“Creating a strong business and building a better world are not conflicting – they are both essential ingredients for long-term success”
——Bill Ford, Executive Chairman of Ford Motor Company
Master chefs, elite athletes and top CEOs have one thing in common; they have a secret recipe for success. But what is the magic formula for harnessing one of the most trending business concepts that also presents an immense potential power – Corporate Social Responsibility (CSR)? Is CSR a myth or reality? Is the recipe for success an open secret or shrouded in obscurity?
Sustainable Development, presently, dominates in the discourse of stakeholders including economists, development practitioners, politicians and various governments across the globe. At the same time, the CSR agenda, as an organizational phenomenon, has developed into an essential concept for sustainable development in the private sector (Lu et al., 2018). It is apparent, especially in times of globalization, that the business-society relationship is interdependent. Hence, business must go beyond simple compliance contributions to social, environmental, and ethical concerns with sound business practices. We observe that today, companies worldwide are increasingly committing themselves to CSR, striving to achieve legitimacy for their business activities.
A secret recipe for success?
Fleming and Jones (2013) assert that CSR presents a medium for stakeholders to express their values. Stakeholders perceive CSR as a valuable and even desirable concept. So it seems there is no way to escape it if the ethical component does not appear like a solid reason to do it. They better do it right. The problem is a lack of guidance and insights into successful CSR application. Contemporary literature and the business case for CSR provide limited guidance for corporate leaders on effective and efficient governance in this field. Thus, the question has changed from “whether” to “how” (Boatright, 2012). For example, which exact activities to undertake and how to decide on their choice to make CSR management successful (Boatright, 2012)?
The need to identify factors that prove to be decisive for companies’ success also lies in the voluntary navigation of social and environmental responsibilities as well as in the lack of a clear universal pathway to successful implementation and management of CSR. While there is still a relatively insufficient amount of practical information on how to achieve success in CSR management, businesses already extensively adopt models for responsible behaviour.
It is a known secret that corporate resources are inherently limited. It necessitates extraction from the entire range of influencing factors, those aspects that account for the ultimate success. This therefore deserve companies’ immediate attention and ultimately result in the rationalization of corporate decision-making and optimization of CSR strategies. Insights derived from stakeholder analysis outline several principles and success factors for CSR management:
- Critical prerequisites to success in CSR management is to create the perception of the CSR notion as a success model and to hail it as a “win-win-win” framework for the company that initiates it, for shareholders, and the rest of the main stakeholders involved (i.e., customers, suppliers, communities). After all, CSR is not a separate project or function but rather an underpinning mentality of broader thinking and the envisioning of long-lasting effects of business activities on a larger scale.
- Treat CSR as an investment and a business opportunity, rather than a cost (similar to quality management).
- Align the CSR programme with the company’s values and mission and make it part of the organizational culture; place it at the centre of corporate policy as a strategic filter for decision making.
- Systematically integrate a vision of the CSR programme in other functional strategies and throughout operational routine; It is a sustainable way to approach CSR
- Systematic linkage of CSR programmes with products/services and core activities as a crucial success component. According to Meier (2020), a paper manufacturer, for example, should commit to improving actions related to resources (wood, water) that are intensively involved in the production alongside the entire supply and processes of transforming these materials. This should be done in collaboration with suppliers and the local community. The company should refrain from charitable donations and other social activities (Meier, 2020). It is simply missing the connection to the core activities of the organization. Similarly, an intense polluter should concentrate on cutting its environmental footprint by enhancing eco-efficiency, resulting in cost reduction instead of donations to a local football club (Fifka & Reiser, 2015).
- Seize existing unstructured philanthropy/charity, focus on the core operation and areas relevant to the central business activities and company’s needs; Utilize key competencies for comprehensive strategic philanthropy
- Critical appear to be both the necessary support and involvement of the main stakeholders (i.e., CEO, employees, customers) throughout the entire CSR management process and proper communication of the CSR campaign’s results; The authenticity of intentions plays an essential role and should serve as a foundation for the company’s commitment to CSR
- Give the authority to a conscious business leader; seek top management/employee buy-in and proactive participation in the CSR management process
- Adopt a shared value mindset and favor decisions that meet these criteria whenever possible; View it through the lens of an opportunity to re-define value chain’s productivity and to reinvent parts of the organization
- Continuously execute stakeholder engagement and communication with the interest groups
- Develop an explicit CSR management system with an impact evaluation framework and KPIs for more efficient CSR governance; CSR is a continuous process and therefore needs assessment to be improved
- Relate CSR performance to the overarching SDG agenda; Consider integration of indicators that reflect contribution to their achievement in the non-financial reporting
- Establish a professional practice of reporting on CSR and sustainability, use all means to communicate the progress, and keep constituents updated on the improvements in accountability and transparency issues; Hence, a data collection framework should be set up and effectively embedded across the company’s business processes.
- Set up compelling CSR storytelling that brings data and narratives together in an action-oriented manner
- Partner with civil society organizations and governments and build synergies by enabling alliances in the private sector.
Conclusion
Corporate social norm to do good is being more commonly viewed from a strategic perspective that contributes to risk mitigation while maximizing the company’s benefits. Recent business cases prove that efficient CSR management is in the company’s interest and will bring tangible benefits for those who deploy it strategically. CSR should be integrated into the corporate DNA. Only then does it become a truly feasible model that creates social value along with economic wealth.
The question that remains is how fast companies will find an optimal way to adapt accordingly while also meeting their financial needs. The ones that crack the case of CSR faster have good odds to ensure their long-lasting flourishment. Thus, companies should abandon the outdated conventional shareholder driven philosophies, as they no longer accommodate properly even the investors’ interests and integrate CSR in their business models. Though like a brick wall in front of them, this secret recipe remains unseen by many businesses, employers and investors alike.
References
Boatright, J. R. (2012), Ethics and the conduct of business (7th ed.). Boston: Pearson.
Chandler, D; Werther W. B. (2017), Strategic corporate social responsibility: sustainable value creation (Fourth edition.), Los Angeles
Fifka, M.S. et al, (2015), Corporate Social Responsibility in between governmental regulation and voluntary Initiative: The Case of Germany (CSR, Sustainability, Ethics & Governance).
Fleming, P, et al. (2013), The end of corporate social responsibility: crisis & critique. London; Thousand Oaks, Calif.
Meier, H. (2020), Business management, SOCEO GmbH and IfTQ-Cert e.v p. 33-88.
