (RDCs) that implement the GMoUs.

Also in 2011, Chevron signed a Memorandum of understanding (MoU) between the United States Agency for International Development (USAID) and the Niger Delta Partnership Initiative (NDPI) Foundation, established by Chevron to help address socio economic challenges in the Niger Delta region of Nigeria. Under the MoU, the NDPI Foundation and USAID will each contribute $25 million over four years to support a portfolio of programs designed to promote economic development, improve the capacity of government and civil society institutions, and help reduce conflicts in the region. These laudable efforts have created a lasting process of community development and harmonious relationship between the company and the communities.

The mass media, civil society and the customer (consumers) are also critical to the operations of the multinationals. The Agenda setting function of the media gives it the power to focus on issues that from agenda for public discussion. In the era of globalization, the mass media have helped to shrink the world into one “global village” with the consequence that an occurrence in Nigeria beamed through the mass media can depress shares in the New York or London stock markets. To effectively manage the media, the multinationals hire mass communication professionals with media experience to interfa ce with them; build capacity of media practitioners through trainings, facility tours, seminars, among others. They also try to carefully control and manage information dissemination and effectively deploy feedback mechanism to feel the pulse of the public through the media.

To manage civil society groups (NGOs, professional association etc), the multinationals adopt partnership, capacity building and effective feedback strategies. For multinationals that deal directly with end-users they try to understand their customers through profiling, psychographic and demographics studies and so on. Importantly, these multinationals also strive to culturally adapt to the cultures of the people, engage in promotions, sponsorship of social programmes and mutually-beneficial exchanges. Partnering with professional bodies and NGOs provides the required independent validation or “third party” endorsement of a company’s reputation, position and claim. Even when the NGOs seem anti-multinationals, the best approach is to continue to engage them to present the organization’s own side on issues.

The multinationals also have to contend with competition. Multinationals have been found tomanage competitors in several ways, which include: gathering intelligence necessary for superior performance; applying international codes of conduct and integrating all multinationals in the same business line into an umbrella body. Corporate lobbying is sometimes applied to influence policy decisions in various areas of interests to the multinationals. In the aviation, oil/gas, pharmaceutical, construction, and other industries also adopt diplomacy in their relationship with one another. In Nigeria oil/gas industry, the establishment of such umbrella bodies as the OPTSA and NGA has helped to provide platforms for issues identification and management. For us in the engineering profession, we have some lessons to learn from the experiences of the multinationals. Engineers have obligations to the public, their clients, employers and the profession.

Many engineering societies have established codes of practice and codes of ethics to guide members and inform the public at large. Each engineering discipline and professional society maintains a code of ethics, which the members pledge to uphold. Undoubtedly,  a functioning engineering community can help deliver economic development outcomes through direct involvement in the development of effective and sustainable infrastructure, which is important for providing the basic needs of the people and internal improvement of local skills and employment. As engineers, we must work effectively in collaboration with our colleagues and other development-focused professionals and community leaders to implement sustainable solutions to challenges and poverty.

However, we need to ensure that these solutions are well integrated into wider decision-making, planning and institutional development processes to improve living conditions for all. Sustainability and corporate responsibility are having an increasing influence on how organizations behave, operate and do business/. Over the years, engineers in collaboration with governments, multinational and professional institutions have promoted greater social responsibility within the society. As professionals, we should play a much greater role in supporting peace, social justice and environmental sustainability.

Being active in any social responsibility initiative would be an important contribution to the social responsibility agenda for any engineer, and it should be recognized as such in career and professional development schemes. Our challenges as engineers, now and in the future, are to provide infrastructure to rural and semi-rural communities in our nation.

Engineers, in conjunction with multinationals, have used innovative business ideas and management systems to build genuine cross sectional partnerships. This strategy establishes an interdependence that builds symbiotic relationships so that business and societal interests become mutually reinforcing.

In terms of communication, the media provide abundant opportunity for engineers to showcase their new technologies and innovations. Public communication is currently an opportunity area for Nigerian engineers. We hardly find an engineering story in the print or broadcast media daily. Engineering publications are not readily accessible. Our profile is not rightly represented.

Our roles, contribution, achievements and challenges are not well publicized for the public to appreciate us. Nigerian engineers need to be factored as important elements of the overall project development and management philosophy of national project execution. Some of the major infrastructure projects led by large multinational companies create opportunities for the development of a robust indigenous engineering capacity that motivates local engineers. More  policies that promote indigenous engineering practice are needed.

The major problem facing the growth of the engineering profession in Nigeria (and indeed in many sub-Saharan African countries) is the lack of involvement of engineers in policy matters.

Government policies seem to hardly take into consideration the key role that engineers and engineering can play in development. Projects are being executed without adequate engineering input. The result is that huge sums of money are spent but the desired results are not achieved.

As engineering is overlooked, development is stalled even when huge resources are committed.

Engineering can only take root if engineers are involved in policy matters and therefore have a say in government.

Distinguished ladies and gentlemen, I thank you once again for the opportunity to address this gathering and wish you a wonderful session.

Thank you for your kind attention

Engr. Femi Odumabo

June 30, 2011

References:

  1. www.ehow.com
  2. www.businessdirectory.com
  3. www.wikipedia.org
  4. UNESCO Report on “Engineering: Issues, Challenges and Opportunity for Development”

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