Companies everywhere are scrambling to find out more about this practice of Corporate Social Responsibility and how it can benefit them.
Business leaders today are discovering the power of Corporate Social Responsibility (CSR). No longer is giving back to your community just a good idea or simply a nice thing to do. More and more business people are finding out that a clearly articulated CSR strategy results in a strong bottom line and a more sustainable company. As a result, companies everywhere are scrambling to find out more about this practice of Corporate Social Responsibility and how it can benefit them. What secret lies hidden beneath this idea of doing well while doing good? How can you measure the results of CSR? What does a good CSR program look like and how can you create one for your company? Answers to these questions will help you better understand the rationale for CSR and how you can use this powerful business strategy to achieve your company’s goals.
Secrets of Corporate Social Responsibility
Would your company like to improve financial performance, reduce operating costs, enhance brand image and reputation, increase sales and customer loyalty, increase productivity and quality, increase ability to attract and retain employees, and reduce regulatory oversight? Today businesses are engaging in CSR because it accomplishes all these goals and more. In a nutshell, here’s how it works: customers have proven that they prefer to do business with companies that care enough about the community to give back. If your company embraces a strong CSR policy and your marketing department tells people about it, your customer loyalty will increase resulting in increased sales.
Another result of being known in the community as a business that gives back is you will attract top employees. And you will retain them. Just as customers prefer to do business with companies that give back, so employees prefer to work for companies where they can be part of improving their community. Most businesses know that strong employee retention results in reduced operating costs. But did you know that motivated employees are more productive? Studies show there is a direct positive link between job satisfaction and firm value.
CSR involves firms considering the interests of all stakeholders, not just shareholders. Angel Martinez, President and CEO of Deckers Outdoor Corporation, recently explained to a group of Santa Barbara business people that he prioritizes concerns of customers and employees above those of shareholders. His rationale is that if customers and employees are happy, sales will be up, costs will be down, and shareholders will be rewarded with improved stock returns.
Stakeholders can also include the environment and the social capital within the community at large. Studies also show that strong CSR practices will reduce the likelihood of negative regulatory action. Once shareholders better understand the implications of CSR, they can embrace this practice as an important business strategy and a mutual benefit.
How to measure the results of Corporate Social Responsibility
You might be thinking that this all makes sense in theory but wondering about how the results of CSR can be measured. Even if you would prefer that your company be a good corporate citizen by giving back, you have to be able to justify additional costs with improved bottom line projections. It’s true that CSR is an intangible asset. As such, it is not physical in nature, and cannot be seen or physically measured. Other examples of intangible assets include intellectual property, brand, customer loyalty, and human capital.
Unfortunately, the stock market uses traditional valuation methodologies devised for the 20th-century firm and based on physical assets, which cannot accommodate intangibles easily. As a result, the market takes a very long time to incorporate intangibles into the stock price. However, you have only to look at the incredible success of Fortune’s “Best Companies to Work For” list to discover the high value placed on job satisfaction and the resulting decrease in cost and increase in profit. Results from this list are a potential solution to the lack of information that surrounds CSR and other intangibles. So be careful that you don’t use outdated measurement sources when evaluating the benefits of adopting CSR.
How to create your own Corporate Social Responsibility program
Many companies adopting CSR policies have adapted the “triple bottom line” approach to their annual reports. The new measure includes updates on social, environmental, and financial performance. The first step to creating your own CSR program is to increase awarenessamong your company’s stakeholders. Including a triple bottom line approach in your annual report is a good way to accomplish this. The CEO and top leadership must lead by example and inspire everyone with the new vision.
The second step to CSR is to spend time integrating your company’s core values into the way you do business. Globalization and the information age have reshaped old expectations limited to simply generating profit. Today, companies realize that doing what is in the best long-term interest of the customer is ultimately doing what is best for the company. So doing good for the customer is just good business. Identifying and incorporating your company’s core values requires a team approach. Invite representatives from all areas of the business to serve on the team.
Step three is for the team to create a corporate giving statement. The statement can include the company’s purpose for giving, which types of causes to give to, what you will be giving (money, volunteer time, in-kind resources), when and how often you will give, and how the company will give (using employee giving programs, corporate matches, volunteer time). Your corporate giving statement will help your company respond to requests, increase awareness of your philanthropy with employees and the community, prevent well-intentioned but misguided giving, and sustain your company’s commitment even in times of corporate change.
Begin today to put your company’s CSR program together and discover the secrets that lie behind this invaluable practice. For additional guidance, check out the corporate social responsibility newswire www.CSRwire.com –the self-proclaimed leading source of corporate responsibility and sustainability, press releases, reports, and news. The site is a goldmine of information issued by leading U.S. businesses on all aspects of CSR, as well as general overviews that help frame the CSR phenomenon.