We discuss Corporate Social Responsibility, the influence business can have on the community it serves, and the ways it benefits employees, customers, and profits
We discuss Corporate Social Responsibility, the influence business can have on the community it serves, and the ways it benefits employees, customers, and profits
Hello, and welcome to the realm. I'm Dr. D, I bring the strategy.
Dr. K:And I'm Dr. Kay, I bring the psychology, we are business psychologist and your guides to the executive route where we bring strategy
Dr. D.:and psychology together so you can bring your best to your C suite, your teams and your customers. Today, we are talking about corporate social responsibility, the influence business can have on the community it serves, and the way it benefits employees, customers and profits. So let's get to work. Dr. K, how do you define corporate social responsibility,
Dr. K:it is the initiatives and responsibility that a corporation takes that influences their legal, ethical, discretionary and economic platforms or ideas that they have within the world. Oftentimes, it's something as simple as volunteering, sometimes it is a much bigger initiative. It is a social aspect of what a corporation brings, it brings benefits to a human component, it brings benefits to the employees component, as well as to the environment.
Dr. D.:When I think about corporate social responsibility was people planet profit, the triple profit aim. Really what that meant to me was, of course, you've got to stay profit focused as a business because a business needs to maintain a margin to continue to operate. You want to support the planet, that means environmental focus, doing what's right not polluting. Now, it's a lot of going electric or being carbon neutral. And then of course, there's the people component, which many companies have diversity initiatives and inclusion initiatives within their organization, gender equity, and parity. All of these things are things that organizations tend to already be doing, if they are good corporate citizens. Am I right?
Dr. K:Yes, absolutely. I mean, there's, you know, with corporate social responsibility, there are a lot more aspects. That's where, for me, the social part comes in, it includes the consumers, it includes the employees, every level of employees, it includes, you know, as you said, profits, and it's also taking care of the environment, there is a another component of a governmental or legal aspect as well, which isn't always that's not the big bite, or the sexy part of corporate social responsibility. But it is something that is very important for an organization to consider is keeping the legal or ethical component of corporate social responsibility at a very high standard.
Dr. D.:So just by operating with good solid business ethics, you are engaging in corporate social responsibility, you're engaging in behaviors that engender trust in the market, engender trust in your employees and engender trust in your customers. When you bring up corporate and risk and legal. And that's not something that immediately would come to mind to me with corporate social responsibility. But it does make sense because if you're operating at a set of standards, and serving the community in an ethical and straightforward way and trying to do what's right, it sounds like you would end up with lower government scrutiny, and you could mitigate your risks as an organization.
Dr. K:Absolutely. We can look at companies such as Enron, and there was a lot that went with that it wasn't just the people, you know, that got caught or in trouble that trickled down to the employees that worked for the company. It plays a toll on their there's psychological stamina, or it plays a toll on a little bit on their emotions. We take on that as a persona of ourselves. So yes, doing everything legally and ethically is a great start. However, there is a lot more for especially nowadays, with the improvement of trying to you know, watch our carbon footprint, or giving back to the communities or serving lower income or struggling areas. There is a lot more now that people are expecting through these corporate social responsibility, which we can call it CSR. So through the CSR initiatives, it is expected that a company is working legally and ethically. So to say, Well, look, we're we're corporate social responsible. Look, we you know, everything that we do is done equal, legally and ethically is not exactly enough to create the atmosphere, the high level of corporate social responsibility.
Dr. D.:That makes sense, it's interesting because so much of developing your brand is about reputation management, maintaining your reputation in the marketplace. So if you're doing the bare minimum and your definition of Corporate Social Responsibility is, we are an organization that adheres to the law, and we have a code of ethics that we adhere to, that's really not enough anymore. Because if your competitors are operating to a higher standard, you're really eroding trust by not adhering to higher standards. And you can gain a competitive advantage, if you get to those standards and engender a higher level of trust in your competitors with your customers. If you are unethical, your employees would not have trust and even more importantly, your customers won't have trust in you and you will lose market share, you will end up spending a lot more money on risk mitigation and government intervention, potentially, then if you are operating at a minimum ethical standard. But by doing more, you engender a higher level of trust, and that can give a competitive advantage.
Dr. K:Absolutely. If a employee is proud of where they work, because they let's just go with thing, just give back to the community in addition to being ethical, and you know, having high ethical and legal standards, what research has found, it creates a positive, not only a positive perception of the organization itself, but then it leads to a positive feeling about themselves within the company, which then that can progress into positive feelings of their work roll. It also has been found to increase job performance. People are proud of where they work. So why would they not want to give back, they want to provide for the company, what the company is providing for them, which is a higher sense of self, and a feel good attitude about where they work, as well as just workplace attitude. The employees themselves want to give back, they want to do more.
Dr. D.:Corporate Social Responsibility can tie in pretty closely with diversity initiatives, as well as employees engage in socially responsible activities that are supporting communities that are close to them, then that would help them become proud of the place that they work.
Dr. K:Absolutely. It's encompassing human interest. One of my findings in all my research was an engaged employee is more profitable for the company in multiple ways than a disengaged employee. And we are struggling in the world with disengaged employees. As an organization, if you say, we're going to take a poll to see what human interests you have going on what you think we could where we could help in the community, where you think that we could help in the world, any of the ideas that people would have, and you ask the employees, you get their ideas, and you allow them to provide their ideas, also, maybe allow them to develop ways to get this done, and then help allow them to initiate it is going to be a game changer for the organization. If you allow their human interest to come out at work, they're going to be more engaged at work. They're not just an employee, they're not just a number, they are a human being that feels a part of a team.
Dr. D.:That's a recurring theme in many of our conversations is aligning your organization and your teams with your mission. So your corporate social responsibility aims can be aligned with your mission. You get your team, your employees excited about the way that you're supporting your community, which can also include your customers and your employees and really give you a good advantage because you're putting your money where your mouth is. You're investing time energy, probably a modest actual cash investment, it's coming with a good payoff a profit of its own. It's not only supporting, building your customer base and making your employees feel more engaged which reduces turnover and all those other hidden cost savings through employee retention, but it also builds brand reputation in the community and strengthens loyalty. Those sorts of activities are good for business in general.
Dr. K:Totally agree. And as much as corporate social responsibility just sounds amazing. There is a negative side to corporate social responsibility and that would be the employees perception of why this is being done. If a employee feel that the reason why the Corporate Social Responsibility initiatives are being put out there is inauthentic. It can negatively impact what is happening, which then can Take a turn for the worst, it can create that disengagement, it can create negative work attitudes. So it's important to not only know why you are developing these initiatives, but as you said, to make it part of your mission, but it's important to create a sense of authenticity with these initiatives for the employees to jump on board. So you have to be careful of why an organization is implementing these initiatives. Is it just the competitive advantage? Or is someone looking to do good?
Dr. D.:Authenticity is really important, particularly coming off of last week's discussion where we talked about the ivory tower and decisions coming down from "on high" and employees not feeling like they're part of it, it's important to have a corporate wide initiative for CSR. But it also has to be local. And it has to engage the frontline folks is what I'm hearing you say. In the world of social media, collecting ideas from people in a distributed environment, and allowing people to upvote or downvote ideas are pretty commonplace. Understanding if you're a large organization and multi locations, and you can allocate some level of funding, some level of time allowance for employees who want to engage, to select their own initiatives, vote on which ones you're going to support locally, and give people the opportunity to develop the plan. It could be a leadership development thing. It gets people really engaged, and really democratizing and crowdsourcing your CSR initiatives sounds like it makes a lot of sense. Maybe not your entire social responsibility program, because that is a very large thing, when you're talking about ethics and legal and are trying to go carbon neutral in the organization or committing to having a diversity in your employee base that reflects the population that you serve, for example. A local unit of a business can't do that themselves. But they can go out and build a Habitat for Humanity or create a grant for flu vaccines for seniors, or helping folks get to medical appointments on time, or whatever it is. Whatever a passionate and engaged workforce would want to do to help support their community. So yeah, crowdsourcing seems to make a lot of sense.
Dr. K:Yeah, it's been known that we knew a lot of the macro level, but now the micro level, okay, we need to look at this, we need to understand what it provides. And a lot of you know, CSR outcomes, psychological safety, psychological availability, values, congruence, people are feeling positive with the CSR, as well as it provides purpose. Not only am I an employee, but I'm an employee of a company that provides purpose to the world or provides purpose to our community. It's very important, because what all that in the end creates, is workplace commitment. It creates employee engagement, it, it also allows a person to feel or perceive that they have more organizational support.
Dr. D.:Now, a person's motivation for coming to work is personal to them. And it's a great kind of psychological term'value congruence'. But it really makes sense that if what I'm doing at work on a day to day basis, is aligned with my values, I can engage in my community or my passions in the way I feel good about what I'm doing. And I'm adding value to the organization and the customers and I'm aligned with the mission of the organization. I'm just generally going to be happier and more engaged in how I do work. I mean, it just kind of clicks all the boxes for me.
Dr. K:It just kind of makes sense.
Unknown:Yeah, that does anyone have the end? Oh, sorry. No, go ahead. Go ahead.
Dr. K:No, you go. Okay.
Dr. D.:I was gonna change the topic a little bit,
Unknown:so let's change
Dr. D.:Okay. Well, one of the arguments against Corporate Social Responsibility is why would you invest in something that is extra? Aren't you really eroding profits away from your bottom line? There have been a number of studies done about this. I was particularly interested as exploring this is, is it a profitable venture, and the studies have come out all over the place and some of them are very biased, saying, invest all your excess profits in corporate social responsibility. That's not tenable. Invest no money in corporate social responsibility. That's not tenable. Because all the reasons that we talked about on both sides, but what the most comprehensive macro level studies of spending and profitability on corporate social responsibility and corporate social responsibilities effect on profitability is that it doesn't help nor harm, overall profitability. So if you invest$1, you'll get that dollar back, but You're probably not going to get $1.10 back in profit. Now, there are ways to align your social goals so that it does support your profit initiative. But you're not going to lose money by investing in Corporate Social Responsibility initiatives, especially if it helps mitigate risk within your organization can keep some legal risks at bay, and ameliorate some of the human resources, risks or governmental risks your industry as a whole could face your organization can live above your competitors a little bit, just enough so that you are the more trusted resource in your marketplace.
Dr. K:And to piggyback off that, it may not be a tangible dollar sign. But you're profiting by keeping engaged employees, you're profiting by keeping people that understand the company, you're profiting by keeping employees that want to stay. So the profit may not be 100% tangible dollar signs. But it does not mean that the company is not profiting. And you know, if
Dr. D.:an employee leaves because they're unhappy, and they have a strong skill set related to your industry, they pretty good chance you're probably going to go work for your competitor, right. So you keep an employee from leaving, you're keeping a good employee from one of your competitors. So play retention, it's a it's a good enough reason to invest in the right way so that your teams are engaged in aligned with the mission. Absolutely.
Dr. K:However, it does take effort to put it together, there's ability to hire someone that is well versed in CSR initiatives and how to make that happen. There might be just people that have had within the company already, that has the experience. And if they are not working on a big project, or they have a moment, maybe they can throw ideas together. Fortunately, there is a wide range of people's talents that do not get used within the company. And you may not have to, you know, hire someone to do it. The important part is to make a clear cut plan. involve your employees at every level, not just your lower level of their frontline. It's all levels. But the biggest part is is not walking or not talking just the talk, it's doing the walk and making it an action plan. Alright, so with all of that, dr. D? How can leaders prepare?
Dr. D.:Well, given all the great advice in your perspective and expertise in the area, here's what I took away from the conversation. Start by inventorying ways your organization is already acting as a responsible corporate citizen crowdsource from your employees, what initiatives are important to them and to their communities. Align your corporate social responsibility aims with your organizational mission and align your employees to that mission. create opportunities for volunteering, aligning employees with community needs, explore community and not for profit grant making. Align your actions with your marketing teams, your legal teams and your risk management team so you can get the full benefit and follow through be consistent, be authentic,
Dr. K:and take action.
Dr. D.:Take action. Absolutely. great conversation today. What's on tap for next week?
Dr. K:Well, next week, we'll be talking about information and data overload when people over or under rely on data and information behavior in decision making.
Dr. D.:Very cool. And to all of you joining us on this journey to the realm Thank you so much. I am dr. D.
Dr. K:And I'm Dr. Kay and we are always looking forward to your next visit to the Executive Realm.