Preparing the Groundwork

To properly apply CSR to a company, the company must have to keep three theaters in mind before starting; focusing on philanthropy, improving operational effectiveness, and transforming the business model. Focusing on philanthropy forces the company to not design operations that promote profits or directly better business performance, but to produce welfare for others. Improving operational effectiveness are functions that already exist in business models to supply social or environmental benefits in ways that support a company’s operation, improving effectiveness and efficiency. Lastly, transforming the business model allows companies’ to create new forms of business to address social and environmental challenges. Companies’ that acknowledge these theaters can proceed into applying CSR into their business. 

 

Step One: Pruning and Aligning Programs

Research reveals that CSR programs are often poorly coordinated across and within theaters. Therefore for the initial step, firms bring coherence to existing programs in each theater. In order to do so, they have to reduce or eliminate initiatives that do not address an important social or environmental problem in keeping with the company’s purpose, identity, and values. Aligning is not about putting all the eggs in one basket, it’s about collecting activities that are consistent with the company’s business purpose and have a valuable social goal that the company cares about. 

 

Step Two: Developing Metric to Gauge Performance

The standards of success and goals that each theater has can differ significantly. For example, theater one is designated to not produce profits, whereas theater three is. Measuring the non-financial outputs of theater one is necessary to determine its level of success. Companies can assess the social impact of their theater one activities credibly by collaborating with nonprofits or other third-party evaluators. While theater two programs have the potential to increase revenue or reduce expenses, measuring performance calls are more concrete. Companies seeking to generate profits from operations need an ongoing system to monitor net present value since not all theater two financial benefits are realized shortly after investments are made. If benefits fall short of expectations, corrective measures may be necessary. No matter how these variables impact business corporate performance, a corporation must track and report the social and environmental benefits. This enables it to determine if the investments has resulted in desired societal or environmental gains. Companies must maintain or improve internal-bottom line targets – goals that are sometimes achievable only over an extended period of time – while demonstrating greater social and environmental values for their external stakeholders in order to qualify for theater three initiatives. If successful, corporations can transform into positive contributors to the welfare of society. Every business should ask these questions to themselves: Does our fundamental business enhance society? Do any of our products and activities diminish that goal, and if so, how can we mitigate or reverse them?

 

Step Three: Coordinating Programs Across Theaters

It is not necessary for all initiatives to address the same social or environmental concerns in order for theaters to be coordinated. It indicates that when together, they make up a coherent portfolio whose initiatives are in line and consistent with the firm’s business purpose and values.

 

Step Four: Developing an Interdisciplinary CSR Strategy

The success of CSR initiatives depends on coordinated support from upper management. Even if responsibility for individual initiatives remains distributed, companies should ideally create a role that will be filled by someone whose main duty is to integrate initiatives across all three theaters, regularly meeting the key players in each theater to ensure consistent interaction and alignment.

 

However, this kind of cooperation is all too uncommon, and for many corporations, the range of purposes underlying initiatives from theater to theater and disparity in those initiatives’ managements presents significant obstacles. Managers holding positions like VP of corporate affairs, who oversee charitable initiatives, are often two levels down the corporate ladder from the CRO. These CSR leaders typically report to the HR chief. Alternatives, in major corporations, community giving and philanthropy may be overseen by the head of the corporate foundation. The operations managers in charge of theater two programs may have a dotted-line reporting relationship with the VP of sustainability or chief sustainability officer. While research shows that only about 30$ of companies engage directly in shared-value initiatives, CEOs are more likely to do so, sometimes in conjunction with one or two senior managers. In many cases, CSOs have oversight over these programs, and no single executive is in charge of them. It should come as no surprise that corporations frequently struggle to shape a clear CSR vision given that dutied divided among three groups of people at three different levels. 

 

There are two effective approaches to CSR strategy development, top-down and bottom-up.

The top-down approach for a company involves several key categories. First being company culture, companies need to emphasize on strong core values and have clear communication of the company’s vision. Leaders and managers should act as role models, valuing volunteer work and encouraging employees. Newsletter, team meetings, leadership calls, internal communication tools, and bootcamps for every new employee are ways a company can keep communication between all their employees. Visible implementation of ecological sustainability like eco-friendly products in the cafeteria, encouraging employees to travel using more sustainable transport modes and efforts to become more carbon-neutral encourage employees to keep their company values in mind. 

For the bottom-up approach, five major categories and matching key statements could be determined. Through participation in equity groups, volunteering, monetary rewards donations to organizations, and idea sharing on internal organization platforms, employees believe they have the opportunity to personally influence the sustainability strategy. Every respondent makes use of this option and expresses a strong commitment to sustainability within the business. This is demonstrated by taking part in charitable endeavors, donating money, carrying out personal initiatives, and utilizing more environmentally friendly forms of transportation. Additionally, managers support the sustainability plan by assisting their teams in putting their individual sustainability goals into practice.

 

Source: Porter, and Kramer. “Strategy and Society: The Link Between Competitive Advantage and CSR.” Porter and Kramer on Aligning Strategy and Corporate Social Responsibility, Harvard Business Review, Dec. 2006, www.hbr.org.