Making CSR happen

Jun 03, 2019
How can companies transform corporate social responsibility from a ‘nice to do’ activity into a strategic imperative?

While corporate social responsibility (CSR) is a discretionary expenditure, leaders are increasingly tuned in to the corporate value of CSR. Indeed, in the current socio-economic environment, it can be argued that companies must be seen to be involved in CSR in some way. And there are many benefits for companies including improved company reputation, a more attractive employer brand and greater employee engagement.

As a cost, companies should be able to evaluate the return on their CSR expenditure as they do for any other expenditure. However, many companies do not view CSR expenditure in this way. Instead, they see it as a moral obligation to give back to the community. Nonetheless, many companies are taking a more formal approach to their CSR expenditure. There is growing support for the idea that the measurement of CSR activity is important as it supports decision-making within the company, makes managers more accountable for CSR expenditure and generates support within the company by illustrating the company’s CSR achievements. Thus, companies can use measurement as a means of building a business case to justify their CSR expenditure, which in turn can help protect CSR projects into the future.

How, then, can companies go about measuring their return from their CSR activities? One model or framework which encapsulates the process is the Impact Value Chain Model. 

Inputs – Activities – Outputs – Outcomes

Let us take as an example a company that wishes to employ staff members from minority groupings. 

The objective is to reach a certain percentage by a specified date; the inputs are the resources devoted to this objective, in terms of money and employees’ time; the activities are the actions taken in terms of recruitment and retention practices; and the outputs are the number of individuals from minority backgrounds recruited and retained within a specified time period. The short-term outcome would be, for example, the achievement of the company’s goal of reaching the agreed target by the agreed date. Long-term outcomes, on the other hand, would include improved staff morale, a more appealing employer brand among minority groups and a boost for the company’s reputation.

However, measuring outcomes can pose difficulties for organisations as there can be both intended and unintended outcomes. Furthermore, outcomes can be examined in the short-term or the long-term and there may be difficulties in linking long-term outcomes to company actions. For example, to what extent does a scheme to pay farmers a fair price in a specific area drive economic activity in that area compared to other initiatives that may have taken place at the same time?

In summary, measuring the benefits arising from a company’s CSR activity can help the company assess whether it is achieving its CSR objectives; ensure that it does not waste resources; build support among employees; protect CSR programmes when resources are constrained; and ensure that a strategic approach is being taken. So, how can managers ensure that the right approach is being taken when evaluating CSR expenditure?

Define your objectives

Clearly define what you want your CSR activity to change. What will the activity achieve for the beneficiaries and for the company? The goals must be set out in quantitative terms as far as possible. For example, a company might want to be seen as an employer of choice. This goal can then be quantified by the number of applications received and whether retention levels have improved over the course of the CSR initiative.

Identify the inputs

You must be clear on the inputs required. And don’t confine it to financial resources alone – include staff volunteering hours and other resources, such as the company facilities used to provide the CSR initiative.

Outline your activities

It is also important to define the activities undertaken. Sometimes, more activities emerge from the inputs than was planned. As an example, let’s return to the recruitment initiative to increase the number of people from minority backgrounds. This initiative also adds to the company’s equality agenda and positively impacts the company’s reputation.

Be clear on the outputs

The outputs generally receive the most attention. If, for example, the aforementioned company is successful in the recruitment of individuals from minority backgrounds and they stay with the company for a specified period of time, or a fundraiser raised a certain amount of money for charity, the recorded metrics can provide a short-term measure of success and can be useful in boosting morale.

Classify the outcomes

It is important to outline the list of short-term and long-term outcomes accruing from the CSR initiative. These outcomes need to link back explicitly to the overall objectives of the initiative.

Quantify the outcomes

Difficulties in quantifying the outcomes can make managers shy away from this part of the process. The key question is: can we attribute the increase in the company’s reputation score to the company’s CSR activities? It is important to isolate the issue as much as possible. While the results will not be scientific and may be arrived at through an element of guesswork, it can help identify broad linkages. This exercise will assist in highlighting the value of the CSR initiative and, therefore, safeguard the future funding of the initiative.

Ensure the participation of staff throughout the process

The participation of staff in the above process is key, as it gives staff ownership of the chosen CSR initiative and thereby increases the likelihood of staff buying into the process. This in turn can lead to increased motivation and greater team cohesion within the organisation.

Debrief

The need to debrief in the aftermath of a CSR initiative is imperative. The idea is to step back and examine what was achieved, how it was achieved and what could be changed in the future to make the initiative more effective or increase the benefits to both the company and the relevant stakeholders.

Conclusion

In conclusion, the Impact Value Chain Model is a roadmap for how CSR can be evaluated. It provides a strategic lens through which management can assess the value of CSR initiatives and move CSR from a ‘nice to do’ activity to a strategic activity; one that can demonstrate its contribution in terms of the many benefits it brings and thereby ensure support and funding into the future.

Dr Blath McGeough is a Lecturer in Management at the Technological University Dublin, Tallaght Campus.

Dr Francis McGeough is a Lecturer in Accounting at the Technological University Dublin, Blanchardstown Campus.

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