CORPORATE SOCIAL RESPONSIBILITY (CSR) Dr Nguyễn Thị Vân Hà Faculty of Business Administration 16/03/2013 | UTC | FET-DBA| Dr.Nguyen Thi Van Ha | ‹1› Copyright by Dr Nguyen Thi Van Ha Course Structure PART I: STRATEGIC CORPORATE SOCIAL RESPONSIBILITY  Textbook and References • [1] William Werther and David Chandler (2011) Strategic Corporate Social Responsibility (2nd edition) California: SAGE publications, Inc (Main book) • [2] David Crowther & Güler Aras (2008) Corporate social responsibility Ventus Publishing ApS [3] Michel Capron & Franỗoise Quairel-Lanoizelộe (2009) Trỏch nhim xó hi ca doanh nghiệp Nhà xuất Tri thức (Dịch giả: Lê Minh Tiến, Phạm Như Hồ) [4] Phillip Kotler & Nancy Lee (2008), Corporate Social Responsibility (2nd edition), Wiley India Pvt Ltd (Reference book) Chapter 1: What is Corporate Social Responsibility? Chapter 2: Corporate Strategy: A Stakeholder Perspective Chapter 3: How Much Does CSR Matter? Chapter 4: The Strategic Context of CSR? • Chapter 5: Implementation: The integration of CSR Into Strategy and Culture PART II: CSR ISSUES AND CASE STUDIES • Chapter 6: Organizational Issues and Case Studes Chapter 7: Economic Issues and Case Studies Chapter 8: Societal Issues and Case Studes 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹2›  Examination: Semi-multiple Choice in 90 minutes CHAPTER – IMPLEMENTATION: THE INTEGRATION OF CSR INTO STRATEGY AND CULTURE Chapter Five Outline  Introduction The CSR threshold •Variation among companies •Variation among industries •Variation among cultures CSR- an integral aspect of the firm? Implementation- short to medium term Implementation- building CSR into the organizational culture •From a strategic perspective: planning •From a firm perspective: action 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹3› 5.1 INTRODUCTION • This chapter provides insights as to what a firm must to integrate strategic CSR into the organization’s culture and actions • That is, when and how does a company become more socially responsible? • We address the when by focusing on the CSR threshold, a tipping point that triggers firms to move toward strategic CSR • Then we turn to the how by outlining the design, timing, and implementation of strategic CSR, introducing the necessary corporate infrastructure and key policy ideas 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹4› 5.2 THE CSR THRESHOLD • The decision of when to implement a CSR policy is compunded by why why, where where, how how, and by whom it should be implemented • The industry context complicates things further because of the varied stages of acceptance of CSR by different competitors • Although the value of an effective CSR policy within specific industries and companies is becoming increasingly accepted, the point at which such a policy becomes ripe for implementation varies 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹5› 5.2 THE CSR THRESHOLD • It varies with many factors, including: • the industry, • the current business environment, • the CEO’s attitude toward CSR, and • other factors • Companies can pursue an effective CSR policy for either offensive or defensive reasons • On the offensive side, the innovative, proactive CEO who is convinced of the intrinsic value of CSR sees it as an opportunity that can maximize company capabilities and identify new competitive advantages 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹6› 5.2 THE CSR THRESHOLD Examples:: Examples • Reduction of energy cost by innovative buiding design and recycling policies (Nike case) • Raise of morale and increase in retention through employee volunteer programs which reduce training cost • Companies with a progressive and innovative mind-set capable of designing and implementing effective CSR policies see benefits, ranging from being an attractive employer (helping retention and recruitment) to greater acceptance among government agencies and social activists 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹7› 5.2 THE CSR THRESHOLD • On the defensive side, CSR still has value for a company, primarily by avoiding criticism and other attacks on the firm or its offerings • In this instance, CSR acts like a brand insurance policy policy, minimizing or offsetting stakeholder response to perceived lapses in CSR disillusionment in Either approach assumes an up-front investment in creating CSR policies; however, when to introduce CSR into the strategic process depends on the driving force behind its implementation 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹8› 5.2 THE CSR THRESHOLD • For those managers convinced of the potential benefits of strategic CSR, there is no time like the present Innovative ideas and policies that maximize market opportunities, minimize costs, and increase productivity can produce immediate benefits • For managers yet to be persuaded of the argument for CSR and reluctant to invest up front for potential future gains, however, the temptation exists to look around at industry competitors and delay as long as possible • Worse, cynical managers might see CSR as merely a public relations exercise or, worse still, postpone hard CSR choices by assuming they can avoid outlays for health insurance – a risky, if not foolhardy, approach 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹9› 5.2 THE CSR THRESHOLD • Neverthless, a crises point can arise Once reached, and stakeholder backlash becomes sufficient to warrant the introduction of a reactionary CSR policy, it may be too late Summary: Summary: • Firms introduce CSR for different reasons • Implementing CSR proactively throughout the firm generates the business benefits listed above and may yield additional benefits associated with first-mover status • The genuine implementation of CSR, whether for offensive or defensive reasons, generates the insurance-like benefits, which render CSR lapses less damaging if committed due to factors outside the firm’s control 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹10› 5.5 IMPLEMENTATION –MEDIUM TO LONG TERM Beyond minimum start-up conditions for CSR, the organization must seek to institutionalize and externalize the subsance of its CSR policies Over the medium to long term, the organization should communicate its perspective, while seeking feedabck from stakeholder groups to make them feel both informed and involved 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹45› 5.5 IMPLEMENTATION –MEDIUM TO LONG TERM Stakeholder Involvement • All large, publicly held corporations have well-developed investor relations departments Keeping investors (main stakeholders) happy became a central issue for CEOs • This should be expanded to other stakeholders stakeholders • One approach would be to change the focus of the investor relations department to become the “stakeholder stakeholder relations department.” department • The goal should be to develop relationships with all stakeholder interests, including NGOs External activists demand attention from these stakeholder relation departments 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹46› 5.5 IMPLEMENTATION –MEDIUM TO LONG TERM Manage the Message • Strategic CSR is more than mere public relations • Communicating a company’s CSR efforts to the outside world is a sensitive area • Excessive self-promotion soon comes to be interpreted as a cynical effort of going through the CSR motions only to receive the public relations benefits • Avoiding the impression of spin is crucial; however, it is also important to let stakeholders know that the company values their input and interests 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹47› 5.5 IMPLEMENTATION –MEDIUM TO LONG TERM • The aim is to meet stakeholder expectations by matching promises with reality • Examples of companies that have failed to take the lead in determiing the public perception of their organization are many • Often the perception of a company in the public mind, once created, is difficult to shift Example: Nike • Because of the early lapses, the company continually finds itself having to play catch-up, with some stakeholders refusing to grant the company any concessions at all 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹48› 5.5 IMPLEMENTATION –MEDIUM TO LONG TERM Corporate Governance Transparency and accountability have become the watchwords of effective corporate governance, which also become a vital aspect of an effective CSR policy Increased legal requirements reinforce this change in sentiment for all but the most narrow-sighted of corporate boards However, equally important is the ability to move ahead of today’s legal requirements and anticipate the legal expectations of tomorrow 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹49› 5.5 IMPLEMENTATION –MEDIUM TO LONG TERM Corporate Activism  Activism alone is insufficient to remain viable in the long run  Activism of any sort, particularly CSR-related efforts must support an economically viable business strategy  Activism does not preserve an operation if basic economical, legal, or other business fundamentals are missing  Corporate activism is important because activism helps align the firm’s actions with the values of customers who care 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹50› 5.5 IMPLEMENTATION –MEDIUM TO LONG TERM Corporate Activism  Corporate Activism is more likely to win the firm the support of other stakeholders: employees, local communities, and government agencies  Corporate Activism must extend from the boardroom and senior executives through CSR professionals, throughout the organizational culture 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹51› 5.6 IMPLEMENTATION – BUILDING CSR INTO THE ORGANIZATIONAL CULTURE The primary CSR responsibility of the CEO is to actively support CSR and the CSR officer The CSR officer’s role is to hold the company accountable to its own CSR position statement The main method of achieving this is to conduct a substantive, annual CSR audit of the company Such verifications is advised and may become necessary for firms that have lost credibility because of past actions 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹52› 5.6 IMPLEMENTATION – BUILDING CSR INTO THE ORGANIZATIONAL CULTURE Implementation from a Strategic Perspective: Planning The implementation of CSR begins with the annual planning process Most firms undertake strategic planning usually on an annual basis The planning process seeks to identify targeted goals, strategies to attain those goals, and an allocation of financial, human, and other resources in pursuit of those goals 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹53› 5.6 IMPLEMENTATION – BUILDING CSR INTO THE ORGANIZATIONAL CULTURE Long-range planning and goal setting begin early in the calender (or fiscal) year of the firm Long-range has different meanings from one industry to another (e.g., in electricity it is between 10 to 15 or more years) The goal of long-range planning is to agree on the future objectives the firm will seek In turn, business goals (growth rates, market share, and the like) must be translated into realizable objectives for each business unit and within these units for operating and support groups – frm production to finance to human resource departments 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹54› 5.6 IMPLEMENTATION – BUILDING CSR INTO THE ORGANIZATIONAL CULTURE Long-term goals and their strategies for attainment must then be translated into more specific, shortterm objectives Ideally, short term objectives are SMART: • • • • • Specific Measurable Action-oriented Responsible Time-targeted Then, the resources necessary to implement these objectives are allocated 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹55› 5.6 IMPLEMENTATION – BUILDING CSR INTO THE ORGANIZATIONAL CULTURE Implementation from a Firm Perspective: Action At the firm level, CSR is meaningless unless it is translated into action Public relations releases to the media, speeches to employees or trade groups, or assertations of CSR in annual reports are not the end goal of CSR, necessary as they may be to raise awareness within the firm and the larger environment of stakeholders CSR must be operationally integrated into the firm’s day-to-day activities 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹56› 5.6 IMPLEMENTATION – BUILDING CSR INTO THE ORGANIZATIONAL CULTURE Implementation from a Firm Perspective: Action At the firm level, CSR is meaningless unless it is translated into action Public relations releases to the media, speeches to employees or trade groups, or assertations of CSR in annual reports are not the end goal of CSR, necessary as they may be to raise awareness within the firm and the larger environment of stakeholders CSR must be operationally integrated into the firm’s day-to-day activities 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹57› 5.6 REVIEW QUESTIONS 1.What is meant by the phrase “CSR as brand insurance?” Can you think of a firm that has benefited from CSR in this way? 2.Why some firms, industries, and cultures have different “CSR Thresholds” than others? Illustrate your answer with examples for all three categories 3.What role stakeholders play in establishing the level of the CSR Threshold for a particular firm or within a particular industry? Think of an example firm and/or industry; what event you think would push that firm or industry over its CSR Threshold? 4.Why is top-management support for CSR so critical? Can CSR be delegated? If so, why and to whom? 5.List four of the eight components of a firm’s plan of action necessary to implement CSR over the short to medium term What examples from business can you think of where firms have performed these actions successfully? 6.How does a firm avoid the perception that its CSR report is greenwash? Does it matter whether the reasons behind an action are genuine or cynical if the outcome is the same? 7.In your view, what does a values-based business look like? Think of an example from what you have seen or read in the news; what you think would be different about working for a firm like that? 16/03/2013 | UTC | FET-DBA| TS.Nguyen Thi Van Ha | ‹58› Thank you for your attention! 16/03/2013 | UTC | Khoa VTKT - Bộ môn QTKD | TS.Nguyen Thi Van Ha | ‹› ... Kotler & Nancy Lee (2008), Corporate Social Responsibility (2nd edition), Wiley India Pvt Ltd (Reference book) Chapter 1: What is Corporate Social Responsibility? Chapter 2: Corporate Strategy: A...Course Structure PART I: STRATEGIC CORPORATE SOCIAL RESPONSIBILITY  Textbook and References • [1] William Werther and David Chandler (2011) Strategic Corporate Social Responsibility (2nd edition)... Chapter 2: Corporate Strategy: A Stakeholder Perspective Chapter 3: How Much Does CSR Matter? Chapter 4: The Strategic Context of CSR? • Chapter 5: Implementation: The integration of CSR Into Strategy