When big businesses have as much economic clout as many countries, they need to start looking at their social responsibilities, writes Kellie A McElhane.
CONSIDER THE following story about Wal-Mart, the American big-box retailing giant. After receiving Wal-Mart's internal employee training on sustainability, Darrell Meyers, an employee in a North Carolina store, was sitting in his Wal-Mart break-room staring at a wall full of vending machines, each showcasing lights and sound cards playing the Coca-Cola theme song. Meyers swiftly crafted an e-mail. In it, he inquired if there could be energy saved by removing light bulbs and sound cards from these vending machines, which stayed lit 24/7 and needed to be replaced from time to time by maintenance workers.
After all, he did not need a musical vending machine on his break from work. They did not need to compete for attention. Turns out, Meyers was on to something.
His idea percolated up to Wal-Mart's corporate headquarters, engineering ran the numbers, and they estimated that Darrell's suggestion would save the company more than $1 million (€635,000) a year. Today, you'd be hard-pressed to find an illuminated, commercial-playing vending machine in any Wal-Mart store or office.
This is hardcore corporate strategy. Corporate social responsibility (CSR) should be a part of every business's corporate strategy, as it has of late - albeit slowly - become at Wal-Mart. And as this story shows, it can ultimately impact upon a company's bottom line.
With the explosion of CSR coverage and activity over the past five to eight years, there is now a lot of talk about it in the business world. There is not, however, a lot of effective, strategic CSR - CSR that is linked to a company's core business objectives and core competencies designed at the outset to achieve positive financial return, as well as positive social/environmental impact.
We live in a world where big business now has as much economic clout as many nation states. In fact, when you look at the 100 top economies in the world, it only takes to number 23 until a company appears on the list. The company Exxon is richer than 77 per cent of the world's countries.
We also live in a world with no shortage of retractable problems - lack of clean water, poor education, lack of adequate healthcare, depleting natural resources, disease, and climate change, to name just a few.
The typical tendency for companies engaging in CSR is to try to tackle all of these worthy social/environmental challenges at once. After all, they are all worthy and needed.
This is a mistake. My strong advice is for companies to pick a social/environmental cause for which they own part of the solution, or a societal challenge which they indeed helped to create.
Consider Whirlpool, the home appliance manufacturer, and their deep partnership with Habitat for Humanity International. It behooves Whirlpool to have as many citizens move into new homes as soon as possible. This meets their core business objective of selling home appliances. It also fits their core competency of producing and selling high quality, energy-efficient home appliances - a win-win business strategy.
Even though many companies across the globe have been doing more to work on societal issues of education, healthcare and the environment, many are not talking about it.
The result is that the average consumer, employee, governmental regulator or supplier has no idea what the company is doing in terms of CSR - which means stakeholders cannot factor the company's CSR efforts into their decision to engage with or buy from the company. Building CSR communications and stories into a company's brand makes good business sense, and allows the company to increase the impact of their strategy. Here are seven simple steps to build CSR into a business's brand:
1. Know thyself
Link your CSR strategy to your company's core competencies to get committed senior leadership support. This will protect your CSR strategy in tough times and enhance its value.
For example, if you're in a telecom company whose chief executive is focused on growth, and you intend to launch CSR initiatives related to education and youth projects, demonstrate to your company's leadership how these initiatives can be an entrance strategy for new markets.
2. Get a Good Fit
It's tough to select just one social or environmental cause to champion when every one is worthy, needed and critical. Your job is simple: pick a social or environmental challenge for which you own part of the solution. Leave the other causes for other companies.
3. Be Consistent
Ensure that your company always tells your CSR story the same way, regardless of whether it appears in chief executive speeches, recruitment and retention strategies, traditional advertising and marketing channels, in-store point-of-sale branding outlets or in new market entrance strategies. Give your CSR strategy a catchy name, and define it simply so that people throughout your business can adopt it. This does not mean making up new business or operational systems; rather, embed one CSR story into your already existing communications, marketing, branding, and operations.
4. Simplify
The critical masses do not grasp concepts like carbon sequestration, carbon storage or carbon trading. They may not even fully understand things like fair trade, human rights in supply chains, or living wage.
Instead, employ simple yet eloquent language, as the pet food manufacturer Pedigree did when launching its CSR partnership with the Society for the Prevention of Cruelty to Animals (SPCA).
The campaign, meant to help homeless dogs find loving homes, had a simple catchphrase: "Help Us Help Dogs". Consumers get this.
5. Work from the Inside Out
To employees who are educated about it, CSR is like a drug: give them a little, and they'll want a whole lot more.
Start by educating your employees about your CSR strategy. Your employees are not only your biggest (and most efficient) brand ambassadors; eventually, they may come to you with better CSR ideas and strategies, just like Wal-Mart's Meyers.
6. Know Your Customer
Not every customer segment is as ready for CSR stories as others. A few have proved very ready: women, Millennials (people between the ages of eight and 24), LGBT (lesbian, gay, bisexual and transgender individuals) and conscious consumers.
Start with a laser-sharp focus on communications linked to products and services targeting these segments.
7. Tell Your Story
Stories trump facts 10 times out of 10, period. Bottom line: you must communicate your CSR message. By not communicating, not only are you missing an extremely powerful business opportunity, you are sending the message that you're doing nothing in the CSR space.
And if you neglect to spread the word, a company which has been at CSR for a far shorter time, and far less substantively, will race forward, communicate and grab your market share.
Company leaders have a powerful opportunity to integrate CSR into their brand, which will positively impact consumers, employees, suppliers, retailers, governments and communities.
You can and should brand and communicate your CSR, as uncomfortable as it may feel. Corporate social responsibility can help firms - particularly those in highly commoditised industry segments, such as consumer products or banking and financial services - to differentiate their brand and stand out above the noise, when price, quality, and convenience are relatively equal.
And this positive impact creates a competitive advantage for these firms, both when markets are up and when they're down. Lose the fear, embrace the risk (after all, everything in business is risky) and go to it.
Prof Kellie A McElhaney is executive director and adjunct assistant professor of the Centre for Responsible Business at Haas School of Business at the University of California, Berkeley. This article is excerpted from McElhaney's autumn 2008 book, Just Good Business: The Strategic Guide to Aligning Corporate Responsibility and Brand (Berrett-Koehler). For more information, contact Kellie A McElhaney at kmack@haas.berkeley.edu
GETTING INVOLVED WITH CSR IN HAITI
NEIL O'LEARY
"Sometimes people, including myself, need to have their noses rubbed in it to realise that you are not doing okay by just giving money, you have to give your time as well," says the Ion Equity chairman of his visit to Haiti.
O'Leary would have been very familiar with current thinking on Corporate Social Responsibility (CSR) given Ion's involvement in consumer business, most notably the fuel retailer Topaz. It already has a programme in place to act in an environmentally responsible manner and improve the standard of service on its forecourts. O'Leary is under no illusion as to the scale of the challenge in Haiti or what can be achieved.
"The structural problems facing Haiti - such as the need for law and order - mean that a small group of Irish entrepreneurs are not going to change things in a hurry, but that is not to say they cannot have an impact," he says. O'Leary is also involved in the La Caye teacher training project .
"There are certain areas - like education - where by focusing on a few initiatives, you can have a sustainable impact." Education is also the area targeted by Digicel, the Irish-owned mobile phone operator in Haiti, which O'Leary sees as a very genuine CSR initiative."They could do much less and still be a more popular company by sponsoring sports events and the like," he says.
PATRICIA O'HAGAN
"It opened my eyes to how we could have a more strategic approach to CSR," according to O'Hagan, who is managing director of biometric identity business Core Systems. The company already had a committee that supported charitable initiative by staff, but O'Hagan is now th°+++inking in much bigger terms.
"We don't sell direct to the public so I think the model for us is to try and influence our industry, which is correction and custody management," she says. The company will look at linking its research and development strategy to projects that have a positive impact on issues such as overcrowding in prisons.
This might involve tracking systems that allow people serve sentences under house arrest, she speculates. Information systems for prisoners are another possibility, she says.
The main lesson from Haiti was that what ever her group achieves, it will be via the leaders in the local community. Her group looked at projects in the rural village of Port a Piment, including the development of a tourism attraction around an extensive cave system.
DR SEAN ROWLAND
"It made me think about what we are doing and how we are doing it," says Rowland, the president of the on-line, third-level institution Hibernia College. His CSR epiphany - of sorts - was realising the extent to which his business (teacher training and other types of educational programmes delivered over the internet) was already ticking the boxes from a CSR perspective.
Delivering education over the internet negates the need for physical facilities and travel, he says. "You don't have to heat the building, students don't have to drive, they don't have to rent a flat," explains Rowland, who plans to establish a team to look at how the company can develop the concept.
In Haiti, Rowland was part of the group that visited the La Caye teacher-training college and school.
The group plans to address the short-term need for benches and other equipment in the school, as well as a more ambitious project to provide additional training for teachers in English and IT, possibly via the internet.
