With all the right intentions, hordes of companies—large and small, franchised and wholly owned, domestic and international—have accepted the calling to be good corporate citizens. They are diligently implementing corporate social responsibility (CSR) programs that address sustainability, philanthropy, community involvement, and other goodwill requirements.
According to a recent IBM study, 1,130 CEOs said they plan to increase their corporate citizenship spending by 25%, on average. CSR, then, is still nascent; companies are searching for the basic answers to how much is enough and what really makes a difference to society, for the brand, and to the stakeholders.
Many companies make serious but avoidable mistakes that can overshadow well-intentioned CSR investments. The errors result in damage to the brand and to the "responsible" person's career.
Here are some of the top causes of such mistakes.
1. Misalignment of the cause with the business
A company in the fast-food business probably has no real ability to fix the US educational system. A clothing retailer probably can't solve world hunger. Sure, corporate foundations can give money to other organizations such as nonprofits or nongovernmental organizations (NGOs) that have expertise in those areas. However, most likely, the company would be better served if the selected cause leveraged the skills, connections, and resources within the company.
FedEx, for example, donates its transportation services to support emergency situations such as disaster relief and organ transplants. Minneapolis-based Cargill, a large commercial supplier of food ingredients and food-related products and services, actively supports the UN World Food Programme. St. Louis-based Build-A-Bear Workshop uses its products to bring joy to disadvantaged or ill children, and Hewlett Packard donates computers to underserved classrooms.
While simultaneously serving the sales and marketing messages, those causes reflect the business competency, and, as such, the programs make sense to investors, employees, and all partners involved. The unifying and memorable theme helps rally the company's available resources, which deliver something meaningful and have a real impact.
2. Focusing only on one aspect of CSR
I applaud companies that are committed to giving money to local charities, but not if they write checks and then dump manufacturing waste into their community's water supply.
I've seen companies that are intent on improving their environmental sustainability, but at the expense of their human rights or governance policies.
CSR is a very broad subject, and although every aspect is important, addressing the entire range of CSR requirements is critical so that you don't rob Peter to pay Paul.
3. Reporting first
Rather than develop and execute a CSR strategy and handful of programs first, some companies opt to initiate their CSR program with a public report. As a result, they have little to say and show for their efforts but they have "checked the box off" just as if it's a compliance requirement.
That approach shows a lack of understanding of CSR and its impact on the brand, employees, future hiring, investors, and other stakeholders.
Reporting first is a risky thing to do, since it implies a committed direction that may not be fully backed up by infrastructure and resources.
4. Not having a CSR road map
To effectively embrace CSR, you must bring many pieces together, such as the branding, messaging, and strategy, and specific plans across functions—perhaps geographies, too—as well as with affiliates, partners, and suppliers.
Without a plan in place, it is impossible to coordinate the necessary company resources and have everyone committed to being good corporate citizens.
As with building a product, CSR programs have many interdependencies and milestones to coordinate. Without a road map, employees will be in motion but potentially heading to different destinations.
5. Assigning a CSR champion without committee support
More and more companies grant a gung-ho senior manager the title of CSR Czar or some politically correct derivative. This person typically doesn't have direct reports but is responsible for putting together the company's CSR plans and reporting.
Best-practices across industries show that cross-functional teams are critical to baking CSR into a company's operations. Many companies also form a board-level CSR committee to ensure accountability throughout the organization.
6. Failing to communicate internally
One of the biggest challenges is getting internal people motivated and involved with CSR initiatives. Much of this shortcoming is due to lack of effective internal communications.
Leading companies use repetitive "inreach" via a multiplicity of channels, such as intranets, newsletters, posters, and emails, to let employees know about new volunteer opportunities, charitable drives, and other CSR initiatives. Cutting-edge companies are using means—such as paycheck statements, text-messaging, and broadcast voice mails—that can creatively reach the mixed demographics of the internal audience.
7. Poorly communicating externally
Communicating CSR to outside stakeholders requires a new way to market: without spin and with defendable depth. As this art form is just coming of age, you can already see CSR presented on websites, advertisements, and annual reports. Special CSR Annual Reports are now common among half of public Fortune 100 companies; and Web video, billboards, and other eco-friendly means are being explored to get the word out in an effective yet humble manner.
8. Not taking advantage of employee volunteerism
Employee volunteerism is proven to increase employee leadership skills, create happier and healthier employees, and help boost a company's reportable giving contributions (if supported by paid time off). Employee volunteerism is a great way to get the entire team into the CSR spirit with minimal investment or management. There is no better way to create company evangelists who will enthusiastically spread a goodwill message to the outside world.
9. Giving without any rules
Again, any company that donates cash or in-kind resources to a worthy charity should be commended. However, I often see companies select a charity because a senior manager or other power player has a personal connection or affinity. Or the company gives small (usually non-impactful) donations to multiple charities.
Without clear guidelines about how charitable donations are to be granted and to whom, there is a potential liability to the company and the person who is "making" those decisions. Whether those decisions are fair and support the anti-discriminatory ethics that the company supports also come into question. While it's hard to say no to Johnny's little-league team, it is even harder to say no to your best customer's favorite charity—unless there are clear rules about how those decisions are made and the application process leading into them.
10. Middle management isn't on board
It is common for the CEO to assign a CSR manager and feed that person to the senior-management lions who are all vying for limited resources. And that typically less-experienced person must create the business case for why the CSR program should get the available resources when it's clear that other departments can use those resources to improve productivity or reduce costs.
To avoid this situation, top management needs to clarify that CSR is everyone's responsibility and it must facilitate the budgeting process to include CSR, just as it does HR and marketing.
* * *
Whether you think CSR is a trend, a nuisance, or a required part of all businesses, if you are going to implement CSR programs... do so responsibly. Because of the transparency required for proper implementation, a poorly executed CSR program can negatively affect the business in many ways. It takes one missing element, one arrogant blogger, or one angry ex-employee to publicly point out the failings of the good works that the company is so proudly touting.
Consider The Gap, Kathy Lee Gifford, Wal-Mart, and others that have spent enormous money and time rebuilding their once-invincible brands that were shattered by sloppy CSR.
When done well, CSR is a tremendous advantage to the entire business. When done carelessly, it can be ruinous.
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