Corporate Social Responsibility (CSR) is an organization’s commitment to produce an overall positive impact on society. CSR encompasses sustainability, social and economic impact, and business ethics. It makes a company socially accountable of its operations, stakeholders, and the public. Businesses undertake CSR programs to benefit society while boosting their own brands.

CSR affects every aspect of business operations and functions. Encouraging equal opportunities; partnering with organizations practicing ethical business methods; putting part of earnings back into environment, health, and safety initiatives; and taking care of communities and charity are all examples of CSR initiatives.

Communities, customers, employees, and media consider CSR vital and gauge companies based on these initiatives. Executives of leading companies consider CSR as an opportunity to deal with critical issues innovatively, reinforce their organizations, and serve the society simultaneously.

The Need for CSR Implementation

Organizations need to come up with a robust approach to unlock potential benefits and value from CSR for them and for the society. The organizations practicing Corporate Social Responsibility do that with one of the following 4 objectives in mind:

• Philanthropy: These initiatives (e.g. corporate donations) make the companies and society feel good, but produce low value for the business — questionable repute building benefits to companies, but offer much to society.
• Propaganda: These CSR initiatives are predominantly geared towards promoting a company’s standing, but offer little real value for the society. This form of CSR is more of advertisement and becomes risky if there are any gaps between the firm’s commitments and actions.
• Pet Projects: Some companies engage in CSR initiatives that support the personal interests of senior executives. These initiatives are much touted about, but are actually of little value to the business or community.
• Smart Partnering: These initiatives concentrate on common themes between the business and the community. Organizations, in this case, create innovative solutions by drawing synergies from partnerships to tackle major issues concerning all stakeholders.

Among these objectives, Smart Partnering offers maximum opportunities for shared value creation and finding solutions to crucial business and social challenges. Whereas for the society, smart partnering helps create more employment opportunities, improve livelihoods, and enhance the quality of life.

Guiding Principles for CSR Initiative Selection

An effective way for the companies to maximize benefits of their CSR efforts is to map the current initiatives; identify the objectives, benefits, and resources responsible for realizing value from those initiatives; and define the projects valuable for addressing key strategic challenges.

Pet projects, philanthropy, or propaganda are easy to plan and execute. However, the real issue is to implement CSR opportunities that bring value for the business as well as society (smart partnering). This goal can be achieved by applying these 3 guiding principles:

1. Focus on the right segments

Real opportunities lie in the segments where the business collaborates with and influences the society the most. These segments help the business interpret mutual dependencies and uncover maximum mutual benefit.

2. Recognize challenges and benefits

After finalizing the opportunity segments, it is imperative to appreciate the potential for mutual benefit. The key is to find the right balance between the business and community and recognize the challenges that both sides face.

3. Find the right partners

Collaboration with right partners — who benefit from business endeavors and capabilities of each other — creates a win–win situation for both sides and motivates them to achieve mutual value. Sustainable collaboration demands long-term alliances and deeper insights on the strengths of each other.

These principles are helpful in selecting appropriate CSR opportunities, identifying societal and business needs to be addressed, and the required resources and capabilities.

The Case for CSR Benefits

The goal of unlocking mutual benefits — associated with CSR (specifically Smart Partnering) — is critical for long-term success of the program. As required by any other strategic initiative, the mutual value creation objective needs to be carefully assessed based on the true value-creation potential, prioritized, designed, staffed, and audited.

The next step is to outline the list of potential benefits for the business and community. A well-defined business case and a compelling story immensely helps involve and gain commitment from the senior leadership, investors, and employees.

Interested in learning more about how to tap CSR opportunities effectively? You can download an editable PowerPoint on Corporate Social Responsibility (CSR) Opportunities here on the Flevy documents marketplace.

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Most companies have ethics and compliance policies that get reviewed and signed annually by all employees. A company policy states that “Employees are charged with conducting their business affairs in accordance with the highest ethical standards.” “Morals, as well as legal obligations, will be fulfilled in a manner which will reflect pride on the Company’s name.” These all come from a company’s policy. Yet, to sustain a truly ethical organization, it takes more than a compliance policy or Values Statement.

“Corporate ethical failures have become painfully common, and they are not cheap.”

Billions of dollars have been paid in fines by companies charged with ethical breaches. Despite good intentions, organizations set themselves up for ethical catastrophes. In this age of corporate mistrust, creating an ethical workplace takes more than compliance programs.

Unraveling the Ethical Organization Paradox

According to the National Business Ethics Survey, leaders make concerted efforts to pay holistic attention to their organization’s systems. Yet, despite progress, a number has failed.

• 41% of workers reported seeing ethical misconduct in the previous 12 months
• 10% felt organizational pressure to compromise ethical standards
• $185 M in fines imposed on Wells Fargo as 5300 employees opened up more than a million fraudulent account.

Despite good intentions, organizations set themselves up for ethical catastrophes. The paradox is, without realizing it, organizations tend to create an environment in which people feel forced to make choices they could never have imagined.

Preventing ethical catastrophes can be done. Organizations just need to create that environment where people are encouraged to make ethical choices. There are 5 critical ways organizations can boost ethical decision making.

Boosting Ethical Decision Making in 5 Effective Ways

Boosting ethical decision making is important. This can be achieved when done using the most effective ways.

1. Foster a Speak Up Culture. This is best applied when the courage needed to raise ethical concerns are inhibited.  The corporate culture will dictate how people within the organization behave.
2. Create Realistic Performance Targets. The second way of boosting ethical decision focus on ensuring that people do not make compromising choices to reach targets.
3. Ensure Goals Are Fair and Non-conflicting. The culture of fairness in the organization is the main focus here. This is best applied when there are conflicting goals in pursuit of growth.
4. Infuse Ethics into Regular Activities. This approach is the most challenging but life-changing. Often, leaders talk about business ethics only when there is a scandal or as part of the organization’s compliance program. Infusing ethics into regular activities ensure that ethics becomes an everyday part of the organization and its DNA. It becomes embedded in the way people relate with each other, work with each other, and even in the application of its processes and systems. Here, ethics become your organization’s everyday life.
5. Set a Positive Example. Leaders play a vital role in setting higher standards when it comes to ethics. Essentially, they must be able to put themselves in the shoes of those they lead to see what unintended meaning they are sending. This can be seen in how they react to stressful situations or event confront poor performance. Leaders need to become extra vigilant as others may interpret their actions or behavior otherwise.

Organizations don’t want to find themselves in a front-page scandal. Hence, they must scrutinize their actions to far greater degrees than they may have realized. The 5 Ways of Boosting Ethical Decision Making can just be the organization’s steppingstone towards transforming into an Ethical Organization and sustaining it.

Interested in gaining more understanding of how Ethical Organizations improve Ethical Decision Making? You can learn more and download an editable PowerPoint about Ethical Organization: Improving Ethical Decision Making here on the Flevy documents marketplace.

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