Harmonizing Social Investment

Companies working in foreign countries face a host of contractual requirements and legal obligations. They pay taxes and other fees, along with signing bonuses and contributions to various funds. They may face local content and procurement requirements. In almost all cases, they are also expected by their host government and local communities to make a meaningful social investment at the local level.

In most cases, coordination between managers in human resources, supply chain, operations and community relations represents a significant challenge. Local people may be hired for short or long-term employment, but expectations for jobs will far exceed the supply. Community relations personnel often bear the brunt of the frustrations of local communities who demand greater economic benefits from the company.

Companies that successfully integrate their training, hiring, procurement and social investment strategies are likely to enjoy better relationships with local communities and with government at all levels. Here are a few principles to keep in mind:

  • Harmonize all aspects of company spending. Often, this means strengthening national and local procurement policies, so that they reinforce – rather than working at cross purposes with – social investment, local business development or job training programs.
  • Proactively encourage small and medium-size enterprises through training, loans and certification procedures.
  • Ensure that project infrastructure is integrated into government development plans. In some cases, infrastructure can be adapted to serve a dual purpose. In every case, however, the company should be careful not to assume the role or responsibility of government, which will undermine the long-term sustainability of any physical project and will also undermine the accountability of government to its citizens.
  • Design job creation and skills development programs to provide local workers with transportable skills and experience – especially when permanent jobs are limited.
  • Identify social investments that will have the greatest impact on the greatest number of people and meet the greatest needs. In many cases, this means passing over “prestige projects” for more mundane activities such as adult literacy or health education.