Corporate Social Responsibility—The Customer's Friend?

Graham Hill
Guru
Member

Posted 24-Jan-2005 11:27 PM
There is a lot of talk about Corporate Social Responsibility (CSR) in the press recently—CSR is the idea that a company has responsibilities to employees, customers, suppliers, the local community and to society at large, as well as just to shareholders.

For example, the December issue of the Harvard Business Review published a favourable article entitled 'The Path to Corporate Responsibility', which tried to make the business case for CSR. On the other hand, this week's Economist magazine published its own 'Survey of Corporate Social Responsibility' that suggested that much of CSR is bad for business and therefore bad for society.

What is not in doubt is that CSR is now an important issue on every American & European CEOs aganda.

What do you think of CSR? Is it good for business, or is it just a waste of management's precious time? And particularly important for us: What does it mean for how we should deal with customers?

Please let me know what you think by responding to this article.

Graham Hill
Customer Value Management Guru
Independent CRM Consultant

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Jim Sterne
Guru
Member
Picture of Jim Sterne

Posted 27-Jan-2005 07:32 AM
If the Economist feels that Corporate Social Responsibility is bad for business and therefore bad for society, I suggest they re-read Joseph Heller's Catch 22. Specifically the scene where Yossarian tries to put on the parachute, only to find that Milo has sold it and replaced it with a mock monetary note that says, "What's good for Milo Minderbinder is Good for the World!"

Just because something is not profitable does not mean it will not raise a company's the esteem in the eyes of the public or its employees' pride. Those are very good for business.

Jim Sterne
Target Marketing www.targeting.com

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Helmar
Member

Posted 27-Jan-2005 08:02 AM
I have been talking about this with my colleague Emilio Cerri recently. My take is that CSR is an integral part of CRM. Conversely, and perhaps more bluntly, I believe anyone who disagrees doesn't really understand CRM.

If the Economist thinks that what is bad for business is by inference bad for society, then it's time they stopped publishing their rag. I can't believe such arguments coming from them, but then again, maybe it reveals their true mindset.

What is good for society can -by definition- only be good for business. It's how the universe works. If you do good to others, good will be done to you. It may, however, not satisfy the needs of those in search for short-term gain, but long term it cannot but pay off—unless the company really stuffs up in the meantime. As Kristin Zhivago once said: "the value of your brand is only as good as the promise you keep".

There's a book out there that some of you may have read: How Corporations Can Make Doing Good an Integral Part of Doing Well. The comments on Amazon may be rather revealing too.

It's really very simple, although I doubt commonplace in most businesses. It means that communication with the (prospective) customer shouldn't only be product/sales-driven, but should—where possible and applicable- also deal with personal or peripheral concerns. In other words: "hey, Helmar, you're interested in Kombucha tea. Did you know that ....". Got nothing to do with what the company sells, but certainly strengthens the glue between "them and me". It shows real interest over and above "the usual", of which one usually gets too much anyway, 24/7.

I believe it to be correct to say that it's a cultural thing first and foremost, because in non-anglosaxon countries there is far more emphasis on the social element, the human connection. In fact, if you're unable to connect to them socially, your chances of doing business with them are close to Nil.

(Side note: many years ago I read an article in Business Day that South African businessmen aren't liked in Africa at all, and I believe this is exactly because they -as anglo-saxons/dutch- are dealing with a largely francophone market. Interestingly, this is also why South Africa is geared more towards Europe and America than towards Africa, despite the face that the latter offers far more opportunity and far less competition. But with the wrong attitude, it will remain closed to them.)

I hope I didn't venture too far. Companies like Salesforce.com are showing that CSR is good for business and good for society. Interesting to note that Salesforce.com is in the CRM field, so they -above everybody else- should know how important it is not to be just a product pusher, but to do good for society at the same time.

Finally, a business that isn't doing good for society has no justification for existence, aucune raison d'être, keinerlei Existenzanspruch. And the moment CSR is being either forced onto them or by them seeing the light themselves, you will see a massive positive change going like a wave through society. As long as businesses share the Economist's mindset, it's good for a few, but bad for the rest. Anyone with a different mindset/opinion should just open the papers, turn on the TV and see for him/herself what the world has come to because of this pure profit-driven and isolationist (read: unsustainable) attitude.

And "no", it's got nothing to do with communism the way you know it—just in case you wondered—but perhaps everything to do with "we are all one", and what we do unto others will be done unto us. May sound arrogant, but I live in South Africa, and I know what it means when the Economist's mindset reigns.

Helmar

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Helmar Rudolph helps companies succeed with their CRM-related business transformation process by utilising his unique "Diamond CRM" framework.

http://www.helmar.org

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Colin
Member

Posted 27-Jan-2005 09:45 AM
Unfortunately, business governance in "capitalism" as it is currently defined, is inimical to the human condition. This is more a sociological and political conversation than a business one. As it stands the business entity is not part of any social organisation, it is a special construct (hence the anti-globalisation movement). As we have seen recently, the prime motivator is the drive to secure only 2 stakeholders, the investor and the professional manager.

Is conspicuous consumption and admirable trait, a progressive one, or even necessary? Is a pre-emptive war truely good for society , the global village? Both produce wealth ... for some...

I remember the organsational governance graduate courses where we expounded on the pros and cons of the "capitalist" system. Nothing will truely change until we can measure the soft values, like actualization, esteem, responsibility, community values, etc.

We are no where near a system in equilibrium, where measurements of discrete changes can be measured and quanitified through data capture and analysis.

Regards
Colin

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Graham Hill
Guru
Member

Posted 14-Feb-2005 05:58 AM
Interesting.

Three responses promoting (more or less) the virtues of CSR but without much explanation as to why this should be so.

And all three responses seemingly suggest that the 'profit motive' is somehow bad, and ergo, that it is bad for society in general.

The Economist report and most of the economics research I have seen on the subject suggest that the profit motive that drives free, open, fair markets is the most effective at distributing resources equitably across a broad base. Some of this happens through direct exchange in the markets, however the majority comes about through the knock-on effects of winner-take-most competition on increased business innovation, increased economic growth and the societal wealth that these two generate. There are plenty of well-known cases of market failure, but these are generally traceable back to failures to ensure that markets are either free, open or fair. That markets sometimes fail is hardly reason to adopt the CSR concept just becomes it seems, well, 'nicer'.

Those promoting the virtues of CSR should be able to show how these activities produce a better result. Either directly or through showing how discrete CSR activities improve the effectiveness of the business economic system as a whole. Most of the hard economic evidence that I have seen to-date suggest that money spent on CSR activities often doesn't produce either the direct results intended, let alone the positive systemic effects that one can expect in market-based economies.

The pursuit of profit may have been foregone in the past in centrally planned economies and in the future in Star Trek, but the former has been shown not to work and well, I think we would all like to believe in Star Trek, however today's reality somewhat gets in the way.

All this still begs the question I originally raised: What does CSR mean for how we should deal with customers?

Graham Hill
Independent Management Consultant

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Helmar
Member

Posted 14-Feb-2005 06:41 AM

Integrity. Honesty. Openness. Connectedness.

All four notably absent from most companies in the pursuit of even insaner profits.

Interesting that it's our family, friends and colleagues who work at such companies, and who—when at work—seem to be dead-bent on furthering these destructive habits.

All this free-market talk is just that. There is no free market, and neither are there free participants, because you know too well what would happen if you (not personally) told your boss tomorrow that you're not coming to work anymore.

Employees are enslaved by the system. They stop working, they stop earning. They stop earning, away go the material trappings, the future of the kids and the life of the old folk. It's all done on purpose and by design. And if you believe you can drop out and disappear into the woods, wait until the local authority comes and wants its property tax and whatever else they have conjured up to make you dependent on the system.

It's time for us to stop that—for good.

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Helmar Rudolph helps companies succeed with their CRM-related business transformation process by utilising his unique "Diamond CRM" framework.

http://www.helmar.org

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Chris Bebbington
Member

Posted 18-Feb-2005 01:28 AM
Just a few observations that might be relevant.

A few years ago an organisation called Business in the Community did some research revealing that quality and price being the same, something like 70-80% of customers would opt for a supplier supporting a cause they sympathised with. I believe MINTEL also did some research on the topic with similar findings.

On the broader canvas, the concept of co-opetition may be appropriate. Investing the fabric of the communities in which they operate can have long term strategic significance for companies e.g. helping to ensure supply of qualified highly skilled labour. For example, consider the emergence of science parks in recent years.

Finally, investing in the social fabric may also be necassary to gain the support of particular stakeholders who have power over a company's ability to implement its chosen strategy and achieve its financial objectives. As an example, it's by no means uncommon to find investment in community facilities a pre-requisite (or at least very advisable) for gaining planning permission for a major retail development or superstore.

The case for CSR is not so much the heralding of a new socialist dawn but more enlightened self-interest—another example of the 'hidden hand of the market' increasing utility and benefit for all.

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Graham Hill
Guru
Member

Posted 30-May-2005 01:54 AM
All

In the wake of more recent discussions of the role of business in society, e.g. the proposition by a leading member of the government in Germany that foreign investors are locusts!, the Economist has published an invited Opinion of the role of business in society. The author of the review is Ian Davis the world-wide MD of McKinsey and someone with a well-honed sense of the importance of this complex issue. The Opinion contrasts the 'business of business is business' approach suggested by Milton Friedman with the CSR approach. He finds both approached wanting in many ways and makes some sound suggestions about how to move forward.

See The Economist website at http://www.economist.com/displaystory.cfm?story_id=4008642 for the complete Opinion.

I recommend that all of you that are interested in this complex topic read Davis'article.

Graham Hill
Independent Management Consultant

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Helmar
Member

Posted 30-May-2005 11:58 AM
Interesting read, although it's obvious from the start that the author is biased against CSR.

On that note, I just found this: One Percent For The Planet.

Helmar

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Helmar Rudolph helps companies succeed with their CRM-related business transformation process by utilising his unique "Diamond CRM" framework.

http://www.helmar.org

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Graham Hill
Guru
Member

Posted 31-May-2005 09:11 AM
Helmar

The fundamental difficulty with seemingly good ideas like 'One Per Cent' is WHO decides WHAT and HOW any resources donated should be allocated for best effect.

Indeed, whether an NGO like 'One Per Cent' is a good idea at all!

(Not always) well meaning NGOs have a very mixed record of using resources donated to them wisely and often seem unable, or even unwilling, to understand the larger systemic economic effects that their actions cause.

Graham Hill
Independent Management Consultant

Posts: 369 | Registered: 24-Mar-2003
Ignored post by Graham Hill posted 31-May-2005 09:11 AM
Helmar
Member

Posted 02-Jun-2005 03:53 AM
Graham, I fully agree that NGOs "have a very mixed record of using resources donated to them wisely", but you will also agree that government has an even worse record of using resources wisely. Furthermore, if business and government would have acted in a manner appropriate and conducive to a functioning and sustainable socio-economic system, there would be no need for NGOs or initiatives like "One Percent" in the first place.

It's simply because business is largely anti-social and government inefficient to the extreme in handling resources, and both of them bound by a rather warped and shortsighted view of where society should go and how it should function, that NGOs—be it One Percent or others—are required.

Ask yourself why One Percent needed to be founded? Certainly not because business has a sterling record of being ecologically and socially minded, even though their reason of existence is based solely on the very existence of a healthy ecology and a functioning society.

But that's just me. YMMV.

Helmar

Addendum: Richard Barrett (http://www.corptools.com) has had some info on his website about the profitability of social responsibility. Here it is ...

"In 1997, 76% of consumers polled said that—assuming no difference in price or quality—they would switch brands to align themselves with a good cause — up from 66% in 1993.

In another poll, 79% of graduating MBA students think a company has to take into consideration the impact it has on society.

A full 50% said that they would take a lower salary to work in a very socially responsible company."

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Helmar Rudolph helps companies succeed with their CRM-related business transformation process by utilising his unique "Diamond CRM" framework.

http://www.helmar.org

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Graham Hill
Guru
Member

Posted 03-Jun-2005 12:28 AM
Helmar

Reality is that nobody actually knows what a 'sustainable socio-economic system' actually looks like. Not the free-marketers like Margaret Thatcher's Conservatives in the UK in the 1980s, nor the dirigiste social democrats like Jacques Chirac's UMP in France today, nor Wen Jiabao's one-party Communists in China. Economic systems are always work-in-progress and that means there will always be elements of inequality that some people find unfair. But that is to be expected and is not necessarily a bad thing.

Back to the original post.

I am genuinely interested to know 'how' you think that CSR should be best implemented and what impact it should have on society in general and customers in particular.

If you take a middle ground position between Milton Friedmann's view that "the business of business is business" and say, Attac's view that corporate social responsibility is a moral responsibility that should be enforced by law, then the big question becomes; in what way do corporates (large, medium and small) have a responsibility to society and customers, and how should that responsibility be exercised in practice.

There is too much position taking about whether CSR is a good or not so good thing, and not nearly as much well-thought through analysis about what exactly should be done, how it should be done and how the benefits to society and customers will come about.

As I said at the start of this post, I am genuinely interested to know 'how' you think that CSR should be best implemented.

Graham Hill
Independent Management Consultant

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Helmar
Member

Posted 03-Jun-2005 02:32 AM
Now there's a challenge... "How should CSR look in practice" as opposed to "Should we do it or not".

It is important to first have a look at the origin of business and what it has turned into before going any further.

Originally we were traders, exchanging goods and services that we felt constituted a fair exchange. Then money was introduced; first it was based on something real (gold), then it turned into something rather arbitrary. No longer was it possible to negotiate, to retain the human element in the trading process. It was either "pay up or shut up".

As trade increased, organisation became necessary, thus companies (businesses) were born. Hierarchies were introduced, moving those making he decisions away from the actual market place and its realities.

In the process advertising was added. This resulted in the once truthful promotion of one's offerings turned into hyperbole and often plain lies or misrepresentations.

With the advent of bourses (stock exchanges), the ownership structure of companies changed. Not longer owned and run by families, who by and large had a certain set of ethics and moral standard, the main beneficiaries were outsiders who didn't and don't really care about the details of how business is conducted, as long as they get their share of the profit.

As a result the focus shifted from long-term relationship building and care for the market environment one operates in to short-term profit maximisation and plain, unadulterated greed. (An immediate example of plain, unadulterated greed is the cost of SMS (text messages). Ever calculated the MB price of an SMS?)

In the process, debt was not only introduced but fine-tuned to the maximum. Let people buy something they cannot really afford (IOW don't have the money for), and let them pay a multiple of the actual value of the product (incl markup) over time. Let's suggest to them that they are inferior if they don't have Product X or Service Y, and let's ensure that the money they have to day is always worth less tomorrow (read: inflation). Let's keep them entertained (TV,video,...) and fed (fast-food, junk food), away from the truth, away from the light, away from the things that really matter in life. I could go on and on.

So over centuries, companies became self-serving entities whose primary objective moved from serving customers to making as much money as possible in order to please those who now call the shots (from behind the curtain). Products/Services are no longer priced at "cost plus", but at "what the market can bear" or "what we can get away with". Nothing critical if happening in isolation, but these days it's the norm rather than the exception, thus adding a very different dynamic to it.

Disclaimer: all this is a generalisation, but as such in its base plain and true.

So.....

how does CSR look like in practice? We're still not getting an answer here, because what's the point of giving a terminally ill patient a vitamin pill? Most patients/companies we are talking about are terminally ill. Their structure rotten to the core, their management morally and socially corrupt or inept, leaving little hope for recovery. But as hope dies last -the Russian saying goes-, we'll still try our best, hence ....

...some practical examples.

* CSR shows first and foremost in a fair pricing of the product and service delivered. As money appears as a finite resource to most people, it should be in the interest of the company to leave the market with as much of that finite resource as possible.

* CSR shows in those with the knowledge sharing it with those without. Educating, enlightening the market rather than exploiting it for one's own gain. As an example, those in S.Africa who over decaded exploited and kept uneducated the majority of the population now have to defend their own life against those they took from all those years. They live behind walls, barbed wire, alarm system, armed response and vicious dogs. The kids don't play in the street anymore, the next person is not trusted anymore, life is lived in fear—24/7.

* CSR shows in training and educating one's staff in life skills, in how to either become as independent and self-sufficient as possible.

* CSR shows in supporting good causes out of a genuine interest rather than a PR exercise to distract from some other misdoing.

* CSR shows in a fair ratio between management salaries and blue collar salaries.

* CSR shows in NOT emitting ANYTHING into the environment as part of the production process that could pose harm, immediate or delayed.

* CSR shows in taking interest in the customer beyond the product/service exchange. This is usually called CRM.

* CSR shows in open and fair communication not only among staff but with the market too.

* CSR shows in not posting billions of profit but in redistributing it among those who really need it, or doing something that leads to a decrease in numbers of those who really need it. Ideally those profits should have never been made, because with money being a finite resource for most of the people, it simply means "we have overcharged them beyond measure and reason in order to accumulate such profit".

* CSR shows in supporting people or projects without the direct aim of benefitting from it right away, although the very fact of the support often results in acquiring their custom later on.

* CSR shows in minimum working hours rather than maximum. The more time people have for themselve and their family, the less likely it is they shove the kids into a crêche and the old folks into a retirement village or old age home—the less likely it also is they (for a lack of time) fall for the first thing they see, but inform themselves about alternatives, which in almost all cases are the better choices. As an immediate example, Internet Explorere vs. Opera/Firefox springs to mind.

In general, CSR shows by doing something positive rather than negative, as like attracts like. Although never scientifically proven or written down by anyone, I firmly believe in the Law of Karma: what goes around comes around—the law of cause and effect, of action and consequences.

CSR shows by doing unto others what you want to be done unto you.

CSR shows by sustaining rather than exploiting the environment you are operating in.

CSR shows by educating people rather than deliberately keeping them un- or misinformed for your own gain.

CSR also shows in the product and service you are offering. Convenience is one thing, unhealthy food/beverages another. Toxic production processes result in toxic products. Toxic thoughts result in toxic services that no one _really_ needs.

And all that just off the top of my head without even having had breakfast. Smile

In general, one can apply CSR kool-aid as a quick remedy, but that shouldn't distract from the fact that our capitalistic system is morally corrupt, rotten to the core, unsustainable for both people and the environment, and generally not something I'd want to leave to my children and grandchildren, whom I would dearly like to play outside without having to worry, whom I would like to be able to chew on something without the worry of it being toxic, whom I'd like to grow up in an environment where they can trust other people rather than acquiring a belief system that is based on mistrust and fear: fear of abduction, fear of mistreatment, fear of exploitation, fear of manipulation, fear of never being good enough..

Ideally, the whole socio-economic and moral system we are operating in should be changed, because then we'll realise that we don't have to spend (waste?) time on CSR, simply because it's an integral part of the whole. Just as CRM would be, if if wasn't for the rotten system/environment we operate in right now.

CSR and CRM are just band aids. However, they are a start. They also show that not everyone is corrupt. They show there is hope. Hope for a better world than the one we are creating right now with our toxic thoughts, toxic actions, disconnected from the Source, disconnected from pretty much everyone except ourselves. Hope that those who have brought us to where we are now are moving on to a different realm (read: die!), and that the new generation no longer tolerates the status-quo.

And hope dies last.

Helmar

Addendum: It is obvious that CSR means different things to different people, just like CRM. But what unites them is a morally just, self-less and community-oriented foundation, IOW an enlightened and connected state that is borne out of awareness of and respect for the Law of Karma, the Law of cause and effect, of action and consequences. And those deluding themselves that their misdeeds don't have an immediate effect, well... they also have children and grandchildren.

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Helmar Rudolph helps companies succeed with their CRM-related business transformation process by utilising his unique "Diamond CRM" framework.

http://www.helmar.org

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Helmar
Member

Posted 29-Jun-2005 10:44 AM
Deafening silence. No one's got anything to add here, even if only to tell me that I've lost it? I'm sure there are other sides to CSR that I haven't covered. Care to add them?

Helmar

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Helmar Rudolph helps companies succeed with their CRM-related business transformation process by utilising his unique "Diamond CRM" framework.

http://www.helmar.org