In assessing the many stakeholders affected by any CR initiative, consider a new gauge: return on impact.
By William B. Horne
The traditional view of prioritizing investments and decisions around corporate social responsibility (CSR) has changed in recent years, due to a significant shift in how companies communicate with their constituents and the public’s expectations on the way businesses operate. While companies could once focus almost exclusively on their products or services, they are now also expected to play a role in creating a positive impact through actions focused on safeguarding the welfare and interests of the society they serve. C-level executives are becoming increasingly aware of how public perception of their CSR initiatives can have a direct impact on their bottom line and are thus taking a closer look at their strategic plans in this regard.
The concept of CSR started to pick up momentum in the early 1970s, but the world has changed greatly since then. Modern CSR programs must take into consideration a much broader base of constituents who want to participate in programs that have personal and professional meaning to them as individuals and as employees of the company. The concept of “creating shared value” has emerged as a way to understand that successful businesses also manage generational differences, a thriving social framework, and many other facets of a well-defined CSR strategy. Most business leaders today also recognize the lasting benefits of strategic investing in efforts that bolster employee satisfaction, community involvement, brand awareness, and employee retention—all of which lead to competitive differentiation and a measurable return on invested dollars.
CSR builds on a foundation of open engagement and thrives when there is a clear focus on being transparent and honest. The social media age is upon us, leaving no place to hide from the opinions of others. If the public disapproves of an action a company takes, the backlash will quickly spread all over platforms like Twitter and Facebook, as negative news tends to move more effectively, making it prone to becoming a “viral” phenomena—reaching a wider audience much faster than ever before. Similarly, positive perceptions of corporate initiatives can spread just as easily. However, individuals today tend to shy away from the corporate spiel. Instead, they want to know what’s in it for them, and CSR helps answer that question by providing common ground for the goals of a company and the wants and needs of society.
Now, more than any other time in history, companies are being held accountable for their actions by their own customers, employees, and shareholders; however, the communication mediums have changed and continue to evolve. In many cases, a company is judged by the public on its reputation for being a good corporate citizen, just as much as it is for the products or services it provides, resulting in whole new realms of “reputation economics” and “socially responsible investment,” which has captured the attention of the C-Suite.
In the corporate world, it is acknowledged that non-financial gains exist and can be highly valuable for businesses over the long term. Return on investment has long been a part of the business lexicon, but now forward-thinking leaders are also looking at return on impact to measure how employee and community engagement can tie into core business goals.
Like any other component of a corporate business plan, a CSR strategy needs to be meticulously mapped out, assessed for risk, and equipped with the means to accurately measure its outcomes. CEOs are increasingly questioning the bottom line and the impact of or return on social investing. Executives often speak about the value proposition of business decisions, and having a well-reasoned value proposition for corporate responsibility initiatives is equally important. In order for an executive to understand what impact means for the company, he or she will first need to identify who the key stakeholders are and what they should be getting out of the initiatives.
Assessing return on impact can be achieved by answering some common questions:
• Are we achieving a measurable impact on our investment in promoting
the values of our company, employees, and shareholders, in addition to the market in which we compete?
• Is the program improving the bottom line and increasing
• How are we measuring the impact and outcomes, and who is
responsible for managing the process and reporting to the board of directors?
• Are the employees interested and engaged in efforts that impact the
company and the communities in which they live?
Innovators in corporate responsibility are looking at the totality of what defines a successful CSR program and how that success is communicated to all stakeholders. A broad range of people are impacted by a company’s initiatives, including clients or customers, employees, shareholders, and the larger community. ISO 26000:2010, the international standard providing guidelines on social responsibility, recognizes that procedures for managing the needs of stakeholders are essential to a successful CSR program. Keeping the CSR strategy aligned with the corporate mission statement and company values helps ensure that corporate responsibility remains an integral part of daily operations and doesn’t fall by the wayside.
One of the most fundamental components of any CSR strategy is the buy-in and involvement from all levels of the corporation, from the CEO to the customer-facing support representatives. It is important to have clearly defined roles and responsibilities for all involved as a basis for tracking progress and performance. Management should determine internally who is accountable for the impact and measurements that define success and at what level in the organization individuals will be held responsible for the outcome of specific initiatives. The goal is ultimately to increase participation and work toward better results over time.
Companies should take advantage of all the tools available for tracking the performance of corporate philanthropy initiatives. Having a project plan is critical for measuring top-level goals and accountability. Project management software can allow program leaders to assign responsibilities to team members and track start and end dates for each task. Using an integrated corporate philanthropy platform will help track employee engagement and larger performance metrics, such as dollars donated and number of hours volunteered. By thinking broadly about the application of these tools, executives can find opportunities that drive new and innovative methods of impact investing.
Defining Desired Outcomes
At the end of the day, a corporate responsibility program is just lip service to company stakeholders if goals are not defined. As with everything else in business, having reasonable goals and a roadmap for achieving them is the only way to make sure a CSR program is on track for meeting the company’s broader business objectives. C-Level executives should develop a written plan for what the company is intending to achieve with its corporate responsibility program. The project plan should be revisited on a regular basis to ensure that it remains relevant to the overall business and that actions are being taken to meet the goals.
With clearly defined outcomes in place, a company can take multiple paths to meet those goals. Corporate social responsibility is never a one-size-fits-all approach. The management team should consider a combination of socially responsible business practices, corporate and employee charitable contributions, volunteering employee time, and other initiatives to meet those goals. Combining multiple CSR initiatives can have a synergistic effect, which will yield far better results for achieving the core objectives.
The company’s CSR management team should determine what metrics are in place to measure the outcomes of everything from social investing and workplace campaigns to volunteer efforts, matching grants, and disaster relief. The C-suite should track resources contributed by the company (dollars donated, number of employee volunteer hours contributed, etc.) against measurable results (number of meals served at homeless shelters, number of trees planted, etc.) to determine which initiatives are most effective and which need refining. It is important for the management team to measure, adapt, and repeat to ensure an ever-improving CSR program that achieves a continually greater impact over time.
Finally, it is essential to have a plan in place for communicating success to all the stakeholders. It is important to keep everyone informed of the progress that’s been achieved in reaching CSR goals. Posting relevant updates on the company website, email newsletters, or social media channels can keep stakeholders informed and inspire deeper levels of engagement from all the program’s participants.
William B. Horne is the president and CEO of Truist.