The Value of Corporate Social Responsibility
08.01.2012 / Posted in Articles, Image Management, Strategy
Companies face a trend to be more involved with the communities in which they work—to do good for the world, not just to profit from it. (The new “do good, don’t just do well” mantra.)
Need proof of the movement? The United States created a new type of corporation in 2012, the B Corporation, which designates a company that pursues business strategies that it believes benefit society over simply maximizing quarterly profits. Prominent retailer Patagonia is one such company—check out its B Corp profile.
Given the new public expectation for companies to do good, not just well, corporate social responsibility has become critical for
- positive perception and understanding with financial markets, regulatory authorities, communities, shareholders and institutional investors, suppliers/vendors, and business partners;
- corporate image and branding;
- employee retention and recruitment;
- business development; and
- crisis communications and reputation management and repair.
Toward this end, companies across the globe are developing plans to be good citizens—and to communicate their socially responsible efforts to internal and external audiences.
Think it doesn’t matter to your company because you’re a commodity business (energy, for example), sell to other businesses, or otherwise are less public-facing than other corporations? Wrong. Positive associations are a boon in times of corporate distress. A study in the peer-reviewed Graziadio Business Review found that
“firms in industries that were the target of protest—the allegedly environmentally damaging and labor abusing industries—suffered a decline in market capitalization of over 3 percent if the firms were not known for social responsibility. However, firms in these same industries suffered no statistically significant decline if they were also perceived by investors to be socially responsible firms.”
Building the Plan
So what’s in a corporate social responsibility plan? Every company requires slightly different elements, but the basic outline includes
- an overview of the plan and a call to action;
- a strategy/policy that formalizes and articulates the company’s commitment, providing an overall direction for the company’s CSR initiatives, including outlining specific priority areas;
- defined volunteering and philanthropic programs that implement the policy in all areas where the company has a physical presence; and
- measurement methods
Of course, the plan is the final compilation of a great deal of effort on the part of the planning team in
- assessing the company’s values and ethics,
- defining internal and external drivers,
- identifying key issues around CSR that affect the company,
- outlining key stakeholders,
- allocating budgets, and
- determining priority areas.
The success of corporate social responsibility plans can be measured in a number of ways:
- To measure improved community perceptions, metrics can compare the number of employee volunteer hours and the amount of donated funds against the number of community complaints received.
- To measure improved employee relations, metrics can compare the number of employee volunteer hours and the amount of donated funds against employee-perception survey results and turnover rates.
- To measure improved employee acquisition, metrics can compare the number of employee volunteer hours and the amount of donated funds against the number of resumes received per opening and anecdotal evidence gathered from recruiting and hiring managers (gathered via survey) about the responses given when people are asked why they want to work with the company.
- To measure negative/positive publicity, metrics can compare the tone of media perception of the company prior to and after plan implementation.
Of course, the best CSR in the world matters less if you don’t spread the word.
The Graziadio Business Review study mentioned above noted that the positive effects of CSR on crisis communications is dependent on stakeholders’ awareness of CSR activities:
“Firms that are reputed to place a value on being socially responsible and that communicate that value to the public may be better positioned to ride out the storms centering on socially responsible business practices than are firms that do not.”
Even more strongly, a study published in the International Journal of Management Reviews noted that
“stakeholders’ low awareness of and unfavorable attributions towards companies’ CSR activities remain critical impediments in companies’ attempts to maximize business benefits from their CSR activities, highlighting a need for companies to communicate CSR more effectively to stakeholders.”
Don’t have a corporate social responsibility plan? Have a CSR plan and are unsure how to best spread the word about your activities? FrogDog to the rescue. Contact us today for more information.