Corporate social responsibility (CSR) is initiatives that companies take to give back to the society within which they operate. CSR initiatives fall under three broad categories namely; environmental, social, and economic. In the past, many companies did not consider CSR very important, and when they did it was often to do with insincere commitment to safeguarding the environment. However, consumers are now more than ever conscious of social and environmental issues; customers are now more aware of climate change and unethical labor practices. For that reason, companies have been compelled to put in place initiatives that not only improve their profitability but also policies that benefit the society at large. Although it was widely believed a number of years ago that businesses should only concentrate on their profitability, the last few years have seen a major shift in this opinion. That said, a research done on online consumers in 2015, revealed that 66% of them were willing to pay more for goods or services from companies that are socially and environmentally responsible. The research also indicated that companies which incorporated sustainability and CSR into their practices do better than those that do not (Nielsen, 2015). Companies that do not make CSR part of their culture are, therefore, likely to lose their customers to rivals who do. Apart from the likely loss of customers who are socially and environmentally conscious, CSR affects companies’ capacity to attract talented employees; impacts employees’ job fulfilment levels, and affects a company’s ability to retain employees.
Ethics are principles or values that direct the behaviors or actions of a person or people about what is right or wrong (Sexty, 2011). In a business context, however, it is the use of ethical principles like honesty, fairness, and so forth to relate with customers, co-workers, employees, and so on (Daft, 2001). Business ethics is, therefore, a general term that covers all ethics-related matters that arise in the process of doing business. CSR, on the other hand, refers to the initiatives that companies put in place to ensure that in their quest for profits; they do not do so at the expense of the environment or the society within which they operate. Business ethics is broad, in that, it touches on customers, co-workers, employees, rivals, and so forth; CSR, on the other hand, is very specific, that is, it only about what an organization owes the society and the environment.
Perhaps the most important benefit of CSR to a company is that it enhances workers engagement. An employee who considers her company ethical is more likely to be supportive of her colleagues, more willing to collaborate, and more likely to create better relationships with her peers. Companies that practice CSR have also been known to experience improved creativity among their employees; this is because employees feel a greater sense of belonging to the company. As such, they work harder, collaborate more, make sacrifices, and invest more in the company in the way time and effort (Mirvis, 2012). In addition to that, companies that urge their employees to participate in CSR especially during work hours create workers who are motivated and workers who feel that their employer values their personal growth (Glavas, 2016). These workers also feel motivated by the chance to be resourceful with their skills for a charitable cause. Furthermore, workers who participate actively in CSR, also act as brand ambassadors for their company. The more the employees identify with the company; and the more they participate in the community within which the company operates the more productive and beneficial to the company they will be. As a matter of fact, organizations or companies with highly active employees post better profits than companies without these aspects (Kassab, 2017)
With regards to hiring, CSR can help an organization to attract the best talent. Research shows that young workers, especially those born after 2000, prefer working for companies that respect the environment or rather, companies that value CSR. In fact, a majority of all young people entering the labor market now say that they prefer jobs that have a positive effect on the environment and the society (Deloitte, 2016). As such, an effective CSR strategy can help a company not only attract but retain best quality employees. Quality employees ultimately translate to better profits.
Consumers are now more conscious and sensitive of goods and services they purchase. Research shows that consumers prefer goods and services from companies that value CSR. In fact, a majority of them are willing to pay a premium for goods from such companies (Nielsen, 2015).
An effective CSR can also help an organization to attract more investors, partners, and so forth. By demonstrating that the company is not just about making profits but also sustainability and the future, the company can attract a lot of future-oriented or visionary investors. In addition to that, investment in CSR demonstrates that the organization is healthy and forward-looking. Admittedly, being socially and environmentally friendly can cost the company a bit of money in the short term. However, research shows that companies that adopt green policies perform better than those that do not in the second year of adopting those policies (Glavas, 2016).
In spite of the many benefits, CSR has a number of drawbacks as well. According to Milton Friedman, CSR changes the attention of the company from its most important objective; which is to generate profits and returns for the investors. CSR detracts the company from its key responsibility; which is to make a profit to its shareholders; instead of investing all their resources towards making a profit, the company diverts some funds towards CSR. In a nutshell, CSR uses up company’s resources without a guarantee of return.
Additionally, CSR initiatives increase the expenses of the company. This increase in expenses is often passed on to the consumers; nevertheless, it makes goods and services from CSR compliant companies less competitive in the marketplace. Big companies can take on or rather absorb these increased costs and may choose to not pass the same to the consumers; small and middle-sized companies, however, do not have this option.
The most successful company initiatives are often the initiatives that align well with the values that management, employees, and customers believe in or share. Where many companies blunder is when they put in place initiatives without taking the company’s values into account. Consequently, they struggle to make the initiative clear and to make it relevant to the company values. An example of these initiatives is CSR. CSR initiatives of many companies are often not consistent with the values of the company. Most companies usually start CSR in response to negative publicity. Consequently, they end up with a CSR initiative that does resonate with employees, customers or the management.
CSR has in recent years gained a lot of renown and awareness; similarly, the business environment has grown more global or international; as such, multinational companies are running into many varied national cultures. For that reason, it has become crucial for these companies to take these different cultures into account when making a decision about which approach to use in putting in place a CSR program as different countries have different expectations from CSR. In any case, CSR does not yet have a universally accepted definition or interpretation; CSR still means different things to different people across the globe (Freeman " Amir, 2011). There have been, for instance, complaints from American companies that Chinese Companies do not respect human rights and the environment. That said, before multinational companies put in place CSR initiatives they should be mindful of the different cultures, labor laws, and so forth of all the places they operate in.
CSR ensures that organizations operate in a manner that is ethical and beneficial to society. In addition to that, CSR ensures that companies take responsibility for the impact they have on the society, the environment, and human rights. CSR has many benefits; it also has some drawbacks. Nevertheless, the benefits outstrip the disadvantages. CSR helps companies attract the best employs, attract investment, and so forth. It also benefits society in the way of schools, hospitals, and other social amenities. That said, CSR can also be misused by companies in the way of exaggerating the cost incurred in CSR and passing the same to the consumers.
References
Daft, R. (2001). Essentials of organization theory and design. South Western Educational Publishing.
Deloitte. (2016). The 2016 Deloitte. Retrieved 10 24, 2018, from Deloitte: https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-millenial-survey-2016-exec-summary.pdf
Freeman, I., " Amir, H. (2011). The meaning of corporate social responsibility: The vision of four nations. Journal of Business Ethics, 100(3), 419-443.
Glavas, A. (2016). Corporate social responsibility and employee engagement: Enabling employees to employ more of their whole selves at work. Frontiers in psychology,
Kassab, M. (2017). Forget Work Perks. Millennial Employees Value Engagement. Retrieved 10 24, 2018, from Harvard University: https://www.extension.harvard.edu/professional-development/blog/forget-work-perks-millennial-employees-value-engagement
Mirvis, P. (2012). Employee engagement and CSR: Transactional, relational, and developmental approaches. California Management Review, 54(4), 93-117.
Nielsen. (2015). Consumer-goods' Brands that demonstrate commitment to sustainability outperform those that don't. Retrieved 10 24, 2018, from Nielsen: https://www.nielsen.com/us/en/press-room/2015/consumer-goods-brands-that-demonstrate-commitment-to-sustainability-outperform.html
Sexy, W. R. (2011). Canadian business and society: Ethics and Responsibilities. Ryerson: McGraw-Hill.
