What value(s) should really drive corporate responsibility?Tuesday, January 10, 2012 22:19
In the recent entry What really drives value in corporate responsibility? , CB Bhattacharya, Daniel Korschun, and Sankar Sen call into the question the value of CSR programs to the firm, and make three suggestions of how firms can get back on track.
It was an article that for me started off quite well, and does a good job to frame a basic problem of CSR programs:
Few companies are clear about how investing in social initiatives will change stakeholder behavior or the harm a bad strategy can cause.
[...] We see companies reengineering supply chains to make them “greener,” supporting social causes through volunteer programs for employees, or lobbying for human rights in far-flung corners of the globe.
As this tide swells, many executives are left with the nagging sense that such investments rest on a shaky understanding of how corporate responsibility creates value, both for their companies and for society. Some investments, of course, produce immediate and quantifiable gains, such as those from recycling or from manufacturing processes that save energy. But often, social investments are expected to yield longer-term benefits as engaged consumers step up their purchases, a broader investor base develops, or new talent flocks to a company’s recruiters.
All true (from 30,000ft), and to which they suggest firms do the following:
Don’t hide market motives. Stakeholders are remarkably open to the business case for corporate responsibility, as long as initiatives are appropriate given what stakeholders know about the business, and as long as companies genuinely pursue and achieve the accompanying social value. Companies should understand that they can pursue profitable core business and corporate-responsibility objectives in tandem, without trade-offs.
Serve stakeholders’ true needs. Consumers are drawn to products that satisfy their needs. Likewise, stakeholders are drawn to companies whose corporate-responsibility activities produce solid benefits, which can be tangible (such as improved health in local communities) or psychological (for instance, volunteer programs that help employees better integrate their work and home lives). Before investing in corporate responsibility, however, managers need to set clear objectives that companies can meet and then, ideally, create programs together with key stakeholder groups.
Test your progress. Corporate responsibility acts as a conduit through which companies can demonstrate that they care about their stakeholders. A company should assess its initiatives regularly to ensure that they foster the desired unity between its own goals and those of stakeholders. Calibrating strategy frequently improves the odds that corporate responsibility will create value for all parties.
In my mind, I am a bit taken back by the lacking depth of (1) definition (of CSR) (2) understanding of the problems (that firms face in implementing) and (3) what should be done about it.
As I said, I agree with the frame that they have developed, particularly as speak to firms on a weekly basis who are struggling to find traction, but I would say that the biggest hurdles are related to their specific definitions/ understanding of CSR, the internal capacity that the firm allocates to CSR, the reasons why a firm engages into a program, the duration by which the program is developed for, and the willingness to invest in the program at a level dictated by program goals…. which is really a problem of understanding the value of “CSR”
For me, this is where the real failures exist, and all too often firms find a program co-opted (willingly) by the PR department and after hammering the budget down as far as it can go (sometimes to a point the external PR agency fee is greater than the program cost), the internal stakeholder s lose interest once they have been promoted or the media hits have been counted.
Why does this happen?
Simple, CSR has become synonymous with “donation”, and “donation” cannot be “measured”…it’s “helping the world” and “being better” and not about achieving a goal of any sort (unless media hits is a noble enough goal) and in this context it is no wonder why executives are scratching their heads.
It’s no wonder it’s too intangible to invest in
They are left to find ways to “engage”, but every year it has to be bigger, better, and different than anyone else is doing. Without any foundation that would allow for a PROGRAM or SYSTEM to be built… it is just event based marketing (internal and external alike)
Without realizing what they should be doing is moving beyond the donation, and the message of being a “good company”, to develop programs that are really engaging their employees/ executives equally over time and in a way that compliments the corporate culture. For some firms this will be product based (fair trade), or it will be something internal (corporate wellness programs), or it will be operations (facility energy savings), or it will be taking the entire team on a day of building housing for the needy.
For the best firms, the firms that are truly invested in developing a CSR program, it will be all of the above .. and more.
- CSR doesn’t need to be sexy
- CSR Doesn’t need to be innovative
- CSR doesn’t need to win awards
- CSR needs to align to core values of the firm
- CSR needs to designed with a long term
- CSS needs to be communicated effectively
- CSR needs to ultimately have a measurable impact