Real CSR benefits both the company and the community

Corporate social responsibility (CSR) should not be confused with cause-related marketing.

Corporate social responsibility (CSR) should not be confused with cause-related marketing.

Many CEOs and CMOs ponder whether they should guide their companies to act as socially or corporately responsible corporations because it is the right thing to do or because it can benefit their sales and profits by creating the right corporate image. What they fail to understand is that these options are not mutually exclusive.

To be socially responsible means that you believe in a dual bottom line. By delivering consistent revenues and profits, you are in fact being a responsible corporation by continuing to provide jobs and returns to shareholders. However, leading CEOs at such corporations as Johnson & Johnson and Emerson Electric know that there is another bottom line - being responsible to the community that surrounds your offices and businesses. This also delivers superior returns in many ways, including financially superior returns to you and your community.

Stride Rite is an example of a company that delivered on this promise. It created the first corporate day-care center in the US and then extended its leadership by providing elder care so that employees and community residents could drop off not only their children but also their parents and elders who needed care and activities during the day while their dependents worked. The prior CEO of Stride Rite, Arnold Hiatt, who created and perpetuated its exemplary commitment to CSR said, "The well-being of a company cannot be separated from the well-being of the community."

Cause-related marketing has to be done for marketing purposes first and foremost. Supporting a cause that can impact your product sales or reputation is a viable marketing strategy, but this should not be mistaken for trying to build a lasting corporate culture that is centered on ethics and integrity throughout all aspects of the enterprise.

Building a lasting corporate culture requires investment, whether in establishing a day-care center or allowing employees paid time to volunteer. In order to justify the investment to the board and shareholders, we need to measure and show the return on that investment. The logical question that many marketing pros then ponder is how do we measure the impact of effective CSR and the effect on the corporation?

One way is to understand the corporate reputation by analyzing the perception of the company among all of its stakeholder communities, including those that physically surround a corporation - employees, shareholders, partners, and neighbors - and the increasingly important virtual community, from blogs to bulletin boards and other internet-driven media.

What was the impact on Boeing when it was embroiled in controversy regarding securing government contracts? How did Martha Stewart's legal problems affect Omnimedia? I'd argue that reputation is only one area that needs to be measured. The true measurement of CSR must involve all stakeholders who in one way or another will impact the company's future successes.

A corporation must know that having a strong company name, supported by strong social values, will not only attract the best employees, but also keep them loyal and motivated. Even in difficult economies, the best employees are always in demand. Hiatt further elaborates on this in a 1992 Boston Globe article when he says, "How workers feel about themselves and their work has a lot to do with pride, and pride has a lot to do with productivity."

The loyalty and dedication of Johnson &Johnson's employees goes far beyond salary and benefits. The company believes in the corporate leadership and the legacy left behind by Robert Wood Johnson. Employees and citizens surrounding J&J's corporate headquarters in New Jersey take great pride in J&J and rally around the company, as they did during the Tylenol arsenic crisis.

It is too easy to log onto the internet and write stream-of- consciousness opinions about a company. Setting a corporate culture that you can be proud of - one that benefits all, not just one class of stakeholders - often yields the best results.

Stride Rite in the 1980s and '90s created a corporate culture that supported volunteerism. It set up a corporate philanthropic foundation that was endowed with 5% of pre-tax profits, and created an enduring legacy that helped promote and build its brand. When you sell products where trust is vital, generating such goodwill is invaluable.

The dual bottom line that Stride Rite created and perpetuated started with the chairman, but, in many ways, his leadership became a role model for many of its employees. As managers left to tackle other challenges and to lead other companies, they emulated the Stride Rite model of practicing CSR by not only delivering superior financial performance for one class of stakeholders, but also by delivering outstanding community performance.

  • Andrew Bernstein is CEO of Cymfony.

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