Does corporate responsibility lead to higher profits – or vice versa?

Corporations in virtually every industry and reaching into every corner of the world, from Target and General Mills to Starbucks, Nike and Monsanto, have made their corporate social responsibility initiatives a primary business function. Many of them do so because it’s the right thing to do. But a majority of them also realize a number of business benefits, such as:

Risk management. A culture of transparency and ethics helps companies focus on responsible practices and compliance, and protects them from behaviors that could damage the corporate reputation.

Recruitment and retention. Companies at the top of the moral heap will draw better employees and encourage long-term career paths.

Brand differentiation. A business model built on socially responsible values will drive the development of market-competitive products and services.

Business growth. Statistics from Cone Inc. support the notion that a large percentage of consumers would prefer patronizing companies that support causes.

Perhaps one of the most compelling incentives to institute or maintain a corporate responsibility program is this statistic: Companies that appeared on the CRO 100 Best Corporate Citizens List® over the past nine years have outpaced the rest of Russell 1000® businesses in three-year total return by 26%.

But did these companies outperform the others because they were socially responsible … or were they socially responsible because they had more capital through higher profits and stock prices, and therefore could invest more in those programs?

One example that favors the former argument is the case of Merck, which earned fourth place on the 2009 CRO 100 Best List. The high-profile pharmaceutical company lost considerable market share in mid-2006 amid the controversy that sprang from reported health risks related to its anti-inflammatory drug, Vioxx. Since then, Merck has sought to improve the trust of its stakeholders through greater transparency and better internal and external communications regarding its CSR efforts. On March13, 2009 – the release of the most recent CRO 100 Best List – Merck’s per-share price closed at $27.07, a full $10 per-share better than if it had tracked with the Dow Jones Industrial Average since the beginning of the Vioxx debacle.

Obviously, one example doesn’t tell the entire story. Many believe that ROI should not even be a factor – that companies should exercise corporate responsibility because it’s a moral and/or social obligation.

And then there are those who believe, like Nobel prize-winning economist Milton Friedman, that “only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but ‘business’ as a whole cannot be said to have responsibilities.” (Apparently Friedman wasn’t consulted prior to the recent Supreme Court ruling.) Friedman also stated that the “corporate executive … has direct re­sponsibility to his employers … to make as much money as possible while con­forming to the basic rules of the society.”

Should corporations set out to be socially responsible in order to improve their bottom line? Or should they seek to make the world a better place without hoping to make a profit on it? Or, finally, do you believe that the only responsibility a corporation has, so long as it stays within the law, is to make a profit? Tell us what you think.

– LuAnne Speeter

High-impact giving: Get more bang for your bucks

Small businesses are notoriously generous and they often don’t receive the credit. While large corporations tend to get the press for their philanthropy, they in fact contributed only 5% of the $307 billion donated in 2008.* Individual donations amounted to 75% of total dollars donated, and much of that was from small business owners.

But large corporations are strategic in how much they give and who they give to – they have to be, in order to accommodate budgets, boards of directors, compliance parameters and more. Small companies, on the other hand, usually don’t have a philanthropic mission and goals in place, making unplanned donations out of compassion to solicitors. And while those donations may not seem like a lot at the time, they can add up to a large percentage of your bottom line.

If you’re a small business owner, would you be more strategic with your giving if you knew how profound of an impact you could have?

The Center for High Impact Philanthropy, a department of the University of Pennsylvania’s School of Social Policy & Practice, recently released a guide for donors who want to ensure their dollars produce maximum results. “High Impact Philanthropy in the Downturn” focuses on three areas of need that are most critically affected by the recession:

• Housing: preventing foreclosures
• Health: sustaining primary and preventive programs
• Hunger: ensuring access to food

This well-researched, evidence-based guide gives specific solutions to the need areas, the impact the donation amounts would have, and the real costs that are incurred by individuals and our society without the donations.

For example, one solution to the foreclosure problem is to provide homeowners with access to nonprofit housing counselors. In order to keep a client at risk of foreclosure in his or her home for at least 12 months, it would cost between $300 and $3,800 for effective counseling.

However, compare this to the costs of a single foreclosure: up to $34,000 in municipal costs, a reduction of $7,200 on average in property values of neighboring homes, and a rise in violent crime at a rate of 2.33% per percentage point increase in the neighborhood’s foreclosure rate. Add to that the direct costs to the individual and, indirectly, society – increased risk of homelessness, financial distress, stress and mental illness and loss of learning and development in children.

As you put together a giving strategy for 2010 – as a business or as an individual – think about those areas that can deliver the greatest impact. Where to put your money is as important as, if not more important than, how much you give.

*Source: www.givingusa.org

– LuAnne Speeter

10 ethical questions to ask yourself before closing the sale

I was asked to bid on a marketing project yesterday. While preparing the bid, I found that I needed to clarify my stance on certain business practices. Specifically, I stated to my prospect that a form of partnership he was seeking was not permissible within my ethics and posed a conflict of interests.

In other words, I knew that type of partnership would make feel disingenuous and possibly cause me to lose sleep down the road.

In our day-to-day business dealings, most ethics-based decisions are cut-and-dried. Companies often have codes that specify what’s acceptable and what isn’t. But in the sales field, when deals are often made on-the-fly, requiring flexibility and innovation, we’re tempted to push the ethical boundaries. So it’s especially important to not only know your company’s code of ethics (the “letter of the law”), but also apply moral standards (the “spirit of the law”) to situations that aren’t so black-and-white.

Sometimes being ethical means you sacrifice a sale. But clarifying your position upfront helps you avoid an uncomfortable situation or damaging legal ramifications.

Temptations and traps to avoid

• Misrepresenting your product or service
• Price fixing
• Bait-and-switch practices
• Surprise charges and add-ons after the sale
• Misuse of proprietary data and customer lists
• Padding an expense account
• Badmouthing a competitor
• Kickbacks to the buyer
• Unauthorized signing of agreements

Whether or not your company has a defined code of ethics, defining and following certain guidelines are not only common sense, but good business.

Ethically responsible questions to keep in mind

1. Do I know these claims to be true or am I just saying them because it guarantees a sale?
2. Am I doing my best to educate the customer about the product before the sale?
3. Do I understand the terms of the sales policies and what’s legally binding?
4. Can this data be divulged or is meant to be proprietary?
5. When quoting statistics, do I know the primary source and if it’s reliable?
6. Do I know federal and state laws that apply to the company’s products and warranties?
7. Am I making clear what triggers any claims to a money-back guarantee?
8. Do I always think twice before saying anything negative about a competitor, another customer or a fellow employee?
9. Do I ask permission before using a testimonial from a satisfied customer?
10. Am I focusing on solving my client’s problem or am I just intent on making the sale?

Please comment and tell others what you’d add as #11.

– LuAnne Speeter, President, Minnesota Cause Connection Inc.

Related post: How ethical are you really? Take this quiz

M.B.A. programs prepare socially aware entrepreneurs

A growing number of graduate students are seeking to specialize in social entrepreneurship – the development of for-profit companies that deliver socially responsible products or services, or are tied to social causes. As a response, business schools are tailoring their curricula to accommodate their interests.

The following are a few graduate programs that address this new paradigm:

The Skoll Centre for Social Entrepreneurship at the University of Oxford’s Saïd Business School explores such models as venture philanthropy and an ethical stock exchange – an alternative that is less focused on financial and more on environmental and social returns than the traditional exchange model.

The Allwin Initiative for Corporate Citizenship is an on-campus group at Tuck School of Business located at Dartmouth College. The vision of the Allwin Initiative is to embue Tuck students with “a heightened social conscience, a strong sense of business ethics, an understanding of social enterprise, and a familiarity with the management tools that facilitate corporate responsibility and community involvement.”

The Center for Responsible Business at the University of California at Berkely/Haas School of Business was founded in 2003 thanks to the generosity of actor/philanthropist Paul Newman, among others. The Center offers an integrated portfolio of research, teaching, experiential learning and outreach.

According to the Center for Sustainable Global Enterprise at Cornell University’s The Johnson School, solutions to environmental and social problems “are business opportunities, not a cost of doing business.” The program includes such courses as Sustainability as a Driver for Innovation in the Entrepreneurial Organization and Corporate Social Responsibility: Organizational Issues.

A number of conditions within the U.S. and globally could be driving today’s budding entrepreneurs to have a deeper sense of social and environmental responsibility, such as:

• A natural outgrowth of our more socially aware society.
• A tightening of the job market, leading to more creative start-up ventures.
• A reaction to the financial crisis and what is interpreted as Wall Street greed.
• An opportunity for laid-off employees to find greater meaning in their next career stage.

In any case, we can look forward to an era of significant social and environmental solutions by for-profit businesses. If they do it right, they will do well by doing good.

– LuAnne Speeter

What motivates employees to volunteer? Hint: The answer isn’t personal recognition

If your company’s social responsibility program includes volunteerism, it can have tremendous impact not only on the community, but also on your company and employees.

How the community benefits

• Increased access to resources
• Improved health and welfare
• Enhanced economic development
• Community needs are addressed

How your company benefits

• Enhanced reputation
• Increased product/service awareness
• Raised productivity
• Improved staff satisfaction and retention

How your employees benefit

• Increased community awareness/involvement
• Heightened employee satisfaction
• Acceleration of professional development
• Opportunities for leadership
• Improved attitude and outlook 

Source: Corporate Volunteerism Council – Twin Cities

But what motivates employees to offer their time and skills to a charitable cause? The answer may surprise you.

In past years, personal recognition was the primary motivation for corporate volunteering, according to LBG Associates, the firm that launched the study involving more than 8,000 employees in 36 companies. However, the latest study, conducted from late 2008 to early 2009, showed the following:

When it comes to recognition, employees rank “a donation made to my charity when I volunteer” highest among all other forms of recognition.

When asked to rank the reasons they volunteer, employees listed the following on a 1-5 scale, with 5 as “very important”:

• The cause is important to me personally (4.35)
• Community organizations are experiencing financial hardship (3.61)
• My volunteering results in a donation for the organization from my company (3.53)
• The cause is important to my company (3.35)
• The charity came to the company to talk about what they do for the community (3.08)

When you’re selecting a charitable organization and you want maximum participation from your employees:

1. Start by looking at several options that are relevant to the majority of your employees’ interests and skill sets.
2. Choose venues that are local and easily accessible.
3. Ask employees to vote among the charities and go with the most popular choice(s).

– LuAnne Speeter

7 ways your company can help change the face of aging

Tonight I’m having dinner with my dad at his favorite restaurant. It’s a cozy neighborhood bistro that caters to his unique tastes. I already know what he’ll order: liver and onions (to fortify his iron-poor blood), paired with a scotch and soda.

Dad’s adamant about continuing to live in his home amid the cherished memories of my mother. My siblings and I, along with his home care providers, ensure he has the care he needs to maintain his independence.  For other older adults, though, a senior housing facility may be a better option.

Empowering individualism and providing innovative senior housing choices are just a couple of the many quality of life issues we face with our burgeoning older population. Today, one in eight Americans is over age 65; by 2020 the ratio will be one in six.  Our society will be challenged to accommodate their needs without dehumanizing them, combat the growing prevalence of Alzheimer’s and dementia, and eradicate an insidious ageism that denies seniors respect and leaves them susceptible to social, physical, emotional and financial abuse.

Corporate America can play a critical role in promoting initiatives that advance senior issues. Why should this be important to you? 

• As individuals retire from our companies, they take with them a significant share of America’s knowledge and experience. Yet with today’s greater longevity, many are embarking on “encore careers” after retirement. By retraining older employees and/or hiring senior consultants, you’ll capitalize on the value that this cohort offers.
• More employees are acting as caregivers for aging relatives and need to find ways to balance this role with their work lives.
• Recent studies by the Taproot Foundation and other organizations show that retired Baby Boomers seek more structured volunteer opportunities that leverage their skills in order to improve their communities, ultimately benefiting local businesses.

Your company can help advance the well-being of seniors by participating in the following efforts:

1. Promote eldercare and senior housing initiatives. Consider partnering with a local organization to provide visitation and build one-on-one relationships with seniors. Include the organization’s logo in your marketing with a link to donate money or learn more about volunteer opportunities.
2. Invest in aging research. We need to understand what our increasing longevity will require from society medically, economically and psychologically. Your organization may have valuable technical expertise to contribute or could sponsor a study to advance these efforts.
3. Combat dementia and frailty. Educate employees about how to advocate on the state and federal levels to ensure a better quality of life for aging adults.
4. Encourage older employees and retirees to stay involved in their community and the workplace. The report Reinventing Aging: Baby Boomers and Civic Engagement, a product of the Harvard School of Public Health–MetLife Foundation Initiative, discusses insights of key thinkers on ways to channel elderly skills to enhance local communities.
5. Support caregivers. Build flexibility into employee schedules, helping them accommodate the needs of loved ones who require home care.
6. Fight ageism. Do your part to improve the treatment of older adults throughout the world. Include positive images of seniors within your marketing and ensure policies and ethical standards are in place to protect senior coworkers from disrespect, harassment or being passed over for advancement.
7. Throw out the stereotypes and redefine aging. Record segments of PBS’ Life (Part 2) and give employees access to viewing and enjoying them together over the lunch hour. Now in its second season, the series is a fast-paced and humorous look at being a Boomer, and how this generation is redefining aging. Segments include panels of experts and guest appearances by celebrities such as Joy Behar, David Hyde Pierce and Martha Stewart. Airing begins Sept. 16, 2009; topics include Boomer Dating, Plastic Surgery, Caregiving, Fighting Ageism and more.

Take steps now to remove the taboos and unleash the opportunities that the later years offer your company, your community, your family – and ultimately, yourself.

“We grow neither better or worse as we get old, but more like ourselves.”  (May Lamberton Becker)

– LuAnne Speeter

Charity at work balances charity at home

TCCVM provides voice mail services for homeless and low-income families.

As the recession drags on, charitable outreach is changing to reflect today’s dire economic situation locally and nationally.

A recent report from the National Conference on Citizenship (NCOC) shows that 72% of Americans are cutting back on community volunteerism and charitable giving – often because they are focusing on needs in the home. Baby boomers in particular are caught between caring for their elderly parents and taking adult children back into their homes. According to the NCOC’s “America’s Civic Health Index 2009: Civic Health in Hard Times,” there is an increase in the portion of young people living with their parents. In 2009, 52.5% of 18- to 24-year-olds reported living with their parents, up from 50% in 2007.  So it’s not that people aren’t as charitable, but rather the focus has turned toward immediate family needs.

U.S. businesses can play a significant role in helping overcome the shortfall by offering charitable opportunities at work. In fact, the NCOC report showed that employed baby boomers were by far more likely to volunteer (45%) than those who were not working due to retirement, disability or layoffs (23%). By partnering with a charitable organization, a business can help provide a major boost through donations, matching gifts, volunteering or cause marketing.

A charity that provides a particularly critical service during this economy is the Twin Cities Community Voice Mail.* TCCVM offers free voice mail to homeless and low-income people who don’t own their own phones. Through TCCVM, recipients can maintain communications for such vital needs as employment, housing, health care, safety from domestic abuse and child care, enabling greater self-sufficiency. In fact, you and/or your company can join the TCCVM Walk in Minnehaha Park on Saturday, Sept. 27.

Your company’s support of TCCVM, Families Moving Forward or other organizations empowering self-sufficiency delivers important help during times of transition for individuals and families – more crucial than ever in this economic environment.

*TCCVM is part of a national organization, Community Voice Mail.

– LuAnne Speeter

Related posts:

• Cause marketing needed to ease the pain of deep cuts
• Enrich the lives of your employees with socially responsible efforts

Checklist: What’s your level of corporate social responsibility?

Corporate social responsibility was virtually unheard of a decade ago. Today, however, most companies are instituting CSR measures to some degree. According to KPMG International, 74% of the top 100 U.S. companies in revenue published corporate responsibility information in 2008, up from 37% in 2005. 

The level of commitment to social and environmental issues can vary widely, however. While some companies dedicate a significant amount of time and resources to corporate citizenship, other companies barely scratch the surface with minimal compliance.

What about your business? Do you know how it measures up to other institutions of comparable size or structure when it comes to social responsibility? Below is a quick checklist*, broken down into five levels that range from low commitment to high involvement. Check off the practices that best relate to your company to find your level of CSR.

__________________________________________________________________

Level 1: CS-What?

__ Sees no corporate relationship to social or environmental community issues.

__ Achieves the bare minimum of social or environmental measures required by law.

__ Sets only profit-based corporate goals.

Level 2: Squeaking By

__ Takes a non-strategic, “management by crisis” approach to social or environmental concerns.

__ Ensures basic compliance is met regarding environmental, labor, safety and health regulations.

__ CSR communications are marketing-based only and not consistent.

Level 3: Strategic

__ Develops a CSR plan with a dedicated budget, but compartmentalized approach.

__ CSR objectives are incorporated into business mission, values and vision.

__ Selects initiatives that positively affect business outcomes; e.g., environmental efficiency or socially responsible product lines.

Level 4: Assimilated

__ Involves stakeholders in determining CSR initiatives that address emerging social needs.

__ Incorporates CSR goals into all business operations and policies.

__ Establishes and tracks benchmarks internally and within the industry.

Level 5: Altruistic

__ Primary corporate mission is focused on creating a better society or environment.

__ Products and services are aligned to fulfill corporate mission.

__ Marketing and communications are dedicated to enhancing community, national or global awareness of causes and affecting public policy.

__________________________________________________________________

How is this checklist useful? First, it can help you pinpoint where your organization is right now regarding corporate social responsibility. Second, it initiates the conversation of how to move to the next level.

Interestingly, as I studied these levels I realized that there’s a strong correlation to Lawrence Kohlberg’s levels of moral reasoning. In other words, our businesses can and should continue to evolve – just as individuals do – to achieve a higher level of social and ethical responsibility.

*Checklist is loosely based on a worksheet produced by Strandberg Consulting.

– LuAnne Speeter

Marketing should add value – consumers are deeper than you think

Is your marketing too shallow?

Today’s consumers are weary of obvious salesy rhetoric and ignore a majority of the bazillion ads they encounter every day. And as the recession wears on and unemployment rates remain high, many are reevaluating their life choices, turning from materialistic interests and seeking deeper meaning for greater satisfaction.

Some companies are acknowledging this search for meaning and are finding creative ways to provide greater value in their marketing. The marketing itself is improving consumers’ lives by helping them meet deeper needs while helping to enhance the brand name.

Are consumers in general more “enlightened” than in previous generations? You wouldn’t know if by watching “Bridezillas,” but there are signs that consumers are more evolved than we give them credit for. It’s obvious, for example, that green living is no longer just a grassroots movement but a corporate mission for most companies. And a recent study shows that volunteerism is on the rise.

The drive to find greater personal fulfillment by many in the population was acknowledged decades ago by humanistic psychologist Abraham Maslow (1908-1970). Maslow defined five levels of human needs that range from the very basic to very high-level. In a nutshell, the five levels are:

1. Physiological. Needs that are basic to survival, such as water, air, food and sleep
2. Security. Needs for safety and security, including steady employment, safe neighborhoods, health care insurance, shelter
3. Social. Needs for belonging, love and affection
4. Esteem. Needs for things that reflect personal worth, social recognition, accomplishment
5. Self-actualizing.* Needs for pursuing personal growth and fulfilling one’s potential

*”What a man can be, he must be. This need we may call self-actualization…It refers to the desire for self-fulfillment, namely, to the tendency for him to become actualized in what he is potentially. This tendency might be phrased as the desire to become more and more what one is, to become everything that one is capable of becoming.”

– Abraham Maslow, “A Theory of Human Motivation,” Psychological Review 50, 370-96

This hierarchy is brought into a marketing context in a new book due to be released in October 2009. Written by Bob Gilbreath, “The Next Revolution in Marketing: Connect with Your Customers by Marketing with Meaning” encourages marketers to be aware of the different need levels of our audiences and offer value in our marketing to help fulfill them. Gilbreath created a three-tiered marketing hierarchy (yes, another hierarchy) loosely based on Maslow’s.  

Level 1: solution marketing adds value to those seeking to fulfill more basic needs. Such marketing efforts could include money-saving coupons, rebates and rewards programs.

Level 2: connection marketing delivers value to those seeking more social or creative expression and corresponds to Maslow’s middle category.

Level 3: achievement marketing is aligned with Maslow’s peak level of self-actualization and seeks to empower people to improve their own lives or communities. Gilbreath points to a few campaigns, such as Home Depot’s home improvement training, Abbot Nutrition’s online diabetes management tool and Dove Soap’s Campaign for Real Beauty, that help enhance people’s lives while subtly promoting their brand.

Consumers are looking for something worthwhile. If your marketing is offering something worthwhile, chances are good they’ll pay better attention.

– LuAnne Speeter

From excellence to greatness: expanding the definition of business success

The other day, an astute friend of mine who offers consulting services to businesses expressed this thought:

“Everybody uses the word ‘excellence’ as a business goal. I like to use ‘greatness.’”

While I don’t necessarily think one precludes the other, I agree that a business that strives toward greatness perhaps has a more expanded, holistic vision than what excellence would imply. To me, business excellence reflects the strategies and tactics that help the company achieve – and even exceed – its goals for revenue, growth, return on investment – even customer and employee satisfaction and other benchmarks and measurements.

But for a business and its leaders to achieve greatness means they’ve stepped beyond the goals of the single corporate entity and into the business community, beyond a particular industry and into a broader business model, beyond the current fiscal year and into the future. Greatness carries a sense of legacy – that what was achieved, and those who achieved it, can be held up as an example for other businesses and will live on for others to emulate.

Greatness incorporates values that can be applied even beyond business – into our personal ethics, our relationships, our social responsibilities. Greatness doesn’t go out of style; it reveals a truth that transcends time, race and religious or political affiliation.

Most of all, greatness inspires others to live with integrity – that our day to day decisions, expressions and activities are a manifestation of a deep commitment to a greater good.

So what will it take to bring you and your business beyond excellence and into the realm of greatness?

– LuAnne Speeter