Long Term Capitalism: Corporate Social Responsibility In the Current Challenging Economic Climate
The radical fix highlighted is the top down approach of corporate social responsibility trickling all the way to employee’s job description and performance appraisal system. This in turn ignites ownership, goodwill, strong networks and long term a corporate culture that is socially accountable. Positive transformations will have impact on both internal and external stakeholders.
In this era of challenging economic climate, how do organizations embrace and retain corporate social responsibility. Organizations are under pressure to deliver profits and gains to their boards and shareholders. The staff lay-offs, cost cutting, reducing sponsorships (community welfare), and other hard decisions are made and social accountability remains low on the list.
Organisations are fiercely competitive and what is the level of ability and willingness for organizations to foster profoundly principled, fundamentally patient and socially accountable capitalism? Are organistaion conscious, have a higher purpose?
What Is Corporate Social Responsibility?
Moses Pava highlights “corporate social responsibility is itself an extremely, valuable and hard won social asset. It is a vehicle for promoting transparency, more nuanced accountability, integrity, better communication, mutually beneficial exchange and sensible development” (2008, p. 805).
Organisations over the decades have been experimenting, incorporating the corporate social responsibility (CSR) into the company, with various degree of success. For some a great public relations tool, others genuinely contributing to the communities. A key link is sustainability in the longterm, as highlighted by Marcela below.
Marcela Manubens highlights that corporate social responsibility is not an event but a journey mainly:
Business, sustainability (social and environmental), good governance, and accountability are entwined, and companies that measure their performance with a long term, triple-bottom-line approach are demonstrating the business case for corporate social responsibility (2009, p. 59).
Triple bottom line is an interesting concept that links the 3 pillars: environmental, financial and social. Cvelbar, Assaf, & Josiassen (2012) define “Triple bottom line reporting is a comprehension approach to achieving sustainability as it integrates reporting on environmental, social, and financial issues.”
Corporate Social Responsibility and the Challenges
Peter Utting highlights significance of the increase in of corporate accountability movement:
Political economy and historical analysis suggests that the challenge of taming corporate capitalism and promoting more inclusive and equitable patterns of development require reasserting social control over markets and big business via various forms of regulation and the reconfiguration of power relations (2008, p.968).
With economic down turn, recession, competition, organizations struggle to maintain social accountability with various cost containment, layoffs, restructuring, limited resources, CSR faces challenges.
Companies are struggling with various degree of effects of the global recession on the markets and the corporate social responsibility area is more uncertain and threatened (Manubens, 2009).
Where there were budgets for public relations, community projects, volunteering, these are potentially the areas that get a budget cut off. Cost containment in the current economic climate remains a key priority for organizations, especially under competitive markets. “Competition is so intense that most corporations cannot accomplish social ends without imposing a cost on their consumers or investors” (Reich, 2007, cited in Pava, 2008, p. 807).
Organisations are challenged to balance generating profits for their stakeholders and maintaining social accountability. In the current economic climate survival of the organization is most critical with social accountability dropping low on the list of priorities. “If business is only about the pursuit of corporate profits there is no vocabulary inside businesses, other than the profit and loss statement, to convey meaning, values and purposes” (Pava, 2008, p.809).
To visualize longterm, and if we were to continue in this path, would organizations remain ethical, transparent, socially accountable?
The Radical Fix
The traditional approaches to corporate social responsibility requires changes, new approaches to adjust to the current challenging economic climate and to be effective.
Manuben (2009) discusses the impact of incorrect market incentive, price and abandonment of ethical sourcing and sustainable concerns. He emphasises:
The re-emergence of the coorperation without a conscience, dominated by short – term profit & Loss (P&L) obsession that permeates its business culture and strategy, would seriously unravel the achievement of the last two decades in the field of CSR (2009, p.53).
Despite the current economic challenges, embracing corporate social responsibility can be very effective with minimum costs.
Marcela Manuben recommends three critical areas to be looked at, mainly:
- business strategy – corporate social responsibility should be part of the business formula, be a priority, be cross-functional/ global, corporate culture to support;
- organizational changes – companies with layoffs, restructuring to realign resources, communication effectiveness, internal networking, engagement and empowerment;
- operational needs – specifically CSR operations, assess risks and put in place preventive measures (2009, p.57).
Incorporating CSR into business strategy in a way that is integral part of the organization, and trickles top down to as far as employee’s job descriptions, which is empowering, and engaging. CSR approaches does not have to be costly, simple programme example employee volunteering (allocating a compulsory working day for this programme/ project/ activity).
When CSR is part of employee’s job description and performance appraisal system a strong ownership and responsibility emerges at the ground level, informal networking develops which in turn builds momentum and uprising of goodwill, social responsibility no longer is separate but integral part of day to day work.
For the above to work, a top down approach to CSR will result in mobilizing team and networking which will lead eventually to a corporate culture shift. This effective transformation will result with small steps, most critical initial stages Senior Management Team (SMT) buy in. Once the SMT buy in on CSR is established, it is expected resources will be made available. Next steps will follow to mobilize and implement CSR in the overall organization. Transformations both internal and external are expected and benefits recognised both short term and longterm. A corporate culture is established, which borders on strong social accountability.
Customers and employees are more and more aligned and affiliate towards organization that are conscious and have good base on corporate social responsibility.
1. Bring Senior Management Team together, table Corporate Social Responsibity (CSR) plan/ ideas. Seek buy in.
2. Pitch on cost benfit approaches
3. Link to organisation strategies, run pilot with selected employees who would like to incorporate CSR as part of their job description and performance appraisal system.
4. Share results, highlight achievement to SMT.
5, Implement through out the oranisation.
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- Manubens, M. (2009). Corporate Social Responsibility in an Economic Crisis: An Opportunity for Renewal. Global Business & Organization Excellence, 29, 50-60.
- Meyer, C., & Kriby. J. (2012). Capitalism. Harvard Business Review, 90, 66-75.
- Panviri, Jr., & Vincent. A. (2011). Skin In the Game. Nation, 292, 23-25.
- Pava, M. (2008). Why Corporations Should Not Abandon Social Responsibility, Journal of Business Ethics, 83, 805-812.
- Utting, P. (2008). The Struggle for Corporate Accountability. Development and Change, 39, 959-975.