The Challenge of Corporate Social Responsibility

CSR Challenges
I have been reading up on Corporate Social Responsibility and found the most practical commentary in the following article. It is worth the time to read the entire thing but I thought I would offer the following summary.

Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility. By: Porter, Michael E., Kramer, Mark R., Harvard Business Review, 00178012, Dec2006, Vol. 84, Issue 12

The challenges of balancing a company’s obligation to its owners, customers, employees, the environment and the community in which it operates makes this question an understandably difficult. In order to keep this initiative from becoming a complete waist of time or worse a public relations disaster inside and outside the company it is important to start with some basic considerations:
Why are you doing it?
This is the most important question to ask first, because unless you have a compelling reason, it will be impossible to get anyone inside the company to pay attention to it. Everyone has more than enough to do without being saddled with another initiative that lacks the clarity and company benefit of every other activity the company is working on.

What makes the most sense to do?
There are so many activities that can be considered ‘Corporate Responsibility Initiatives’ that you could spend years determining what to do. Begin by focusing on what the biggest challenges in your business are from a cost perspective. Process improvements in this area are likely to make your company more efficient, generate less waist and therefore less cost. This contributes to one of the largest contributions a business makes to society: JOBS! These process improvements will end up reducing waist in almost every area from energy consumption, solid waist generation, to labor costs. An efficient business is stable and contributes work opportunities, tax revenue for the community in which it operates and provides products or services that meet genuine needs of individuals, businesses and communities.
It does not make sense to work on something that is not related to your business. Studies have found that companies that attempt this are not always successful making cost improvements and do not even get a public relations benefit. For instance, carbon emissions are something that all companies might be concerned with, but some are more able to affect it than others. A global consulting company that has employees flying weekly to and from client work sites has a much bigger opportunity to impact this environmental concern than a web based business. Here it is critical for the employees to set the priority. They are the most able to determine where the biggest opportunities are and how they can best be achieved. Stakeholders outside the company are important to listen to as well but they will never be able to understand the company’s abilities and opportunities as well as those engaged in running the company on a daily basis. Nevertheless, it will be important to keep employees focused on a set of achievable and measurable goals in this regard.

Can you measure it?
If you want this effort to generate any results you will need to help keep the effort focused. It is here that you can employ all of the things you learned in the TQM craze of the 80s. Not only must there be a way to measure progress, there must also be some time boundaries. Measuring the effort will need to be objective and have realistic timeframes if you hope to get any stakeholder to see the value. So every effort should be SMART: Specific, Measurable, Attainable, Relevant, and Time bound. If the pendulum swings too far and you have a host of committees working on social initiative at the expense of the company’s core activities then clearly there is a problem. Such a loss of focus will end up putting the entire company at risk. The social impact of a failed business to the employees and the larger community are far greater than the social initiatives that it might undertake.

In the Log Term
Initiating such an effort should not be a fad as it will end up making the company look insincere, and there are plenty of cases where that has backfired. Studies have shown that the CSR efforts require a long term commitment to be effective. As employees and customers become more attuned to these issues the company will need to be able to balance this concern with the responsibility to make a profit for its owners. It is possible to do all of this if there is a reasoned thoughtful approach that focuses on a shared value. If companies choose initiatives they know a great deal about they stand to make a much bigger and long term beneficial impact than a charity, or government could do.