There are plenty of resources available that tell you what good corporate social responsibility looks like, but sometimes it’s useful to see the bad stuff so you can learn to avoid it. So here are six descriptions of ineffective CSR to avoid.
In 2008, a paper by Brammer & Millington found that firms with top 10% CSR programs outperformed everyone over the long term, but that middle 20% CSR programs underperformed everyone else over short, middle and long terms. In other words, it makes more financial sense to do no CSR at all than to take it only half way. Unfortunately, a huge percentage of CSR is of the make-it-up-as-we-go-along variety. Employee benefits are added because they’re inexpensive, charity gala events are sponsored because a key customer’s spouse submitted the request, or recycling programs start because someone put a blue bin next to the copier.
Responding to external pressure
One of the reasons that ad hoc CSR is so prevalent is that the programs are frequently imposed upon the business by an outside party. For example, if a company is donating to charity because the charity made a request, it is responding to external pressure. If a company adds an employee benefit because it’s offered by a competitor, it is responding to external pressure. In neither of these situations is the firm going to get any business benefit from these activities.
Around the holidays, someone inevitably suggests that the company should volunteer for a local charity. Employees are making the request so it is likely that there is some stakeholder interest, but will the increased employee goodwill offset the lost productivity of employees out of the office? How would you even begin to calculate that? The answer is that you shouldn’t have to because you’ve intentionally selected a particular charity, and know exactly what benefits will accrue to your employees by participating.
Closely related to the middle 20% problem that Brammer & Millington found, CSR programs that aren’t directly rooted in the benefit that the company is expected to achieve are unlikely to be successful. Many well-intentioned programs start by selecting the CSR activity first, rather than the business benefit. Because these are usually only loosely connected to the overall goals of the business, they are unlikely to be successful.
CSR programs are frequently considered “nice to have” rather than essential. Especially in smaller businesses, a commitment to CSR can be considered a distraction from the core work of the firm. Symptoms of under-resourcing include not taking CSR seriously by never putting a strategy in place, or by limiting CSR activity to corporate philanthropy and volunteering.
One guaranteed way to get your CSR programs to fail spectacularly is to be inauthentic. Because of the social component of CSR, people are inherently skeptical of CSR activities that feel false. Terms like “greenwashing” and “Astroturfing” are applied when consumers feel that companies are falsely inflating the environmental or grass-roots nature of their activities.
Are you interested in setting up a corporate social responsibility program and want to make sure you're doing it the most affordable and effective way? Or are your existing programs stuck in that middle 20% range, and generating more costs than benefits? Please contact us for a free consultation.