Several of this week's readings dealt with the concept of Corporate Social Responsibility, and how it is becoming an increasingly popular practice in Corporate America.
Since the fall of Enron and various other business scandals, stakeholders want more from the companies they invest their money in; not only from a product standpoint, but also from an ethical one. They want to know their money is going into a company that cares about the environment it inhabits, and that the organization genuinely wants to make an impact in the community that goes beyond its bottom line.
Because of these relatively new expectations placed on the organizations that comprise the business world, we as communications professionals can develop these expectations into a competitive advantage for our organization. Such is the main point made by Porter and Kramer (2006) in their article, Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility.
The authors contend that CSR can be much more then just writing a check to a local charity or some other small charitable endeavor (p. 1). Rather, if we approach CSR from a strategic perspective, we can create significant opportunities and competitive advantages - both short and long-term - for our organization.
So how do we go about thinking strategically in terms of our philanthropic outreach? For starters, we can identify points of intersection between our organization and the society it inhabits (p. 1). How does your organization affect society? What positive impact does it have on its environment? Does it provide a unique product or service that makes the world a truly better place? Do the working conditions or incentive programs you offer make it a great place to work? All these aspects can help determine what type of outreach you will do, and how you go about relaying this message to the outside world. In each one of these, there is a possible competitive advantage. Portraying your company as the company that cares - even if its about its own employees - can create an advantage over your competition.
Second, you must select specific social issues you want to address (p. 1). You should attempt to find issues that will help both society and your bottom line at the same time. For instance, by helping fund and administer relief efforts in Haiti, you are not only helping the country and creating a better life for its people, but you are also helping your corporate brand. Lastly, you should attempt to find a small set of endeavors you wish to pursue, and make sure they have the ability to have a significant impact on both society and your organization (p.1). By minimizing your endeavors and making sure they are of major significance to all parties involved, you will have the potential to create an even bigger impact for both stakeholders and the environment, one that will create significant advantages going forward.
Corporate social responsibility is something that is becoming an increasingly important part of how an organization conducts its business, and it is an area that can no longer be appeased by simply writing a check. Just like any other aspect of your organization, a strategic approach can yield tremendous results in terms of competitive advantage. By taking the time to think about what endeavors you'd like your organization to pursue, minimizing the number and maximizing the reach, and develop an idea of how your organization impacts society, you can create significant competitive advantages that could mean the different between whether or not your company reaches its bottom line.
References
Porter, M. and Kramer, M. (2006). Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility. Harvard Business Review, December, 2006 p. 1-15.
Ah, I see Porter and Kramer were very popular people this week. Maybe next semester I should assign this reading.
ReplyDeleteYou say that stockholders want to invest in an ethical company. Do you think they are investing just because of the ethics, or what the ethics add to the company (value)? Wouldn't an organization that writes big checks to charities be ethical?
Looking back at the Economist reading, what specific organizational example do you think best fits this CSR strategy? Can you think of an organization that has been less effective with its CSR?
Courtney,
DeleteI feel that ethics add to the company value, and are not the sole reason why stockholders want to invest. I think a company's ethical standards are merely a bonus if positive, but can be a severe detriment if negative. And I think a company that writes big checks can be considered ethical, but they also might be writing checks to cover up areas where they may not have practiced the best ethics. An example of this might be the BP oil spills of the last year or so. The checks started getting written by the company only after the spills occurred. Does that make them ethical? Why did they never donate money to the area before that? It was merely to save face in the public eye, which I don't feel is an ethical reason to donate money.
I think this is an example of a company who is less effective with its CSR. CSR should be done strategically, not reactively. A company should not sit around and wait for a situation to arise before it breaks out the checkbook. It should be proactive, and find ways to get out in front of the curve and become a positive contributing member of their environment.
Thanks for the response!
Hi Andrew,
ReplyDeleteI was tempted to use Porter and Kramer, so I am glad I chose another article! CSR creates a competitive advantage if done well (Franklin, 2008). It is interesting though since I believe that sometimes writing a check is the best way to effectively support an organization - if the organization does not have the capacity to accept or coordinate anything else.
Let me share a work related experience that will speak to this point. During my time at the Red Cross, we responded to some major disasters and there were times when companies wanted to help, but without a previous negotiated partnership that included training, it was hard to put these volunteers to work right away. It was during those times that checks were more helpful than "extra hands". We also did not accept "clothing donations" and it was hard to turn people away, so we started referring them to other organizations that accepted those type of donations.
Andrew - I agree, CSR can be seen of as an opportunity as well as a responsibility (or obligation). The Franklin (2008) article on The Economist explains this well when he encourages companies to find the "sweet spot" where the CSR initiatives are equally good for profit and soail welfare. In my opinion, CSR can put the a company's name into the media which gives them more exposure to potential clients/customers. Customers are just like employees in that they want to be associated with a company that they can be proud of.
DeleteCasey,
DeleteI totally agree. From a Public Relations standpoint, CSR is a dream come true. If you do it strategically and with thought, it can create tremendous PR for your organization, and most of the time all you need to do is donate money. I like your point about the sense of pride as well. That's definitely true. When you have pride in what you're doing, you put forth more effort into it, and want to be associated with it. This will lead to loyal customers, customers that will remain faithful to you through the ups and downs your company will undoubtedly face.
Appreciate the response!
Adriana,
DeleteThis was a great example of how organizations can simply donate money and be able to maintain CSR, and one I had definitely not thought of. It gave me a lot of perspective on this issue, so I sincerely thank you for responding. I have my opinions on this issue, but I can now at least see the other point of view quite clearly.
Really appreciate the response!
Andrew, thanks for your post. Great insight. I especially liked your use of "strategic perspective." From a strategic perspective, an organization can use CSR to its advantage. Not only is an organization giving back, but it is also receiving things in return. By giving, an organization can make itself look better to employees, future employees, investors, consumers, and etc. One of the best ways to give back to one's community would be education. I say this because if an organization funds educational projects like construction or after-school programs, then they would actually be cultivating a future employee and maximizing their reach. Great post!
ReplyDelete