by: Stephen Frost*
One of CSR Asia’s messages in its corporate training across Asia is that Corporate Social Responsibility should be based on what stakeholders believe makes a good company. Enterprises that rely on textbook definitions of CSR – although useful – run the risk of missing the point about what CSR should really be about: engaging with the communities in which they do business and profit from. Knowing what stakeholders think is the essential foundation for CSR. And if stakeholder engagement is the foundation, then it is clear that CSR will be different for each company because different stakeholders have different ideas about how companies should behave responsibly.
Knowing what stakeholders believe makes a good company need not necessarily make doing the right thing any easier (stakeholders often disagree or don’t want to engage), but it does provide a solid base on which to build good CSR strategies. Understanding who stakeholders are should be a first step, after which companies can start to talk and listen (and then make informed decisions on that dialogue).
The other benefit of making stakeholder dialogue (or engagement) the starting point for CSR is that it helps companies to focus on the community rather than simply focusing on the (admittedly important) question of “How much is this going to cost us?” Being a socially responsible company does not come without a cost, but reducing CSR to a business case often misses the big picture, which is that companies should examine their role in society and whether they are playing in a part in national development (political, social and economic).
So my message here today is not so much to present the business case (although I will raise it later on), but to link CSR to reputation and ask whether it might be more useful to think about the costs of not doing CSR. Companies sometimes spend far too much time trying to quantify the cost of doing CSR (as do those of us building CSR capacity in companies) rather than looking into the future and considering the costs of failing to engage stakeholders. It is sometimes hard to measure benefits, and sometimes it’s easier to measure costs when things go wrong. It might be useful to link CSR to reputation to help make that equation easier to calculate. Which means that the question is: How does a company build a better reputation?
I certainly don’t want to suggest that companies should only do CSR to protect or enhance their reputations. This will open them up to justifiable claims of “window dressing” (of only doing CSR to look good), but actually doing very little to move beyond legal compliance. Nevertheless, it is also true that knowing how to engage with stakeholders is an important aspect of CSR. One of the keys to linking CSR to reputation is through developing partnerships
and stakeholder dialogue.
To survive and prosper business needs to be up to date. There are numerous ways to do this, but one of the cheapest and most effective is to simply engage with stakeholders. There is always a need for good public relations and market research, which implies a good knowledge of stakeholder views. “Public relations” are exactly that: a relationship with the public. Companies can learn a tremendous amount from focus groups that bring together stakeholders with opposing views. They can conduct interviews and maintain contact over an extended period with stakeholders to keep up with the latest information.
Dialogue with the public is important because business has power, and with this power comes obligations to the communities in which they operate. Companies that ignore community and stakeholder concerns run a twofold risk: one, they run the risk of hurting their reputation; and two, they fail to gain access to groups of people who could assist them become better organisations. Being an ethical business has significant payoffs; listening to employees, NGOs, shareholders, consumers, and so on provides companies with an expanded set of ideas that could prove fruitful.
Many companies are intimidated by the thought of engaging stakeholder or developing partnerships, but there are a number of clear steps they can take to make it work. First, companies need to define their stakeholders. This is not as easy as it sounds, but nor need it be overly complex. Some companies tell us that they talk to their stakeholders all the time, but what they really mean is they talk to a limited number of people with whom they engage in business. Stakeholders are diverse, and should include the entire range of organisations or individuals whose lives and/or business are in some way impacted on by a company’s operations. Of course, not all stakeholders are legitimate (would you engage with stakeholders who want to harm you)? And nor are all stakeholders of equal importance (but how do you define the most important)?
There are a range of tools available to companies (including CSR Asia’s own “Double Triple-I) that allow them to assess priorities and impact on business. Companies need to manage stakeholder demands and dialogue (particularly if they disagree). This means that companies should be honest about whether they can meet stakeholder expectations (don’t over-promise), and be prepared to say no. And after having done all this, companies need to constantly monitor and respond to priorities as outlined by stakeholders). The process of engagement requires companies to be in dialogue constantly, not simply when it suits them (eg, once a year).
Having defined their stakeholders, companies should prioritise their most trusted stakeholders. Once again, they are confronted with the problem of deciding with whom to engage. Companies should not feel compelled to engage with everyone, but they need to have clear values and policies that enable people to know why they have engaged with this or that organisation. Shared values are key means by which to choose partnerships, which can in the long run be extremely valuable. But companies (as well as their partners) should think carefully about the strategic fit. For instance, at first glance, there seems to be few links between the Body Shop, American Express and
Amnesty International. Yet American Express has a well developed and deep set of policies on domestic violence (violence against women). The Body Shop sells mainly to women (and has rolled out policies on domestic violence, too). Amnesty International is a human rights organisation, and violence against women is a key concern. The fit is strategic and strong.
NGOs will often approach companies because they need money. Companies are often put off by this approach, and they need to be careful. But it should be remembered that building a good reputation requires legitimacy and the right partners can provide them with that. Like any relationship though, partners can embarrass you. Companies need to have exit strategies in place in case things go wrong. It all comes back to homework – choose partners carefully. The second key to linking CSR to reputation is through building a good image through good CSR practices. There are four aspects to this: internal aspects, external aspects, corporate citizenship, and accountability and reporting. Internal aspects include things like written policies on non-discrimination in the workplace, equal opportunities statements and implementation plans, statement on normal working hours, maximum overtime and fair wage structures, staff development, in-house education and vocational training, the right of freedom of association, collective bargaining and complaints procedures, and the protection of human rights within the company’s own operations. Most large companies incorporate these and more in internal company documents.
External aspects include things like policies on labour standards adopted by suppliers in developing countries, policies on restrictions on the use of child labour by suppliers, a commitment to the protection of human rights in the company’s sphere of influence, the inspection of suppliers’ facilities for health, safety and environmental aspects, a commitment to local community protection and engagement, policies on responding to stakeholders including procedures for the resolution of complaints, policies on fair trade, equitable trade and end-price auditing, policies on the protection of indigenous populations and their rights, and codes of ethics (including bribery and corruption).
By corporate citizenship I mean the direct support for third party social and sustainable development related initiatives, educational programmes for the promotion of corporate citizenship, external campaign programmes for raising social and sustainable development issues, and so on.
Accountability refers commitment to reporting on corporate social responsibility and/or sustainable development and policies and procedures for engaging a wide range of stakeholders in two way dialogue. The third key to linking CSR to reputation is engaging employees in CSR Activities. When it comes to CSR, employees like to be engaged, and they want to work for companies they can respect. However, one of the mistakes companies make is to assume all workers have the same motivations; they don’t. For every employee interested in planting trees or cleaning up the beach, there are others who want to get involved in human trafficking or HIV/AIDS.
Study after study have shown that the benefits of engaging employees are substantial: increased commitment, increased trust, motivation, new ideas, reduced turnover, reduced absenteeism, productivity. A failure to engage employees may lead to organisations being little more than “networks of complaints”; hardly the most positive workplace environment for creativity, productivity and loyalty.
Creating employee buy-in is not easy, however. It requires companies to demonstrate leadership and commitment to CSR initiatives (managers who are enthused one day over a CSR project but have lost interest the next send the wrong signals to staff). To avoid these problems it is essential to consult staff – ask them for ideas and find out what they think the company should be doing. Remember, “With every pair of hands you get a free brain”. This is an old saying, but true. You might hire people for what they can do, but we should never lose sight of what they can offer us with creativity and ideas. Employees often come up with great ideas when given the opportunity to be part of a company and feel a sense of “ownership” in the company’s future direction. Companies can involve “willing helpers”; employees who are keen to take the lead or teach other staff how to do things.
Through all of this, companies should communicate progress to all employees so that people know what is happening, that the company is still committed, and so on. Employee volunteering is also another way to help staff develop a sense of belonging. Allowing staff a half day off per month (or one day per three months, etc) to work on community projects can be a win-win situation. Companies can demonstrate commitment to the community whilst at the same time creating employee buy-in into CSR programs with all the benefits they entail.
It should be remembered that the business case for CSR is not always positive. Small enterprises in particular sectors will find it difficult (if not impossible) to perform well in many areas. But this is not the case across the board. There are benefits (sometimes intangible and non-measurable), but there also risks of not doing CSR (sometimes tangible and measurable). Each company will have to determine what is possible. Nowadays, however, those decisions need to be made in consultation with stakeholders; many of them are watching companies much more closely. And they have the means to tell others what they see.
*CSR Asia, Hong Kong
CSR Asia is a social enterprise that strives to be the leading provider of information about Corporate Social Responsibility (CSR) in the Asia-Pacific region. CSR Asia builds capacity in companies and their supply chains to promote awareness of CSR in order to advance sustainable development across the region.
One of CSR Asia’s messages in its corporate training across Asia is that Corporate Social Responsibility should be based on what stakeholders believe makes a good company. Enterprises that rely on textbook definitions of CSR – although useful – run the risk of missing the point about what CSR should really be about: engaging with the communities in which they do business and profit from. Knowing what stakeholders think is the essential foundation for CSR. And if stakeholder engagement is the foundation, then it is clear that CSR will be different for each company because different stakeholders have different ideas about how companies should behave responsibly.
Knowing what stakeholders believe makes a good company need not necessarily make doing the right thing any easier (stakeholders often disagree or don’t want to engage), but it does provide a solid base on which to build good CSR strategies. Understanding who stakeholders are should be a first step, after which companies can start to talk and listen (and then make informed decisions on that dialogue).
The other benefit of making stakeholder dialogue (or engagement) the starting point for CSR is that it helps companies to focus on the community rather than simply focusing on the (admittedly important) question of “How much is this going to cost us?” Being a socially responsible company does not come without a cost, but reducing CSR to a business case often misses the big picture, which is that companies should examine their role in society and whether they are playing in a part in national development (political, social and economic).
So my message here today is not so much to present the business case (although I will raise it later on), but to link CSR to reputation and ask whether it might be more useful to think about the costs of not doing CSR. Companies sometimes spend far too much time trying to quantify the cost of doing CSR (as do those of us building CSR capacity in companies) rather than looking into the future and considering the costs of failing to engage stakeholders. It is sometimes hard to measure benefits, and sometimes it’s easier to measure costs when things go wrong. It might be useful to link CSR to reputation to help make that equation easier to calculate. Which means that the question is: How does a company build a better reputation?
I certainly don’t want to suggest that companies should only do CSR to protect or enhance their reputations. This will open them up to justifiable claims of “window dressing” (of only doing CSR to look good), but actually doing very little to move beyond legal compliance. Nevertheless, it is also true that knowing how to engage with stakeholders is an important aspect of CSR. One of the keys to linking CSR to reputation is through developing partnerships
and stakeholder dialogue.
To survive and prosper business needs to be up to date. There are numerous ways to do this, but one of the cheapest and most effective is to simply engage with stakeholders. There is always a need for good public relations and market research, which implies a good knowledge of stakeholder views. “Public relations” are exactly that: a relationship with the public. Companies can learn a tremendous amount from focus groups that bring together stakeholders with opposing views. They can conduct interviews and maintain contact over an extended period with stakeholders to keep up with the latest information.
Dialogue with the public is important because business has power, and with this power comes obligations to the communities in which they operate. Companies that ignore community and stakeholder concerns run a twofold risk: one, they run the risk of hurting their reputation; and two, they fail to gain access to groups of people who could assist them become better organisations. Being an ethical business has significant payoffs; listening to employees, NGOs, shareholders, consumers, and so on provides companies with an expanded set of ideas that could prove fruitful.
Many companies are intimidated by the thought of engaging stakeholder or developing partnerships, but there are a number of clear steps they can take to make it work. First, companies need to define their stakeholders. This is not as easy as it sounds, but nor need it be overly complex. Some companies tell us that they talk to their stakeholders all the time, but what they really mean is they talk to a limited number of people with whom they engage in business. Stakeholders are diverse, and should include the entire range of organisations or individuals whose lives and/or business are in some way impacted on by a company’s operations. Of course, not all stakeholders are legitimate (would you engage with stakeholders who want to harm you)? And nor are all stakeholders of equal importance (but how do you define the most important)?
There are a range of tools available to companies (including CSR Asia’s own “Double Triple-I) that allow them to assess priorities and impact on business. Companies need to manage stakeholder demands and dialogue (particularly if they disagree). This means that companies should be honest about whether they can meet stakeholder expectations (don’t over-promise), and be prepared to say no. And after having done all this, companies need to constantly monitor and respond to priorities as outlined by stakeholders). The process of engagement requires companies to be in dialogue constantly, not simply when it suits them (eg, once a year).
Having defined their stakeholders, companies should prioritise their most trusted stakeholders. Once again, they are confronted with the problem of deciding with whom to engage. Companies should not feel compelled to engage with everyone, but they need to have clear values and policies that enable people to know why they have engaged with this or that organisation. Shared values are key means by which to choose partnerships, which can in the long run be extremely valuable. But companies (as well as their partners) should think carefully about the strategic fit. For instance, at first glance, there seems to be few links between the Body Shop, American Express and
Amnesty International. Yet American Express has a well developed and deep set of policies on domestic violence (violence against women). The Body Shop sells mainly to women (and has rolled out policies on domestic violence, too). Amnesty International is a human rights organisation, and violence against women is a key concern. The fit is strategic and strong.
NGOs will often approach companies because they need money. Companies are often put off by this approach, and they need to be careful. But it should be remembered that building a good reputation requires legitimacy and the right partners can provide them with that. Like any relationship though, partners can embarrass you. Companies need to have exit strategies in place in case things go wrong. It all comes back to homework – choose partners carefully. The second key to linking CSR to reputation is through building a good image through good CSR practices. There are four aspects to this: internal aspects, external aspects, corporate citizenship, and accountability and reporting. Internal aspects include things like written policies on non-discrimination in the workplace, equal opportunities statements and implementation plans, statement on normal working hours, maximum overtime and fair wage structures, staff development, in-house education and vocational training, the right of freedom of association, collective bargaining and complaints procedures, and the protection of human rights within the company’s own operations. Most large companies incorporate these and more in internal company documents.
External aspects include things like policies on labour standards adopted by suppliers in developing countries, policies on restrictions on the use of child labour by suppliers, a commitment to the protection of human rights in the company’s sphere of influence, the inspection of suppliers’ facilities for health, safety and environmental aspects, a commitment to local community protection and engagement, policies on responding to stakeholders including procedures for the resolution of complaints, policies on fair trade, equitable trade and end-price auditing, policies on the protection of indigenous populations and their rights, and codes of ethics (including bribery and corruption).
By corporate citizenship I mean the direct support for third party social and sustainable development related initiatives, educational programmes for the promotion of corporate citizenship, external campaign programmes for raising social and sustainable development issues, and so on.
Accountability refers commitment to reporting on corporate social responsibility and/or sustainable development and policies and procedures for engaging a wide range of stakeholders in two way dialogue. The third key to linking CSR to reputation is engaging employees in CSR Activities. When it comes to CSR, employees like to be engaged, and they want to work for companies they can respect. However, one of the mistakes companies make is to assume all workers have the same motivations; they don’t. For every employee interested in planting trees or cleaning up the beach, there are others who want to get involved in human trafficking or HIV/AIDS.
Study after study have shown that the benefits of engaging employees are substantial: increased commitment, increased trust, motivation, new ideas, reduced turnover, reduced absenteeism, productivity. A failure to engage employees may lead to organisations being little more than “networks of complaints”; hardly the most positive workplace environment for creativity, productivity and loyalty.
Creating employee buy-in is not easy, however. It requires companies to demonstrate leadership and commitment to CSR initiatives (managers who are enthused one day over a CSR project but have lost interest the next send the wrong signals to staff). To avoid these problems it is essential to consult staff – ask them for ideas and find out what they think the company should be doing. Remember, “With every pair of hands you get a free brain”. This is an old saying, but true. You might hire people for what they can do, but we should never lose sight of what they can offer us with creativity and ideas. Employees often come up with great ideas when given the opportunity to be part of a company and feel a sense of “ownership” in the company’s future direction. Companies can involve “willing helpers”; employees who are keen to take the lead or teach other staff how to do things.
Through all of this, companies should communicate progress to all employees so that people know what is happening, that the company is still committed, and so on. Employee volunteering is also another way to help staff develop a sense of belonging. Allowing staff a half day off per month (or one day per three months, etc) to work on community projects can be a win-win situation. Companies can demonstrate commitment to the community whilst at the same time creating employee buy-in into CSR programs with all the benefits they entail.
It should be remembered that the business case for CSR is not always positive. Small enterprises in particular sectors will find it difficult (if not impossible) to perform well in many areas. But this is not the case across the board. There are benefits (sometimes intangible and non-measurable), but there also risks of not doing CSR (sometimes tangible and measurable). Each company will have to determine what is possible. Nowadays, however, those decisions need to be made in consultation with stakeholders; many of them are watching companies much more closely. And they have the means to tell others what they see.
*CSR Asia, Hong Kong
CSR Asia is a social enterprise that strives to be the leading provider of information about Corporate Social Responsibility (CSR) in the Asia-Pacific region. CSR Asia builds capacity in companies and their supply chains to promote awareness of CSR in order to advance sustainable development across the region.
