The Profound Effect That CSR Has On Employees

“Employees don’t stay with a company because of benefits. It is the long-term relationship-building that attracts people to stay.”- Jeff Swartz, CEO of Timberland A recent survey at Cognizant India, an American IT services company with 200,000 employees in India, revealed that over half of their employees volunteering for CSR initiatives displayed improved workplace performance. The employees believe that being associated with a company that actively participates in CSR is something to be proud of and positively affected their motivation levels and productivity. This is just one of the many cases where organisations achieved increased productivity from their employees as a result of increased CSR activity.

CSR: The New Deciding Factor In Employee Satisfaction

It’s clear in the above example that a company’s role in CSR affects the thought processes of its employees. Offering exemplary salaries, perks, and positions just won’t cut it anymore. Employees want to know how their company is giving back to society, and without this information, they tend toward dissatisfaction. And an increase in employee turnover rates is a direct outcome of this anxiety.

Why It’s So Important

Millennials are in high demand in the job market. They carry the skills, talent, and ideas that will help an organisation evolve and embrace the new age. However, they want something more than just a great job and good pay. They want the 3 Ps.

Pride

Everyone entering the job market looks for a sense of pride in what they do. No one wants to work for a company that’s contriving to destroy the environment, no matter how well they pay. And taking a neutral stance on CSR won’t help either. Employees want to be able to tell people, ‘Hey! You know I work in XYZ?’. And that won’t happen unless the company gives them a reason to boast. Organisations actively involved in CSR activities are filled with motivated employees. Being proud of their organisation also instils a feeling of respect towards it, which translates into higher productivity and greater engagement at work.

Purpose

After the initial thrill of a new workplace, most employees tend to wear figurative blinders and routinely carry out their jobs. This is more prevalent at the entry level, where employees may not have much knowledge of how the company operates and what it does with its funds. When employees are exposed to the social work that organisations engage in, they feel a stronger sense of belonging. This is accompanied by enhanced productivity, higher involvement, and increased confidence. Although CSR is not directly tied to a company’s operations, it acts as a lighthouse, guiding employees toward a brighter future. It’s also a great measure of how well a company is performing against its promises; the ideal way to build employee trust.

Progress

People want to enrol in a company that looks promising. And what’s better than being able to use a chunk of your profits to help society? If a company is engaged in CSR initiatives, it means that they can spare the funds to donate. It also implies that they’ve reached a stage of stability, and can focus their attention on issues that may not be directly related to their business. An organisation that’s able to provide services outside of its realm of operations presents an attractive prospect to potential employees. CSR, today, is changing from just a mandatory law to a process that’s vital to an organisation’s health. Companies need to get on board with this, or they’ll miss out on the increased coordination, trust, and productivity that will take them to the next level. References: https://www.marketingmag.com.au/news-c/csr-boosts-employee-attraction-retention-adma-global-forum/ http://www.triplepundit.com/2015/08/sustainability-strategy-can-pivotal-employee-engagement/ http://timesofindia.indiatimes.com/tech/jobs/Oracle-India-introduces-CSR-driven-induction-programme/articleshow/48481872.cms http://www.business-standard.com/article/pti-stories/social-commitment-attracts-best-talent-to-tata-group-rajan-115072600154_1.html http://www.forthephilanthropist.com/services/corporate-social-responsibility.php http://www.csrwire.com/blog/posts/906-stakeholder-vs-shareholder-value-connecting-the-sustainability-dots-with-philips-drexel-university-profits4purpose http://catchafireblog.org/2013/08/15/top-of-mind-10-interesting-articlestrends-in-csr/ http://www.optimy.com/csr-retention-tool-indian-companies-2/

Profits And Purpose: Using CSR To Achieve Both

Milton Friedman once remarked that the ‘only social responsibility of a business is to maximise its profits.’ According to his theory, if firms focus on profits, everything else should automatically fall into place. However, he added that a company can only do so by focusing on its stakeholders and providing better products, better working conditions, and following environmental regulations to the dot. It’s almost impossible to ignore the profits vs. purpose debate whenever we talk about CSR. Should a company only be concerned about paying its shareholders a bigger dividend, or, should it follow a more holistic approach and also take into account the environment and communities that it comes into contact with? Over the last decade or so, many organisations in India have changed the way they approach CSR. Gone are the days when CSR was considered nothing more than ‘social tax’. With big companies like Tata and Wipro displaying how easy it is to facilitate organisational growth through CSR, smaller organisations soon followed suit. Now, we even have fierce competition between rival companies to see who runs a better CSR campaign than the other. For example, PepsiCo and Coca-Cola are constantly trying outdo each other when it comes to water conservation and recycling. In fact, PepsiCo even runs a Positive Water Balance initiative which aims at recycling and conserving more water than they utilise.

Valuing Your Employees

Alan Edmans, Professor of Finance at the London School Of Business, gave a very interesting talk on ‘The Social Responsibility Of Business.’ In his talk, he mentions that it’s ‘employee well-being that causes good performance rather than good performance allowing a company to spend on employee well-being.’ He drove his point home when he told his audience how the top 100 companies to work for in America beat their competitors by a profit margin of 2-3% each year, for a period of 26 years! What he was trying to reiterate was that the better a company treats its employees, the more profits it earns. He took the example of Costco, which not only pays their staff almost double the average American wage/hour but also stays closed on days like Christmas and New Year’s Eve, when most of their competitors force their employees to come to work. And despite all this, they still continue to be in the top three wholesale retailers of USA. While their competitors are afraid of facing a loss if they grant employees leave and shut shop on public holidays, Costco realises that a workforce which is motivated and happy is the key to running a successful business. In India, HCL runs a ‘Teach At Office’ program. Realising the importance of its support staff, they hold free classes on basic computer skills and conversational English. To complement these classes, they also hold workshops on basic etiquette, financial management, and health and hygiene.

Giving Back To The Community

It’s not necessary that organisations stick to internal CSR activities to gain profit. ITC Limited, with their varied portfolio, run a variety of CSR projects all over India. They’re one of the pioneers in watershed development and soil conservation in the country. To aid farmers who provide them with raw material, they help in developing agricultural infrastructure like group irrigation wells, sprinkler units and vermicomposting trenches. They also donate Re. 1 from the sale of each of their Classmate series of notebooks towards the education of underprivileged children. So what’s the one thing that’s common between Costco, HCL, and ITC Limited? All three are market leaders in their respective sectors. Costco is among the top 3 retailers in the USA, HCL Technologies is one of the top 20 largest publicly traded companies in India, and ITC is a market leader in the tobacco sector and the largest supplier of stationery and branded food products in India. These three organisations make it quite evident that finding a balance between profit and purpose isn’t hard. No matter how disconnected they may seem, the two don’t need to sit at opposite ends of the scale. Any organisation with a good CSR strategy can easily cater to a societal cause and still derive enough profit to stay ahead of the competition. If you look at the bigger picture, you’ll see that any business will eventually stagnate if it doesn’t seriously consider doing a little bit more than making money. To summarise what you just read, we’ll quote Alan Edmans one last time, ‘Businesses exist to serve a purpose. And by doing so, and only by doing so, will they generate profits in the long run. To reach the land of profit, follow the road of purpose.’

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Implementing CSR With The Right NGO

No matter how big or small an organisation is, choosing the right partners for its CSR projects is always a big deal. This is a decision which can cement your company’s position as a socially active and responsible organisation. And a well-executed CSR strategy can tremendously increase stakeholder engagement and even affect the value of your stocks. A good CSR partnership goes a long way in helping your organisation strike a balance between profit and purpose. Partnering with, or investing in the right NGOs for your CSR activities is as essential as finding investors who bring more to the organisation than just money. Don’t approach CSR with the aim of compliance under the Companies Act, 2013 . Instead, look for an NGO which mirrors the vision, mission and core values of your organisation. Let’s take a look at the things you should keep in mind while selecting NGOs who’ll bring value to your CSR efforts.

1. What Does The NGO Do?

In order to narrow down your search, find out exactly what your potential CSR partners do. The reason behind this is obvious. You want to work with an NGO whose work is as closely linked to your line of business as possible. For example, if you work in the processed food industry, try and find an NGO which works with local agricultural communities. Help them provide social and economic support to farmers, who are the lifeline of the processed food industry. This way you can directly help your primary stakeholders, the people who provide you with raw material.

2. Reputation Matters

As of 2014, India has one registered NGO for every 600 people and just one policeman for every 943 people! However, even with such a high density of NGOs, there are only a few organisations who’ve actually managed to establish themselves as reliable and impactful CSR partners. It’s also important that you choose an NGO which is well respected amongst your employees, investors and customers. This move can potentially lead to a fair increase in stakeholder engagement.

3. Previous Interactions With The Corporate Sector

The easiest way to gauge how well an NGO can support your CSR endeavours is to check their track record with other corporates in the past. See what kind of activities they’ve engaged in and how effective their efforts were. There are many NGOs out there who may have excellent management and processes but may not have any projects which fit into the corporate scenario. On the flip side, there are NGOs who have impeccably structured corporate campaigns but fall flat when it comes to implementing and executing those strategies. If you find an NGO that delivers quality and has a strong work ethic, you could easily set up a long-lasting partnership with them on mutually agreed upon terms.

4. What Does The NGO Offer?

Carefully consider what the NGO will bring to the table when you partner with them. What is the nature of engagement? How experienced is their staff? Are they equipped to provide training or educational resources?

5. What is the Approach of the NGO ?

Ask the NGO if it is open to a partnership model. CSR is always about building partnerships. If the NGO wants only your cheque, you need to ask yourself if this is the right approach. Also it would be great if a shared value approach can be taken. This would enable you to make the maximum impact Find answers to all these questions before signing a deal. A good NGO will be able to seamlessly blend their activities with your CSR concerns. Remember, your money and resources are also being utilised, so make sure that it’s a win-win situation for both parties.

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Embracing Social Responsibility – A Few Takeaways From The Vardaan Seminar

On 19th December 2014, a few brilliant minds gathered on-stage to share their insights in the area of social reform. Organized by Vardaan, this seminar dealt chiefly with the topic of embracing social responsibility. The first speaker for the day was Mr. Santosh Hegde, a former Justice of the Indian Supreme Court who had also served as the Solicitor General of the country.

Sharing The Burden Equally

According to the former Justice, today’s society had become obsessed with wealth and power; compassion was no longer a driving motive. He questioned the practicality of a CSR mandate, especially when the government itself was finding it difficult to account for revenues. Justice Hegde then talked about some of the popular Indian scams that had occurred over the years. In the 50s, the government had been cheated out of ₹52 lakhs (approximately ₹50 crore today) in a popular scam. By the 80s, the Bofors scandal had come to light, and it was discovered that funds worth ₹64 crore had been misappropriated. In 2000, two major frauds shook the country—while the Commonwealth Games scam cost the exchequer ₹70,000 crore, the 2G Spectrum scam was estimated to be a whopping ₹1,76,000 crore. He was of the view that the CSR mandate wouldn’t even be necessary if such scams hadn’t occurred. These frauds had occurred because many people had shunned their own responsibilities in the blind pursuit of wealth. In short, each person is responsible for the welfare of another; creating moral liability by forcing companies to donate isn’t the answer to effective societal change.

Re-evaluating CSR Relationships And Objectives

Ms Vandana Mahajan, a popular social activist, was next in line. The CSR mandate, according to her, had brought about a number of positive changes—there was an unprecedented level of interest in the social reform sector and investments were at an all-time high. According to her, as CSR in India was still in its infancy, businesses and non-profits needed to collaborate in a more productive manner. Ms Mahajan also talked about the some of the key social concerns in today’s society from her experience as a reformer. Entrepreneurship, urban safety, women and children’s empowerment, rural livelihood and ecological sustainability were some issues that she touched upon. Ms Mahajan also went into the traditional trust-deficit between non-profits and corporates. She discussed how most corporates chose to work with only those NGOs they could fully understand, leaving out hundreds of other genuinely committed non-profits that could definitely do with some help. “Can we bring in the same seriousness, prestige and pursuit of excellence to realising the goal of social change that we give to the realisation of economic development, profit maximisation and business growth?”.  

Bridging The Gap Between Corporations And Non-Profits

The first person to represent the corporate world at the gathering was Mr Jacob Kurian, a Partner at New Silk Route Advisors. He was of the view that many companies failed to tackle CSR in the right manner. Companies that just wrote out cheques needed to embrace the idea of CSR as an integral part of business. Meaning that they needed to approach each social initiative as they would a business. Social programs needed objectives, both short-term and long-term. Each program needed to be measured for its impact just as a business project would be evaluated for its profitability. On a concluding note, he said that all the stakeholders had to be actively engaged if a social program was to have any chances of success.

Looking Ahead To A Productive Future

The last speaker in the seminar was Mr Thomas Raffa, the Founder and CEO of Raffa Inc., a consulting firm based out of Washington DC. Like Mr Hegde, he thought that forcing companies to pay 2% of their profits wasn’t really going to make things better in the long run. Mr Raffa talked about how Indian non-profits needed to evolve from their highly dependent positions to become sustainable, well-capitalized organizations. According to him, business was an important force in society that could be used effectively for the greater good. He had this to say about real sustainability, “We have to ensure that what we do today to meet our needs will not compromise the ability of our future generations to meet theirs—this is what sustainability is all about” Some of the topics tackled in the seminar include the effectiveness of enforcing CSR, the role of non-profits in the arena of social development and the need for strategically tailored social programs. A few case studies were discussed as well that could be potentially used as guideposts by non-profits striving to make a change. On the whole, the issues discussed in the gathering were of great significance to both corporates and non-profits. A great many truths were propounded at the Vardaan seminar, which offered an engaging deliberation for those who were truly interested in creating effective social change.

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