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Giving Thoughts

Jun
12
2017

What CSR Can Learn from Other Business Functions: An Outside-In Perspective

By Mohammad Hamidwindow washer

In April of 2016, I decided to interview as many corporate social responsibility (CSR) professionals as I could get in front of. Over 12 months later, I have amassed over 150 interviews chronicling a variety of enterprises that have really shaped my perspective about the space. These interviews span numerous business types—public and private, B2B and B2C, US-Based and international, emerging and established, commodity and niche, and even growing and declining businesses. The good news is this: most of these companies have, to some degree, embraced corporate social responsibility as a business function. The bad news—whether CSR leaders want to admit it or not—is that there are fundamental holes in how CSR, as a business function, is managed. In this piece, I’ve outlined some of these challenges and what CSR practitioners can begin to do to move forward.

There are 3 fundamental issues in CSR today:

  • The illusion of siloes
  • Lack of accountability
  • Obtuse mental models

Let’s break them down one at a time.

The illusion of siloes

Many organizations, even some of which are very sophisticated, don’t have a clear idea of just how many of their activities  fall under the broad category of Corporate Social Responsibility (CSR) and as a result, their CSR group has a very narrow scope of responsibilities.

Many banks, for example, tend to think that CSR is just a vehicle to 1) comply with CRA regulations, and 2) support philanthropic initiatives. Manufacturing companies tend to think that CSR is mostly about sustainability along the supply chain and environmental, health, and safety efforts. Some of the largest employers in the world seem to think that CSR is mostly about instilling purpose in the workforce a la employee engagement.

In general, we’ve also seen that companies that operate in highly regulated industries seem to think that CSR is primarily about transparency when it comes to governance and risk management. Across all of these sectors (and many others) too many companies oversimplify what CSR is—often with the excuse that their businesses are unique and therefore they need to customize the CSR function based on those unique attributes.

As a mentor of mine used to say: “That’s a bunch of malarkey.” (He was Irish.) Times have changed. Employees, customers, investors, suppliers, and other stakeholders have made it clear that companies need to have a unified, strategic approach to CSR regardless of their industry, location, etc.

Every large enterprise needs to have a systematic way to deal with environmental, health, and safety efforts. Every large enterprise needs to have a systematic way to deal with their governance, risk, and compliance initiatives. And despite the critics, every large enterprise needs a systematic way of managing their philanthropic and community relations efforts in concert with these other components.

CSR is really just an amalgamation of EHS (environment, health, and safety), GRC (governance, risk, and compliance), and PCR (philanthropy and community relations). These cannot be separate functions that live in different parts of the enterprise. The underlying components of these functions are naturally intertwined and, therefore, they must be integrated at both a strategic and tactical level.

These aren’t different functions, they are the necessary components for companies to manage their socially responsible business practices. The sooner enterprises realize their Chief CSR Officers should be accountable to all three of these areas, the sooner they can achieve a triple-bottom-line.

The lack of accountability

One of the key topics I focus on most frequently with CSR professionals is accountability. While there are a few exceptions, most CSR functions are not held accountable for delivering value compared to other business functions.

Chief Marketing Officers are accountable for delivering awareness, engagement, and attention. Chief Financial Officers are accountable to delivering efficiencies, leverage, and earnings. Chief Technology Officers accountable for delivering innovation, efficiencies, and revenue. What are Chief CSR Officers accountable for? A lot of folks have told me that they’re accountable to the UN Sustainable Development Goals. My response typically takes the form of a question: do you even know what accountability means?

Accountability is serious. It’s something organizations take so seriously that people can lose their jobs if they don’t achieve the outlined goals. With the exception of a small faction of European companies, I’ve not seen the CSR function held accountable for delivering value.

A test I like to use to gauge accountability is to evaluate the relationship between a business function and the solution-providers, vendors, etc. in the space. If the community of professionals is responsive to solution-providers, there tends to be a sense of urgency at the organization to achieve their goals. However, if the community of professionals is not actively seeking out solutions to improve their efficacy, it is usually due to a lack of accountability—i.e, no sense of urgency to deliver greater value.

Let me provide a few more tangible examples.

If I call a CMO with the value proposition of helping them deliver awareness, engagement, or revenue, they will usually hear me out. The same goes  with a CTO or a CFO. But why is it so hard to get Chief CSR Officers to, at least, hear how we might help them create more value?

I posit that one of the explanations must be that there is no accountability. It’s something that puzzles me because CSR professionals spend a lot of time legitimizing the function to their CEOs, CFOs, and board of directors—and yet, the way they make decisions about hiring and firing, investing in consulting services and technology solutions, and professional education has little to do with whether or not these things will help them achieve their business goals.

Maybe some leadership teams have a hard time taking CSR seriously because some CSR professionals don’t appear to be taking themselves seriously.

Obtuse mental models

Business functions usually make decisions based on their goals. Hiring and firing is usually done on the basis of the implications on the company’s ability to achieve its goals. Investments in new products and services are usually done on the basis of the implications on the company’s ability to achieve its goals. Even creating new strategies and programs is usually done on the basis of the implications on the company’s ability to achieve its goals. But for a large number of CSR professionals, that doesn’t seem to be the case.

Let me provide a few real-life examples.

Example 1

Company A’s CSR Director is being pushed by leadership to integrate his efforts into the value-chain of the business. To do so, the CSR Director is looking to hire a program manager to help manage the initiative. A friend of the CSR Director suggests hiring someone with more of a business and strategy background, but given the CSR Directors background in philanthropy, he hires someone with a background in grant writing to help manage the initiative. Six months later, the new hire quits, citing no interest or expertise in managing this program for the company.

Example 2

Company B’s VP of CSR is looking for a technology solution to help consolidate the CSR reporting and communications efforts across a number of its subsidiaries. Serendipitously, a young technology company demos their product to company B. Company B loves the product, but decides not to make the investment referencing “the company’s risk aversion when it comes to new technologies.” Years go by and the company still invests too much time and resources on CSR reporting and communications, relative to its peers, yet the company is not taking action.

Example 3

Company C’s Chief CSR Officer has a clean slate and is responsible for creating the company’s new strategy around CSR, including the creation of a series of new programs. To start this process, she conducts a back-of-the-napkin materiality assessment. After thinking about which new programs the company will have, company C’s Chief CSR Officer chooses a total of 25 new programs. 15 of them in quadrant III of the materiality assessment, 5 of them in quadrant IV of the materiality assessment, and 5 of them in quadrant II of the materiality assessment. The company’s board asks here why there are no programs in quadrant I, where value to stakeholders and the business is maximized, and she provides several anecdotes about why the other programs are accretive, too.

In each one of these examples, the company suffered from obtuse decision-making processes that, I would argue, had materially harmful implications for the company. In the first example, Company A’s CSR Director put the company in a undesirable position by hiring the wrong person. In the second example, Company B’s VP of CSR’s decision negatively impacted his team’s productivity and ability to deliver on goals by focusing exclusively on short-term switching costs. In the third example, the lack of pre-defined goals and accountability caused Company C’s Chief CSR Officer to leave dollars on the table by  ignoring the programs that would create substantial value both to stakeholders and to the business.

Conclusion: Problem solving needs to be a part of the culture within CSR Functions

It’s important to mention that my perspective is heavily shaped by three inputs:

  • My experience serving the core business functions in the enterprise
  • The incredible group of CSR experts on my team (all of whom led world-class programs at the Fortune 500 level)
  • More than 150 conversations I’ve had with CSR professionals over the past year.

The perspective I have is that of someone from the outside looking in: someone without the functional fixedness that has crystallized in CSR over the years.

All of that being said, if there’s anything I really want the CSR community to take away from this post, it is this: the psyche of the CSR professional needs to change.

Among the changes I’m advocating for, one is more important than anything else—establishing a culture of problem-solving in the business function. Problem-solving is really the core of any effective business function. While some may need to work on clarifying the problems they strive to solve, others need to become more intentional in addressing the challenges they face in achieving those goals.

What do we have to gain by doing so? A lot. More societal impact. More business impact. And at its foundation, a more empowered CSR profession to drive that change.

This piece was originally published by Unison.

About the author:

Mohammad Hamid CEO Unison

Mohammad Hamid
CEO
Unison

Mo is CEO at Unison. A data scientist by training, he now focuses on building and growing technology companies. His work has been featured in The New York Times, Washington Post, Reuters, Financial Times, The Atlantic, U.S News & World Report and other global publications.




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