A couple of years ago, I quoted in this space Jonathan Blum, SVP of Yum Brands, the parent company of Taco Bell and Kentucky Fried Chicken."We are not now, nor ever, going to get involved in a labor dispute between third parties," Blum insisted, responding to calls for the company to intervene in a disagreement between tomato growers and their workers. Protesters had picketed Yum's annual meeting, calling on the company to use its influence on suppliers in Immokalee, FL, where workers endure harsh conditions and are paid as little as 40 cents for each 32-pound bucket of tomatoes. The protesters wanted a penny more for every pound they picked. Blum insisted the dispute wasn't Yum's business. I suggested that Yum's position was doubly dumb. Dumb because Yum couldn't choose not to get involved - it was already involved. And dumb because Blum might end up eating his "not now, nor ever" pledge if the boycott spread and sales plummeted. (Several colleges had denied Taco Bell access because of the dispute.) So I was intrigued by a news release this week in which Yum announced "a proposed solution to end the three-year boycott lodged against its Taco Bell division by the Coalition of Immokalee Workers (CIW)." At the company's annual meeting, Yum chairman and CEO David Novak responded to a question from CIW leader Lucas Benitez, first by attempting to set the record straight - claiming that Taco Bell buys fewer Immokalee tomatoes than its competitors - and second by promising to support an industry-wide solution, "such as a penny-a-pound surcharge," if the protests end. Taco Bell would be the first company to sign up for the surcharge, Novak said, if it was applied universally to all purchasers. And the company "would be willing to help the CIW lobby for changes to Florida labor laws and help seek ways to improve the working conditions on the farms." There are a couple of lessons here. The first is that companies can't ignore stakeholder groups because they question their legitimacy or their influence. Legitimacy is conferred by the marketplace, not the company. Groups become legitimate the moment someone listens to them and they impact a company's sales. And influence is sometimes inversely related to economic power. The CIW has influence - in the form of moral authority - precisely because it has no economic power. The second lesson is that companies need to face controversy head on. Yum had a chance three years ago to be a leader, to turn a problem into an opportunity. Today, it looks like it has been dragged kicking and screaming to a common-sense solution.
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