The Complicating Factors
Lack of Consensus on Standards
Globally there is no consensus on what social responsibility is, or how it can be defined across cultures and nationalities. For example, there are those that believe that the obligation exists to give back once a certain level of financial success has been attained. Others believe that true social responsibility is a pathway to success. In the US, a capitalism-based culture has favored the former model, while in European countries in particular the later model reflects the more shared more socially conscious culture on that continent.
There are many who believe that businesses have a moral obligation to advance issues as human rights, gender equality, competitive wages, and the like. This can be hugely problematic for many in lesser-developed or non-Western counties that see may not welcome these new ideas and morays. To them, companies that seek to import different values threaten to destabilize their entire society – religious, politically and socially. And from this perspective, these businesses, through the fault of their own best intentions, are viewed with suspicion if not outright hostility.
A seemingly sensible strategy is one of falling back on regulatory compliance, linking social responsibility goals and objectives to cultural competence; and a desire to demonstrate respect for local cultures, customs and laws. Following this model is not without its pitfalls, however. Companies have found themselves facing outcry back home for engaging in practices overseas that offend the sensibility of shareholder and customers in the States.
This can lead to a troubling situation when a company genuinely believes it self to be socially responsible yet finds itself suffering from criticism leveled by its stakeholders. When there is this kind of disagreement between an organization and its stakeholders over expectations, it becomes an imperative to reconcile. The shift can happen with stunning swiftness and many companies find themselves ill prepared when the perception changes. Wal-Mart, the world's largest retailer and currently #2 on the Fortune 500 list, enjoyed status as one of the world’s most admired companies for years. Seemingly overnight the company was faced with strong criticism for its wages and employee benefits (both of which are well within industry norms) for not doing more to advance these issues. This despite an impressive focus on environmental sustainability; including the use of fuel-efficient trucks, working to reduce waste in both packaging and garbage and pledging to become energy neutral.
Not surprisingly, there are efforts underway to quantify sustainability efforts and promote global standards. Groups such as the Global Reporting Initiative (GRI), a large multi-stakeholder network of thousands of experts in dozens of countries worldwide, has developed a popular, but not universally set of guidelines. The fourth iteration of their guidelines adds the new dimension of corporate governance, and is currently in the public comment phase of implementation.
But until a set of standards emerges there will always be disconnects and confusion. Companies would do well to ensure that their practices conform to local laws and regulations and engage proactively in stakeholder dialogue to ensure that they are keeping abreast and helping to manage stakeholder expectations.
As companies strive to define their own standards, transparency becomes the name of the game, as stakeholders who are brought into the process that defines company policies, commitments, practices and goals. The company must set benchmarks and then hold themselves to those standards – reporting and announcing their actual results publicly.
CSR activities combine elements of strategic planning, human resources, environmental, legal, communications and a host of other functions. It is especially difficult to develop a program that provides value to all these various functions unless the organization is structured to facilitate, and encourages cross-functional efforts.
Effective CSR programs require local implementation of corporate-wide ideals. It is particularly difficult to coordinate in larger organizations that take pride in their corporate culture of decentralized decision-making. CSR also has no obvious home within traditional corporate structures. When the function exists as a separate entity, it may report to the CEO or Chief Operating Officer. It is common to place CSR within the legal/risk management functions.
Because of the strong need for stakeholder dialogue, and to ensure that local concerns are addressed, CSR is sometimes housed in corporate communications departments. Corporate communications departments often are called upon to craft messages to both internal and external audiences, have ready access to corporate leadership and are responsible for managing the company’s public image.
Companies that wish to have credible stakeholder communications must recognize a fundamental change back to the true meaning of the words ‘public’ and ‘relations.’ Relating to and with the public (external stakeholders) requires open and honest communications; with an implied compact between company and stakeholders that the company will eschew hyperbole and rhetoric provided the community is open to working with the company to work through (not around) issues.
Incentive and Reward Programs Based on Short-term Results
A close relative of the structural impediments to implementing a strategic CR program is the fact that incentive and reward programs are often aligned with financial performance on a monthly, quarterly and annual basis and do not take into consideration the value of long-term strategic approaches. Managers receive incentive bonuses based on strong quarterly returns may be passively being discouraged from engaging in environmental or community programs that can be viewed as a cost.
Culture of ‘Instant Gratification’
Americans are traditionally viewed as impatient and many have commented on the seeming obsession with ‘instant gratification.’ The concept of delayed gratification is a difficult one for a society that values fast food, ‘the fast buck’ and in which the trappings of wealth are paraded nightly in the media.
The five elements of a successful sustainability program described earlier in this series provide a model and proven framework that helps address all of these issues.
To read more posts from this series, click here.
John Friedman, is an award-winning communications professional and recognized sustainability expert with more than 20 years of experience.
Friedman has served as both an external and internal sustainability leader, helping companies, ranging from small companies to leading global enterprises, turn their values into successful business models by integrating their environmental, social, and economic aspirations into their cultures and business practices.
His insights on sustainability issues and strategy are a regular feature onHuffington Post.
Friedman authored the e-publication The New PR which outlines how companies must modify the way they communicate to meet stakeholders' changing expectations through five proven keys for developing programs that replace "spin" with transparency and unlock the full potential of a sustainability program to build reputational capital. Friedman is currently working on a new book Your Backyard Is My Front Yard.