In the age we live, businesses have become a very different ball game altogether. Gone are the times when they used to be about the sole objective of earning profit. There has been a shift of paradigm to customer as king and coupled with an important ingredient of giving back to society. This is known as Corporate Social Responsibility in the language of business.
Corporate Social Responsibility is also referred to as corporate citizenship or responsible business among other terms. Basically to do good to the society in other words, this is not the core interest of the firm and is not mandatory by law. The aim would be to secure long term growth of the business and stakeholder inclusion whether it be consumers, employees, investors etc. The term came into existence in 1960’s.
Corporate Social Responsibility can be in the form of philanthropy to include monetary or other aid given to not for profit organizations or assist a cause or community for its betterment. Causes can include education, health, housing, providing electricity to non- available areas, controlling pollution, better environment etc.
Just like the other functions of business are there Corporate Social Responsibility can be a part of HR/ PR or maybe a separate unit altogether. It has defined objectives, budgets, and has to be accounted for commonly referred to as “social accounting” and has to be accountable to stakeholders of the perceived value or benefit that is obtained by the said community or society as a whole after the exercise.
The basic outcome of Corporate Social Responsibility is to have goodwill in society and to be perceived in the eyes of all as one who contributes to society. Also, lead by example and inspire others to up their ante and step up for a noble cause leading to the overall development and growth of the targeted community as well as the nation as a whole.
Researcher Devin Thorpe in 2013 found out that 51 out of 59 organizations that he interviewed on the benefits of Corporate Social Responsibility believed that they had happier employees. Under the same research, Thorpe also realized that 45 out of 59 companies that he interviewed believed that as a result of CSR, they have better employees; this comes as a result of either being capable of attracting better talent or as a result of CSR programs being able to develop better employees. Managers believe that organizations are only good when they have high performing employees who are focused on achieving the missions and visions of their respective organizations. Because of shared values, Corporate Social Responsibility policies assist planners to forge standard operating procedures that reflect the integrity and better performance (Simply Corporate Social Responsibility 2008).
It is no doubt that organizations that practice Corporate Social Responsibility have a better reputation around the globe and are profitable. RBC Wealth Management, a US company that has realized $227 billion in management assets (Hopkins 2012), has a philanthropic initiative dubbed from the RBC Blue-water project, in which the company offers $50 million in the non-profit initiative (Hopkins 2012). For the sixth year in a row, clients and employees of RBC participates in Blue-water day to protect the fresh watersheds and encourage access to clean drinking water (Hopkins 2012).
The activity is carried out for benefits to the business which can be among the follows:
Triple Bottom Line
The “People, Planet and Profit” concept. It was introduced by Elkington in 1999.
People relates to employees, community and location.
Planet relates to environment.
Profit is value add created by business.
Employer of Choice
Employees existing in an organization have a feel good factor if their firm gives back to the society. Even new joiners, fresher or students consider or give weight age to the fact that if the business gives back to the society then it would keep its employees well.
Reputation
As explained earlier the image/ reputation/ goodwill factor automatically comes into play with Corporate Social Responsibility. The same is also communicated to stakeholders as a part of the company annual report and financial statements. There is a complete plan versus which achievement is displayed.
Differentiation
The Corporate Social Responsibility would help the brand be differentiated among other businesses for their good work and would further ensure a positive image. Competitive advantage in comparison to companies not carrying out Corporate Social Responsibility would be another factor.
Perception of Conformity
A business carrying out Corporate Social Responsibility would be likely to avoid excess or unwanted scrutiny, audits, fines and penalties or taxation as when on its own it is looking after well being of society it would be perceived to be require less/ no monitoring.
Customer Loyalty
A happy customer itself accounts for repeated business. It would also lead to word of mouth marketing for the business as a whole as a content and pleased customer would tell others in turn making the chain grow.
Market Presence
Corporate Social Responsibility can open avenues for better market presence. As collaborators, suppliers, intermediaries would like themselves to be associated with business partners that are positions well in goodwill terms and give avenues to the firm for enlarging its region beyond its location and overseas as well.
The Flip Side – Criticism
Although, we have talked about the advantages of Corporate Social Responsibility activity above there are always two sides of the coin. Every act has its own pros and cons. It can be viewed differently by advocates for and against the concept. This is as below:
Objective
It has been always said that the objective is to create value and give back to the society. But it has been argued that it is carried out under the influence of government and is not being done voluntarily as ideally it should be. This further leads to attainment of own desired outcomes and plans, allocation of resources not being proper and not reaching the outcomes as promised.
It would also lead to word of mouth marketing for the business as a whole as a content and pleased customer would tell others in turn making the chain grow.
Personal Motives
Companies, if it is to be believed want to take cover and distract or avoid any kind of scrutiny by merely spending for a cause and not actually meaning well for society. By some it is consider o be a façade of sham to divert attention.
Cover Up
Corporate Social Responsibility supporters claim that it would ensure workers and community are not exploited. However, in certain cases it has been seen quite otherwise. To cover up for any activities that are harmful and not in line with normal business practices. E.g. Walmart has been criticized and accused of discrimination, human right violations and ill treatment of the environment among others.
Nature of Industry
Certain industries like the ones serving tobacco and alcohol might engage in CSR and build a good reputation and try to divert attention of the harmful impact that their products and services carry as a whole to society and community.
Examples of Good Corporate Social Responsibility
Since we have already determined that CSR is business way of god show and care to the society let us take the opportunity to discuss a few examples of businesses that have been acclaimed and been applauded for doing it right. The list seems to be endless. They are as follows:
SurveyMonkey
Known to be the best and easy to use software to engage for purposes of survey. SurveyMonkey donates 50 cents per survey completion to the taker’s charity of choice. In 2013, the company donated more than $1 million to organizations such as the Humane Society, Boys & Girls Club of America, and Teach for America.
Just “Google” it: The world’s best known search engine that needs no introduction. Google Green is a corporate effort to use resources efficiently and support renewable power. But recycling and turning off the lights does more for Google than lower costs. Investments in these efforts have real-world effects on the bottom line. Google has seen an overall drop in power requirements for their data centers by an average of 50 percent. These savings are then redirected to other areas of the business or to investors.
Xerox
Like the words Xerox and Copy have become synonyms for each other. Their Community Involvement Program encourages it by directly involving employees. Since 1974, more than half a million Xerox employees have participated in the program. In 2013 alone, Xerox earmarked more than $1.3 million to facilitate 13,000 employees to participate in community-focused causes.
Target
Since 1946, Target has been committing more and more effort and assets toward local and environmental support for the communities in which they have stores. Over the past several years, the company’s efforts—from growing sustainable practices to educational grants—have amounted to 5 percent of its profit going to local communities. That’s $4 million each week! In the area of education alone, Target has donated more than $875 million since 2010.
Starbucks
Starbucks ranked as Fortune Magazine’s fifth most socially responsible company in 2012. There are a number of good reasons for the high ranking. The company looks for better ways to develop sustainable production of its coffee. It has set in place some guidelines it calls C.A.F.E Practices, ensuring environmental leadership, economic accountability, and product quality. Starbucks also supports Ethos Water, which provides clean water to more than a billion people.
Disney
The Walt Disney Company largely focuses on a few areas of social responsibility, namely community, the environment, and volunteerism. Disney has been a major provider of aid after natural disasters, such as the 2010 earthquake in Haiti. The company also takes an interest in protecting the environment, giving proceeds from nature films to plant trees in the rain forest and protect thousands of acres of coral reef.
Microsoft
Microsoft is another major company that takes great effort in giving back. The company was even named the best at Corporate Social Responsibility by the Reputation Institute. One way Microsoft is helping out is through its annual Employee Giving Campaign, where employees attend fundraising events for nonprofit organizations. The campaign has been held every year since 1983 and has raised more than $1 billion in contributions to more than 31,000 organizations.
TOMS Shoes
The entire company was founded on the idea of giving back. For every pair of shoes sold, another pair is donated to a child in need. More than 10 million pairs of shoes have been donated, and that charitable effort has now extended to vision care for kids.
Haggen-Dazs
Honeybees are disappearing at an alarming rate — and that’s bad news for the global food chain. Haagen-Dazs decided to create a microsite to raise awareness about the issue. The company is donating a portion of proceeds from its Haagen-Dazs honeybee brand to research on the topic, and it launched a modest Twitcause campaign through the #HelpHoneyBees hashtag.
One Friday each month LinkedIn’s employees participate “InDay.” InDay’s purpose is to give back to the community through employee volunteerism and resources. Each InDay has a different theme allowing diverse departments to come together for a common cause. InDay activities range from guest speakers discussing global justice, to initiating global learning programs and volunteering in local communities.
General Electric
Employees volunteer over 1 million hours per year! Donations from the GE foundation have supported senior centers, children with autism, literacy programs, and neglected urban spaces among many other programs. On Global Community Days, GE coordinates company-wide to address urgent projects around the world. GE knows that a helping hand starts in your backyard extends across the world.
Cisco
Initiatives cover every aspect of daily life. Global projects provide education, healthcare, economic empowerment, and disaster relief to areas in need. Cisco employee’s log more than 160,000 volunteer hours around the world in a year. Teams of Cisco employees called Civic Councils get involved in their local communities by organizing events and donation projects. Cisco asks their employees to, “be a part of the equation. You + Networks= Impact Multiplied.”
Corporate social responsibility is important and useful not only for the society but for the business as well. It should be carried out with good motives and in the spirit of the purpose to be effective and efficient. All in all it creates a symbiotic relationship between business, society and various stakeholders involved.
