By Cynder Sinclair on March 8, 2014
Business leaders are discovering the power of corporate social responsibility. No longer is giving back to your community just a good idea or simply a nice thing to do. A clearly articulated CSR strategy can result in a strong bottom line and a more sustainable company. In 2009, the IBM Institute for Business Value surveyed 224 business leaders worldwide to measure their experience with CSR. Sixty percent believe that CSR has increased in importance over the past year. Only 6 percent say it is a lower priority.
Companies of all sizes are asking questions about the power of being socially responsible. What secret lies hidden beneath this idea of doing well while doing good? How can we measure the results of CSR? What does a good CSR program look like and how can we create one for our company? Answers to these questions help business leaders better understand the rationale for corporate social responsibility, and how this powerful business strategy can be used to achieve company goals.
Secrets of CSR
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 and increase its ability to attract and retain employees?
These days, businesses are engaging in CSR because it accomplishes all of these goals and more. Here’s how it works: Customers have said they prefer to do business with companies that give back to the community. 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 strong CSR is that it will help your business attract and retain top employees. Studies have also shown that 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? Research shows 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 publicly traded Goleta-based Deckers Outdoor Corp., recently explained to a group of South Coast 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 go up, costs will go down, and shareholders in turn will be rewarded with improved stock returns.
You might be thinking that this all makes sense in theory but wondering about how the results of CSR can be measured. How can you correlate additional CSR related costs to improved bottom line projections? CSR is an intangible asset; it is not physical in nature, and cannot be seen or physically measured.
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 the intangible CSR.
Creating a program
Many companies adopting CSR policies have adapted the “triple bottom line” approach to their annual reports, taking into account social, environmental, and financial returns.
The first step to creating your own CSR program is to increase awareness among your company’s stakeholders using a triple bottom line approach.
The second step to a successful CSR program is to integrate your company’s core values into the way you do business. These days, companies are realizing that 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.
In step No. 3, a team creates 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, when and how often you will give, and how the company will give. Your corporate giving statement will help your company respond to requests, increase awareness of your philanthropy, prevent well-intentioned but misguided giving and sustain commitment even in trying times.
For additional guidance, check out www.CSRwire.com, the self-proclaimed leading source of corporate responsibility and sustainability information. The site is a gold mine of information issued by leading U.S. businesses on all aspects of CSR, as well as general overviews that help frame the CSR phenomenon.
• Cynder Sinclair is the founder of Santa Barbara-based nonprofit consulting firm Nonprofit Kinect. Previously, she was the CEO of Santa Barbara Neighborhood Clinics for five years. Contact her at [email protected]