By Melissa J. Anderson
Recently Harvard Business School researchers released a working paper detailing how companies can more effectively organize their various CSR initiatives into a cohesive strategy.
Based on their own experience and a poll of polled 50 CSR managers, the researchers Kash Rangan, Lisa A. Chase, and Sohel Karim, surmised that most CSR activities fall into three categories – philanthropy, strategic CSR (supply chain enriching), and re-engineering the business. But, they continue, oversight of each of these programs is disorganized and unfocused when it comes to business goals. Individuals with the responsibility of carrying them out, often do not have the authority to accomplish the task.
Rangan, Chase, and Karim suggest a process to connect the dots between individual disparate programs in a way that will tie with short and long term business strategy.
One of the most well-known philosophies on CSR is the concept of “shared value.” The writers explain, “The role of business, according to this model, is to create value for its shareholders but in such a way that it also creates value for society, manifesting itself as a win-win proposition.”
The “shared value” model is a way to mitigate conflict around CSR, to find a way for those who think the purpose of business is to make money to get along with those who think businesses should work in the service of the public good. With “shared value,” everybody wins.
But, the writers believe, “shared value” merely glosses over internal organizational conflict and confusion when it comes to CSR. For example, they say, while this concept requires top-down leadership, these leaders are not likely to be involved in the implementation of CSR initiatives. They explain:
“Only the CEO or the executive committee will have the authority to conceive and sanction such initiatives. Yet the reality is that most CSR functions in companies are staffed by managers who are a rank below the executive committee level. We have talked to hundreds of these managers, and they feel disconnected from the shared value concept because they perceive it as sitting above their ‘pay grade.’ As for the CEOs, given the pressures of business and meeting their ‘numbers,’ shared value is naturally not at the top of their agenda, except for a handful of committed CEOs.”
As a result, companies are engaged in various disparate CSR initiatives that fall into three stages – philanthropy, strategic CSR, and business re-engineering. The goal of CSR managers, they say, should be to organize the programs into a cohesive strategy that ultimately creates value for the company.
First of all, managers should work to draw pet philanthropic projects into the company’s strategic vision. Strategic CSR initiatives (usually focused on improving or educating a supply chain) should be more keenly focused to create a larger impact for the business as a whole. And the third category – programs that attempt to re-engineer the business should be taken to the next level strategically, to transform the entire business in a sustainable way. The researchers explain, “… it is critical to create an accompanying business model that is capable of delivering a return on the societal investments that have preceded it.”
“Gaining a unified vision is a central challenge of coordinating CSR efforts in all three theatres. In current practice, the typical management of philanthropic, supply chain and transformative ecosystem initiatives by different levels of management and business units has resulted in a messy state of affairs. CSR priorities may be unclear to managers, executive leadership and employees, and disparate CSR campaigns may not effectively address social or environmental problems.”
In order to mitigate this potential challenge, CSR mangers are given the authority to connect the dots strategically between programs, editing those that aren’t strategically relevant. Strong leadership support is also critical. Under this model, CSR managers are given the strategic authority to ensure programs work to support the business in the short and long term. The researchers say:
“CSR is here to stay, and every company needs a cohesive, integrated CSR strategy that plays on its core strengths and institutional capacity. By strategically managing its CSR initiatives, every corporation can maximize its benefits to society and the environment, create societal value and fulfill the motivations of its many stakeholders.”
Companies can get the most value out of their CSR programs by ensuring they are aligned with business strategy, and granting CSR managers the authority to make and maintain these connections.