Being socially responsible is not just good business practice but also makes good business sense. CSR has positive effects on the economics of the company, its public relations, customers, employees and shareholders. If integrated into the business strategy, CSR is a potent business tool. There are several benefits to companies:
1. Getting community support:
Certain industries that displace people or have environmental impact require support to operate from the community whom they impact by their operations. Failure to do so could not only make the operations difficult, but the hostility can sometimes make the operations even unviable in extreme cases.
2. Enhanced reputation and brand value:
The business environment is increasingly sensitive to a company’s social, ethical, and environmental performance due to globalization, the communication revolution, and mobility of customers and suppliers. Reputation is an important sustainable competitive asset, because it is difficult and time consuming to develop and cannot be easily mimicked by competitors. Brand identity is also growing in importance
3. Increased efficiency in operations:
Using the CSR framework in corporate business strategy can result in high efficiency in operations, for instance, improved efficiency in the use of energy and natural resources; reduced waste such as reducing emissions of gases; and selling recycling materials. Better human resources also benefit business. Work-life programs that result in reduced absenteeism and increased retention of employees often save companies money through increased productivity and by a reduction in hiring and training costs. For example, companies that improve working conditions and labor practices among their offshore suppliers often experience a decrease in defective or unsalable merchandise.
4. Increased Sales and Customer Loyalty:
While businesses must first satisfy customers’ key buying criteria – such as price, quality, appearance, taste, availability, safety and convenience – there has been a growing desire to buy based on other values-based criteria, such as “sweatshop-free” and child-labor-free clothing, smaller environmental impact.
5. Increased Ability to Attract and Retain Quality Employees:
Since attracting and retaining a committed and skilled workforce is vital to business success, many people nowadays accept to work for a company that has a good reputation by being committed to CSR.
6. Creating new business opportunities, revenue growth and market access:
Experience gained through addressing CSR challenges also provides opportunities for companies to create new business opportunities, grow revenues and gain market access standard.
7. Innovation in market and product development through cooperation with local communities:
Cooperation with local communities helps in tailoring products and services to local markets.
8. Attracting and Retaining Quality Investors and Business partners:
There are various ways investors might influence company behavior. The most obvious is through the cost of capital. A company that is out of favor with investors will have to pay more for capital.
9. Risk management:
By engaging equitably with all stakeholders, a company is better able to manage risk. Well-known brands and large companies are the first target of litigation for CSR misconduct and the consequences could be huge in terms of lost market share or capitalization. A tarnished reputation might require years to rebuild and cost a large sum of money.
Success factors for implementing CSR include:
- Vision and High Level Commitment to CSR—having high-level commitment is necessary for transforming an organization and integrating CSR into the way they conduct business. High-level commitment provides leadership for the change process, ensures that the needed resources are made available, and that any barriers to change, such as lack of incentives or skills, are addressed. It is important that management of organizations puts in place a CSR policy that can be included in the company’s code of conduct.
- Skills and Tools—success CSR programs depend to some extent on hiring people with the right skills, especially when these skills are innate (e.g., interpersonal skills) and can not be easily taught.
- Incentives, Motivational Factors and Employee Buy-In—corporate recognition programs, bonus or profit-sharing schemes and accountability systems can make an important contribution to the success of CSR efforts. Companies who view their supply chains as part of their own overall performance also use recognition programs to encourage improvement in the performance of their suppliers. Companies can operate internal training programs geared towards increasing employee awareness and understanding of the company's vision, values and policies and their relationship to the company's core business practices. These often include presentations by the Managing Director, General Manager to further drive home the importance of CSR to the company's business objectives and help promote buy-in among employees.
- Information and Data—in most cases, success in managing improvement in CSR performance requires setting measurable targets within fixed timetables and assigning clear responsibilities. To work, targets assigned to individuals need to be realistic and achievable.
- Management reviews-after putting in place CSR activities, it is important for management of a company to constantly review its CSR policy and activities to be able keep pace with increasing global standards.
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Enoth Mbeine is a CBI trained export consultant and director and business development consultant of FIT Uganda LTD. View profile
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