CASE STUDY :-

Jeffrey Swartz, the President and CEO of Timberland Company, was the third-generation leader of a formerly family-owned business that went public in 1987.67 In 1955, Swartz's grandfather, a Russian immigrant, bought the Abington Shoe Company, located in South Boston, Massachusetts, and brought his two sons into the business. The iconic Timberland boot was introduced in 1965 when the Swartz family developed a process for fusing rubber soles to leather uppers to form a rugged, waterproof boot that was also less expensive to produce. The success of the Timberland boot led the Swartz family to relocate in 1969 to Stratham, New Hampshire, and to change the name to Timberland Company in 1978. The growing company began to market a variety of casual and work footwear under the Timberland brand, and, later, introduced clothing and accessories for men, women, and children, as the company expanded sales to Europe, Asia, and Latin America. After graduation from Brown University and the Amos Tuck School of Business at Dartmouth, Jeffrey Swartz assumed a variety of positions at Timberland, becoming chief operating officer in 1991 at the age of 31 and president and CEO seven years later. Under the leadership of Jeffrey Swartz, Timberland Company developed an expanding program of community service in an effort to combine "commerce and justice." The centerpiece of this program was the trademarked Path of Service, launched in 1992, which allowed employees to devote 16 hours of company-paid time each year to community service. Path of Service was expanded to 32 hours in 1994, and to 40 hours in 1997. The purpose, as stated by Swartz, was "to engage the skills and talents of employees to create long-term solutions for critical community needs." Although participation was optional, employees were encouraged to use the hours for their own favored causes or to participate in company-sponsored events. A new Community Enterprise Department was created to support the Path of Service program and other community service initiatives. The origin of Timberland's commitment to community service was a chance encounter that Swartz made with the Boston-based nonprofit organization City Year. City Year was founded in 1988 to engage young people in a year of full-time service that gave them "the skills and opportunities to change the world."68 After Timberland responded twice to requests for donations of boots, a founder of City Year called on Swartz to thank him and invited him and other Timberland employees to spend four hours of community service with a group of City Year volunteers. Swartz accepted the invitation and was appalled by the social problems he saw, as well as inspired by the possibilities for change. He reported of his experience: And I found myself not a mile from our headquarters, face to face with the stories you read in the newspaper, face to face with a vision for America not unlike the one that drew my grandfather to leave Russia in steerage so many years ago. . . . Behind my desk again, safe no longer, moved by my own sense of purpose having served, albeit briefly, all that mattered was figuring out how service could become part of daily life at Timberland.69 Swartz gradually increased Timberland's support for City Year by making an initial pledge of $1 million annually for three years, later extended for another five years, and loaning a Timberland executive to assist in marketing for City Year. Swartz became chairman of City Year's national board. In turn, City Year organized team-building exercises for Timberland employees, aided in creating community service projects, and, in 2000, located an office in Timberland's headquarters. Timberland expanded its community service program with two full days of activities, one in the spring that coincided with Earth Day, and another in the fall called Serv-a-palooza. The company extended its collaboration with nonprofit organizations by establishing a link with Share Our Strength, an antipoverty group, and SkillsUSA, which provided vocational training for young people. If Timberland had remained a family-owned business, then Swartz could indulge his passion for service because he would be using his own resources. As a public company, however, he was responsible to shareholders. This responsibility was tested in the mid-1990s, when profits fell, and in 1995 the company suffered its first loss in net income. Although he was urged to cut the community service program, Swartz resisted. He believed that instead of being an expense that could be cut in bad times, the cost of community service was an investment of resources that contributed to the company's success. Community service, in his view, was a key part of the strategy at Timberland for fulfilling the company's mission and values, which in turn were integral to the company's main goals that included strong financial performance. The mission of Timberland was stated in company documents as "To equip people to make their difference in the world." Four core values were identified as guides for all company activity. These were humanity, humility, integrity, and excellence. And five "bold goals" were set forth: Become the authentic outdoor brand of choice by providing inventive and practical products to our consumers Be the business partner of choice by providing distinctive value to our customers Be a top employer of choice globally Be the reference for socially accountable business globally Deliver exceptional financial performance for shareholders Swartz believed that these measures of the company's successits mission, values, and goals required not only the community service program but also ambitious initiatives to protect the environment and secure human rights in its manufacturing facilities worldwide. Swartz expressed his belief in this connection of commerce and justice in the following way: We operate on the core theory, on the belief that doing well and doing good are not separate ideas; they are inseparable ideas. That, in fact, they are inextricably linked and that everything we do, every business decision we make, every strategy we promulgate, every speech we make, or every pair of boots or shoes that we ship, have to be the embodiment of commerce and justice, and that's a different model. This is a model that has served Timberland well as it has survived and prospered in the highly competitive footwear industry. The questions remain, however, whether this is a model for many companies or industries, and whether it will remain a viable model for Timberland if its competitive environment changes or the company faces another economic downturn.

1.Read Case 12.3 "Timberland and Community Service," and then answer the questions below.This case brings to us the serious differences between the classical view of CSR and the Stakeholder view.

a.Critique Timberland's CEO's approach to CSR in the way he managed his role as CEO.Say whether you think the CEO should have followed his policies, or pulled back on the service costs in order to firm up the company's finances, as an effort to protect his company from being purchased. How do you see CSR and Justice as being important to the CEO's decision? (12 MARKS )