Corporate Social Responsibility: Competitive Ethics, Employee Engagement, and Customer Community

We discuss Corporate Social Responsibility, the influence business can have on the community it serves, and the ways it benefits employees, customers, and profits

Episode Transcript

Dr. D. (00:05):
Hello, and welcome to the realm. I'm Dr. D, I bring
the strategy.

Dr. K (00:09):
And I'm Dr. Kay, I bring the psychology, we are business
psychologist and your guides tothe executive route where we
bring strategy

Dr. D. (00:16):
and psychology together so you can bring your best to
your C suite, your teams andyour customers. Today, we are
talking about corporate socialresponsibility, the influence
business can have on thecommunity it serves, and the way
it benefits employees, customersand profits. So let's get to
work. Dr. K, how do you definecorporate social responsibility,

Dr. K (00:40):
it is the initiatives and responsibility that a
corporation takes thatinfluences their legal, ethical,
discretionary and economicplatforms or ideas that they
have within the world.
Oftentimes, it's something assimple as volunteering,
sometimes it is a much biggerinitiative. It is a social

(01:01):
aspect of what a corporationbrings, it brings benefits to a
human component, it bringsbenefits to the employees
component, as well as to theenvironment.

Dr. D. (01:17):
When I think about corporate social responsibility
was people planet profit, thetriple profit aim. Really what
that meant to me was, of course,you've got to stay profit
focused as a business because abusiness needs to maintain a
margin to continue to operate.
You want to support the planet,that means environmental focus,
doing what's right notpolluting. Now, it's a lot of

(01:40):
going electric or being carbonneutral. And then of course,
there's the people component,which many companies have
diversity initiatives andinclusion initiatives within
their organization, genderequity, and parity. All of these
things are things thatorganizations tend to already be
doing, if they are goodcorporate citizens. Am I right?

Dr. K (02:02):
Yes, absolutely. I mean, there's, you know, with
corporate social responsibility,there are a lot more aspects.
That's where, for me, the socialpart comes in, it includes the
consumers, it includes theemployees, every level of
employees, it includes, youknow, as you said, profits, and
it's also taking care of theenvironment, there is a another

(02:27):
component of a governmental orlegal aspect as well, which
isn't always that's not the bigbite, or the sexy part of
corporate social responsibility.
But it is something that is veryimportant for an organization to
consider is keeping the legal orethical component of corporate

(02:48):
social responsibility at a veryhigh standard.

Dr. D. (02:53):
So just by operating with good solid business ethics,
you are engaging in corporatesocial responsibility, you're
engaging in behaviors thatengender trust in the market,
engender trust in your employeesand engender trust in your
customers. When you bring upcorporate and risk and legal.
And that's not something thatimmediately would come to mind

(03:16):
to me with corporate socialresponsibility. But it does make
sense because if you'reoperating at a set of standards,
and serving the community in anethical and straightforward way
and trying to do what's right,it sounds like you would end up
with lower government scrutiny,and you could mitigate your
risks as an organization.

Dr. K (03:37):
Absolutely. We can look at companies such as Enron, and
there was a lot that went withthat it wasn't just the people,
you know, that got caught or introuble that trickled down to
the employees that worked forthe company. It plays a toll on
their there's psychologicalstamina, or it plays a toll on a

(03:58):
little bit on their emotions. Wetake on that as a persona of
ourselves. So yes, doingeverything legally and ethically
is a great start. However, thereis a lot more for especially
nowadays, with the improvementof trying to you know, watch our
carbon footprint, or giving backto the communities or serving

(04:21):
lower income or strugglingareas. There is a lot more now
that people are expectingthrough these corporate social
responsibility, which we cancall it CSR. So through the CSR
initiatives, it is expected thata company is working legally and
ethically. So to say, Well,look, we're we're corporate

(04:44):
social responsible. Look, we youknow, everything that we do is
done equal, legally andethically is not exactly enough
to create the atmosphere, thehigh level of corporate social
responsibility.

Dr. D. (04:59):
That makes sense, it's interesting because so much of
developing your brand is aboutreputation management,
maintaining your reputation inthe marketplace. So if you're
doing the bare minimum and yourdefinition of Corporate Social
Responsibility is, we are anorganization that adheres to the
law, and we have a code ofethics that we adhere to, that's

(05:21):
really not enough anymore.
Because if your competitors areoperating to a higher standard,
you're really eroding trust bynot adhering to higher
standards. And you can gain acompetitive advantage, if you
get to those standards andengender a higher level of trust
in your competitors with yourcustomers. If you are unethical,
your employees would not havetrust and even more importantly,

(05:43):
your customers won't have trustin you and you will lose market
share, you will end up spendinga lot more money on risk
mitigation and governmentintervention, potentially, then
if you are operating at aminimum ethical standard. But by
doing more, you engender ahigher level of trust, and that

(06:04):
can give a competitiveadvantage.

Dr. K (06:08):
Absolutely. If a employee is proud of where they work,
because they let's just go withthing, just give back to the
community in addition to beingethical, and you know, having
high ethical and legalstandards, what research has
found, it creates a positive,not only a positive perception
of the organization itself, butthen it leads to a positive

(06:31):
feeling about themselves withinthe company, which then that can
progress into positive feelingsof their work roll. It also has
been found to increase jobperformance. People are proud of
where they work. So why wouldthey not want to give back, they
want to provide for the company,what the company is providing

(06:52):
for them, which is a highersense of self, and a feel good
attitude about where they work,as well as just workplace
attitude. The employeesthemselves want to give back,
they want to do more.

Dr. D. (07:06):
Corporate Social Responsibility can tie in pretty
closely with diversityinitiatives, as well as
employees engage in sociallyresponsible activities that are
supporting communities that areclose to them, then that would
help them become proud of theplace that they work.

Dr. K (07:26):
Absolutely. It's encompassing human interest. One
of my findings in all myresearch was an engaged employee
is more profitable for thecompany in multiple ways than a
disengaged employee. And we arestruggling in the world with
disengaged employees. As anorganization, if you say, we're
going to take a poll to see whathuman interests you have going

(07:49):
on what you think we could wherewe could help in the community,
where you think that we couldhelp in the world, any of the
ideas that people would have,and you ask the employees, you
get their ideas, and you allowthem to provide their ideas,
also, maybe allow them todevelop ways to get this done,
and then help allow them toinitiate it is going to be a

(08:12):
game changer for theorganization. If you allow their
human interest to come out atwork, they're going to be more
engaged at work. They're notjust an employee, they're not
just a number, they are a humanbeing that feels a part of a
team.

Dr. D. (08:27):
That's a recurring theme in many of our conversations is
aligning your organization andyour teams with your mission. So
your corporate socialresponsibility aims can be
aligned with your mission. Youget your team, your employees
excited about the way thatyou're supporting your

(08:48):
community, which can alsoinclude your customers and your
employees and really give you agood advantage because you're
putting your money where yourmouth is. You're investing time
energy, probably a modest actualcash investment, it's coming
with a good payoff a profit ofits own. It's not only

(09:08):
supporting, building yourcustomer base and making your
employees feel more engagedwhich reduces turnover and all
those other hidden cost savingsthrough employee retention, but
it also builds brand reputationin the community and strengthens
loyalty. Those sorts ofactivities are good for business

(09:28):
in general.

Dr. K (09:29):
Totally agree. And as much as corporate social
responsibility just soundsamazing. There is a negative
side to corporate socialresponsibility and that would be
the employees perception of whythis is being done. If a
employee feel that the reasonwhy the Corporate Social

(09:51):
Responsibility initiatives arebeing put out there is
inauthentic. It can negativelyimpact what is happening, which
then can Take a turn for theworst, it can create that
disengagement, it can createnegative work attitudes. So it's
important to not only know whyyou are developing these

(10:13):
initiatives, but as you said, tomake it part of your mission,
but it's important to create asense of authenticity with these
initiatives for the employees tojump on board. So you have to be
careful of why an organizationis implementing these
initiatives. Is it just thecompetitive advantage? Or is

(10:35):
someone looking to do good?

Dr. D. (10:37):
Authenticity is really important, particularly coming
off of last week's discussionwhere we talked about the ivory
tower and decisions coming downfrom "on high" and employees not
feeling like they're part of it,it's important to have a
corporate wide initiative forCSR. But it also has to be
local. And it has to engage thefrontline folks is what I'm

(11:00):
hearing you say. In the world ofsocial media, collecting ideas
from people in a distributedenvironment, and allowing people
to upvote or downvote ideas arepretty commonplace.
Understanding if you're a largeorganization and multi
locations, and you can allocatesome level of funding, some
level of time allowance foremployees who want to engage, to

(11:23):
select their own initiatives,vote on which ones you're going
to support locally, and givepeople the opportunity to
develop the plan. It could be aleadership development thing. It
gets people really engaged, andreally democratizing and
crowdsourcing your CSRinitiatives sounds like it makes
a lot of sense. Maybe not yourentire social responsibility

(11:45):
program, because that is a verylarge thing, when you're talking
about ethics and legal and aretrying to go carbon neutral in
the organization or committingto having a diversity in your
employee base that reflects thepopulation that you serve, for
example. A local unit of abusiness can't do that
themselves. But they can go outand build a Habitat for Humanity
or create a grant for fluvaccines for seniors, or

(12:08):
helping folks get to medicalappointments on time, or
whatever it is. Whatever apassionate and engaged workforce
would want to do to help supporttheir community. So yeah,
crowdsourcing seems to make alot of sense.

Dr. K (12:21):
Yeah, it's been known that we knew a lot of the macro
level, but now the micro level,okay, we need to look at this,
we need to understand what itprovides. And a lot of you know,
CSR outcomes, psychologicalsafety, psychological
availability, values,congruence, people are feeling
positive with the CSR, as wellas it provides purpose. Not only

(12:45):
am I an employee, but I'm anemployee of a company that
provides purpose to the world orprovides purpose to our
community. It's very important,because what all that in the end
creates, is workplacecommitment. It creates employee
engagement, it, it also allows aperson to feel or perceive that

(13:10):
they have more organizationalsupport.

Dr. D. (13:13):
Now, a person's motivation for coming to work is
personal to them. And it's agreat kind of psychological term
'value congruence'. But itreally makes sense that if what
I'm doing at work on a day today basis, is aligned with my
values, I can engage in mycommunity or my passions in the
way I feel good about what I'mdoing. And I'm adding value to

(13:36):
the organization and thecustomers and I'm aligned with
the mission of the organization.
I'm just generally going to behappier and more engaged in how
I do work. I mean, it just kindof clicks all the boxes for me.

Dr. K (13:48):
It just kind of makes sense.

Unknown (13:49):
Yeah, that does anyone have the end? Oh, sorry. No, go
ahead. Go ahead.

Dr. K (13:54):
No, you go. Okay.

Dr. D. (13:56):
I was gonna change the topic a little bit,

Unknown (13:58):
so let's change

Dr. D. (13:59):
Okay. Well, one of the arguments against Corporate
Social Responsibility is whywould you invest in something
that is extra? Aren't you reallyeroding profits away from your
bottom line? There have been anumber of studies done about
this. I was particularlyinterested as exploring this is,
is it a profitable venture, andthe studies have come out all

(14:22):
over the place and some of themare very biased, saying, invest
all your excess profits incorporate social responsibility.
That's not tenable. Invest nomoney in corporate social
responsibility. That's nottenable. Because all the reasons
that we talked about on bothsides, but what the most
comprehensive macro levelstudies of spending and

(14:44):
profitability on corporatesocial responsibility and
corporate socialresponsibilities effect on
profitability is that it doesn'thelp nor harm, overall
profitability. So if you invest$1, you'll get that dollar back,
but You're probably not going toget $1.10 back in profit. Now,

(15:04):
there are ways to align yoursocial goals so that it does
support your profit initiative.
But you're not going to losemoney by investing in Corporate
Social Responsibilityinitiatives, especially if it
helps mitigate risk within yourorganization can keep some legal
risks at bay, and amelioratesome of the human resources,
risks or governmental risks yourindustry as a whole could face

(15:28):
your organization can live aboveyour competitors a little bit,
just enough so that you are themore trusted resource in your
marketplace.

Dr. K (15:39):
And to piggyback off that, it may not be a tangible
dollar sign. But you'reprofiting by keeping engaged
employees, you're profiting bykeeping people that understand
the company, you're profiting bykeeping employees that want to
stay. So the profit may not be100% tangible dollar signs. But

(16:00):
it does not mean that thecompany is not profiting. And
you know, if

Dr. D. (16:03):
an employee leaves because they're unhappy, and
they have a strong skill setrelated to your industry, they
pretty good chance you'reprobably going to go work for
your competitor, right. So youkeep an employee from leaving,
you're keeping a good employeefrom one of your competitors. So
play retention, it's a it's agood enough reason to invest in

(16:25):
the right way so that your teamsare engaged in aligned with the
mission. Absolutely.

Dr. K (16:31):
However, it does take effort to put it together,
there's ability to hire someonethat is well versed in CSR
initiatives and how to make thathappen. There might be just
people that have had within thecompany already, that has the
experience. And if they are notworking on a big project, or

(16:51):
they have a moment, maybe theycan throw ideas together.
Fortunately, there is a widerange of people's talents that
do not get used within thecompany. And you may not have
to, you know, hire someone to doit. The important part is to
make a clear cut plan. involveyour employees at every level,

(17:13):
not just your lower level oftheir frontline. It's all
levels. But the biggest part isis not walking or not talking
just the talk, it's doing thewalk and making it an action
plan. Alright, so with all ofthat, dr. D? How can leaders
prepare?

Dr. D. (17:31):
Well, given all the great advice in your perspective
and expertise in the area,here's what I took away from the
conversation. Start byinventorying ways your
organization is already actingas a responsible corporate
citizen crowdsource from youremployees, what initiatives are
important to them and to theircommunities. Align your
corporate social responsibilityaims with your organizational

(17:53):
mission and align your employeesto that mission. create
opportunities for volunteering,aligning employees with
community needs, explorecommunity and not for profit
grant making. Align your actionswith your marketing teams, your
legal teams and your riskmanagement team so you can get
the full benefit and followthrough be consistent, be
authentic,

Dr. K (18:14):
and take action.

Dr. D. (18:15):
Take action. Absolutely.
great conversation today. What'son tap for next week?

Dr. K (18:22):
Well, next week, we'll be talking about information and
data overload when people overor under rely on data and
information behavior in decisionmaking.

Dr. D. (18:33):
Very cool. And to all of you joining us on this journey
to the realm Thank you so much.
I am dr. D.

Dr. K (18:40):
And I'm Dr. Kay and we are always looking forward to
your next visit to the ExecutiveRealm.