20 BILLION US DOLLARS. That is the least the top 500 companies in the world have been spending annually on corporate social responsibility (CSR) initiatives. Currently, more than 90% of these big businesses produce annual CSR reports for their shareholders. Even with all that interest and resources being committed to doing good, some are still calling for these corporate juggernauts to do more. These proponents for more good point to the fact that these businesses are spending less than 2% of their annual profits on these “Do Good” ventures.
But why all this fuss about CSR?
Because CSR is important—and it is important for so many reasons. For starters, the world, or more specifically, the communities that receive these CSR goods do benefit. On the global level, all the green and climate change initiatives are helping mankind save the planet. Communities that are being cleaned are benefiting from the improved sanitation and all its attendant benefits. Farmers who are at the receiving end of some interesting CSR initiatives such as those that cut food wastage and increase yield know, at first-hand, the benefits of CSR activities.
Those poor Argentine children who grew up without shoes but now have new shoes thanks to TOMS Shoes know the benefits of CSR. The more than 400,000 people whose eyesight were restored by the kind courtesy of TOMS Eyewear are grateful for the surge in CSR. Infant mortality has been reduced by the hundreds due to the training of skilled birth attendants and distribution of birth kits containing items that help with safe delivery.
Individuals who are being given medical screening leading to the early detection of deadly diseases will forever be thankful. The 100,000 children in Malawi who get to eat a good meal every single day thanks to the benevolence of Nu Skin Enterprises. The boreholes, clinics, classroom blocks, market centres, and recreational facilities that are springing up all over this country thanks to the CSR activities of corporate bodies are testaments of the positive impact of CSR. It is hard to argue against the good that CSR activities bring to this world.
Beyond all that, it is interesting to note that CSR has other benefits for the organisation. CSR has also been found to be beneficial to businesses through its effects on customers. According to researchers, customers experience something referred to as Warm Glow when they realise that the organisations they do business with are doing good for the community. This pleasant feeling then translates into other positive behaviours from the customers. Customers are said to become more loyal to the business. They are even willing to pay more for the product or service.
The benefits of CSR do not end with just external customers. The truth is that whatever an organisation does also affects its employees. Employees cannot be dissociated from an organisation. They make up the organisation. Therefore, they are always influenced by the actions of the organisation, including the CSR activities the organisation undertakes.
Research has shown that the warm glow that is experienced by customers of CSR-compliant organisations also extends to the internal customers of the organisation. Plainly put, employers also feel good when their organisations do good. In a July 2017 article published in Service Industries Journal, researchers concluded that indeed the CSR activities of the organization does affect employees positively. Titled, “Corporate Social Responsibility and Employee’s Desire: A Social Influence Perspective”, the study provided enough evidence to support the assertion.
According to the study, when employees see their organisation doing good in the community, it engenders a sense of pride in these employees. This sense of pride makes the organisation more attractive to the said employees. The more attractive the business becomes to the employee, the greater the chances of the one imbibing the values of the organisation. The employee begins to internalise the values she sees being exhibited by the organisation. This accounts for why employees mostly become embodiments of the organisations they work for.
For employees, working for organisations that engage in CSR initiatives, such employees begin to develop what researchers refer to as a DISW— Desire to have a Significant Impact through Work. DISW has been defined as an “employee’s desire to affect the lives of their surrounded people and society through the work they perform in the workplace.” In other words, the CSR activities of the organisation inspires employees to do good. These employees become socially-responsible employees. The more socially responsible an employee becomes, the greater the chances of the one doing good on the job.
This is most important when one considers the fact that one of the key employee groups every organisation has is its front line employees (FLEs)—the regular interface between the organisation. Of all employees, they are the ones that need to be fill with the “spirit of goodness”. Customer-facing employees must always be ready to go the extra mile to serve customers in uncommon ways. They are the one group of employees who must always dig in, just to be able to put up with all the pressure from the front line. To be successful therefore, FLEs must necessarily be socially responsible.
By extension, one can argue that businesses who are not seen by their employees as doing good in the community might end up producing customer-handling employees who do not appreciate the importance of doing good. To enhance the positive psychological state of employees—especially that of customer-handling employees, many businesses must reconsider their attitudes towards CSR initiatives.
Too many businesses are quick to use money as an excuse not to engage in any social responsibility activities. However, if the ongoing discussion is anything to go by, then businesses that are not engaging in any CSR activities are actually losing out. They might believe they are saving money but they are actually losing money.
If these businesses are unable to find any justification, they should consider the effect CSR has on those whose jobs it is to serve customers. It is a fact that businesses must do good. In doing so, they must ensure that their employees play very important roles in all of it. One way to do this is to ensure that the organisation will take on CSR responsibilities that resonate with employees. To do this will call for employees coming up with various CSR interventions that they are interested in.
Smart organisations who understand this dynamic are able to tie this need to do good with the organisation’s need to make money. What these organisations do is to set targets for staff to achieve. When these targets are achieved, employees can choose a CSR initiative of their choice. FLEs can be given a target, say, a number of positive responses from customers for a specific period. If that target is met, then the FLEs can choose the good deed the department (or maybe the organisation) can engage in. When employees engage in CSR activities of their own choosing, the pride they feel for the organisation would be intensified. The good work that these employees begin to do will become a competitive advantage for the business in question.
The idea that businesses are taking from the environment to make money and must therefore give back to the community is not going to abate any time soon. As more and more people begin to notice the challenges that are facing humanity—challenges for which government interventions alone can only do so much—there will be greater calls for businesses to do much more. Customers’ demands for businesses to pick much of the tab for how much humanity is eating up the resources of Mother Earth will only grow louder. Organisations that turn a deaf ear to these calls will begin to face the wrath of customers.
No business must be forced to do good but if a business decides to prove stubborn, it will be forced to do good. Customers have one powerful resource they will use to force this change—their money. Customers will not hesitate to take their money to more responsible competitors, if they feel a business is not playing its part to help fix the ecological, economic, and social ills plaguing humanity.
The smart, progressive businesses are those who will not wait for the worst to happen. They are the organisations that will begin to inculcate CSR into their overall strategies. They will begin to look around and see what they can do to be of help to all. The days of sitting on the fence when it comes to CSR activities are far gone.
The future calls for businesses to act in ways that ensures we all win. Our accountants are calling it the Triple Bottom Line framework. The ideal organisation is now expected to perform well on three dimensions: social, environmental and financial. Others refer to this as the three Ps: People, Planet and Profits. Even two of the three will not cut it. Business leaders, owners, managers, executives, etc. should realise, by now, that they do not need a regulator to twist their arms to do good. Doing good is good for those who do it.