It’s annual report time and you can be sure that many, if not most corporations, have made a special effort to report on their CSR (corporate social responsibility) initiatives, some with separate documents that highlight their actions to preserve the environment and maintain the planet’s sustainability.
CSR has, in fact, become an active subset of public relations in recent years, often touted by our trade press as a magic wand that solidifies relationships with stakeholders and brings about universal respect, maybe even affection, for the sufficiently committed corporation.
The fact is that some corporations, in the U.S. as well as Europe, recognized their responsibility as social entities before the dawn of the 20th Century. Think “mill” towns; think Hershey, Pennsylvania. Companies built livable and affordable housing, schools and medical facilities for their employees. Altruism was not the reason. They did it because it was good business. It gave them a nearby, stable and generally contented labor force. And it pointed the U.S. on the road toward creating the world’s most productive economy.
In the less complicated world in which business once did business the corporation’s role in society was relatively simple. It was to manufacture products and deliver services that were valued by its customers, provide steady jobs for employees, be a good corporate citizen in communities where it was located and compensate stockholders with a reasonable return on their investment. That, in effect, was the social compact between business and society – and it worked for many years.
Starting in the 1980s, the corporation’s primary mission veered in another direction. All one need do is look up annual reports of that era. Their avowed purpose, boldly communicated, became “maximizing shareowner investment.” Purging companies of unproductive assets (including extraneous people) became the prevailing priority. Corporate social responsibility took a back seat.
But one of this country’s wonderful characteristics is its innate ability to self-correct. This has manifested itself many times in politics, but it also happens in business. Once the pendulum sweeps too far in one direction, it begins moving counter-wise. The recent reintroduction of “corporate social responsibility” to the business lexicon is, I hope, one of those manifestations.
But let me offer a caution prompted by my recent re-reading of Charles Dicken’s satiric novel “Bleak House,” published in 1853. One of Dicken’s most memorable characters is Mrs. Jellaby. She espoused every imaginable worthy cause, her latest the plight of the natives of Boorie-goola-Gha on the left bank of the Niger. She called it her African project and it occupied her near full time.
Then Dickens tells us the state of Mrs. Jellaby’s personal and family affairs. Her house is strewn with paper and other rubbish, the furniture and floors covered with dust and grime. Her children are in a dire state of neglect, badly clothed and unfed. Her son’s head is stuck between the banister railings. But Mrs. Jellaby doesn’t seem to notice, much less care. Mrs. Jellaby is obsessed with her African project.
The lesson of Mrs. Jellaby – as I have said before in articles and speeches -- applies not only to social critics and reformers, self-appointed or otherwise. It applies also to executives who must balance the many obligations confronting the modern corporation.
A corporation’s first duty, as I see it, is to manage its affairs properly and profitably. It must, as indicated earlier, deliver products and services that fulfill the customer’s need and meet stringent tests of safety and reliability. It must compensate employees fairly and provide fulfilling career paths and a safe working environment. It must reward stockholder/owners with a satisfactory return on their investment. And, yes, it must also support schools and hospitals and cultural institutions that serve its numerous stakeholders. It should recognize that its greatest payback from its CSR investment will come from initiatives that benefit those with the closest business connection to its growth and profitability – mainly its own employees.
Corporate participation in meritorious public service undertakings – local, national or global – is, of course, to be commended. But those that gain goodwill and enhance corporate reputation most are still those with a business connection to the donor. That’s why large corporations with mega-buck philanthropy budgets employ professionals to decide where they spend their money. Charity without a business purpose is not a prudent use of stockholder funds; there must be a business purpose, a meaningful business rationale.
It’s the reason Coca-Cola is directing millions of dollars to provide water to Darfur refugees, why Exxon supports teaching engineering and sciences in colleges, why Johnson & Johnson, Pfizer, Merck and other pharmaceutical companies focus on health and disease. Coca-Cola sells water and uses it in its soft drinks; Exxon employs hundreds of engineers and scientists every year; health care and treating disease is central to pharmaceutical companies. Numerous other companies are working effectively with NGOs on initiatives in which the two parties have addressed mutual issues (McDonald’s was a pioneer with highly successful results.) In all these instances employees, customers, the public, even stockholders get the connection between corporate social responsibility and good business practice. It’s easy to understand.
What’s the point I want to make? Simply that there’s more to corporate social responsibility than do-goodism. When implemented correctly, it’s an important part of the reputation building process. It adds to the bottom line with greater sales and consumer satisfaction. It serves as a positive differentiator from competitors. It’s a form of corporate behavior we in public relations should embrace whole-heartedly.
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Harold Burson
March 31, 2008