Content area
What organizations spring to mind when corporate social responsibility is mentioned? Perhaps you think of the Body Shop who will not sell products that are tested on animals. Or maybe you picture Ben & Jerry's, the ice cream corporation that aims to recognize the central role that businesses play in the structure of society by initiating innovative ways to improve the quality of life of a broad community - local, national, and international. Earlier this year, McDonalds produced its first social responsibility report - 46 pages of information describing how the company is creating a positive effect on the community, the environment, and the global market.
What organizations spring to mind when corporate social responsibility is mentioned? Perhaps you think of the Body Shop which will not sell products that are tested on animals. Or maybe you picture Ben & Jerry's, the ice cream corporation that aims to recognize "the central role that businesses play in the structure of society by initiating innovative ways to improve the quality of life of a broad community - local, national, and international".
McDonalds' social conscience
Whoever you picked, it is probably fair to say that McDonalds was not very high up on your list. Even though allegations of rainforest destruction, third world exploitation and food poisoning were all deemed unjustified by a court of appeal in 1997, this organization is still viewed by many as the epitome of capitalist greed. But could all this be set to change? Earlier this year, McDonalds produced its first social responsibility report - 46 pages of information describing how the company is creating a positive effect upon the community, the environment and the global market.
Corporate social responsibility is hardly a new concept. It has been around since the eighteenth century when anti-slavery groups appealed to the public to buy sugar that had been produced in a country where unpaid labor was not enforced. And certain companies through the ages have taken great pride in "looking out for their employees" both in and out of their working lives. However, it was only relatively recently that the actual term CSR was coined. In the 1980s it was mainly a focus for environmental concerns, but over the last two decades the expression has expanded to encompass a range of issues including:
* business ethics;
* employee volunteering programs;
* overall role in society; and
* meeting the interests of shatholders, stakeholders, employees and customers.
The caring capitalist? Prove it!
Today organizations frequently give money to charity, raise funds for projects in the community and sponsor local events. However, CSR is still viewed by many businesses as peripheral to their core interests - an image enhancement opportunity with no tangible gains. Companies present lengthy social responsibility sections in their annual reports but include little more than glossy photos or promises for more commitment. All too often this is not enough for the public who, after years of mistrust of "greedy capitalist corporations", want to see facts and figures, proving that businesses really are giving something back.
And, according to critics, this is the one area in which McDonalds falls down. Its social responsibility report is rather lacking in numbers and includes no comparative data on past and present performance. Neither does it have independent verification. McDonalds readily acknowledges these deficiencies, putting them down to its inexperience of producing such reports, however such explanations have not allayed concerns that McDonalds' report is little more than an answer to its critics - a PR stunt to promote a caring, trustworthy image.
Meaningful action within a defined strategy
Corporate social responsibility is all very well in theory, but organizations have found it increasingly difficult to turn such a concept into a meaningful business reality. There is no doubt that donating a one-off sum to a local charity is an ethical and morally sound thing to do, but to promote it in the same way you would a new product or service turns a worthy action into a meaningless gesture. A common problem is that CSR is not incorporated into an organizational strategy and so simply becomes a nice-to-have entity that creates a feel-good factor for board members but can be dispensed with when times get tough. Efforts like these can even have adverse effects:
* employees feel that they are working for an insincere, uncaring organization;
* the public see little more than a token action more to do with publicity than community;
* the organization does not see much benefit of CSR and so sees no need to develop the concept.
"Enlightened self-interest"
All this paints something of a grim picture for the future of ethical business. However, there is hope in the form of the more forward thinking organizations which see CSR as a meaningful part of their business strategy and something that can bring certain benefits to the company. This approach has been described as "enlightened self-interest" and stems from the realization that HR can make a serious strategic contribution through this channel.
How? In a world where money is increasingly playing second fiddle to job satisfaction, people are looking to the non-financial aspects of an organization when it comes to choosing an employer. As one employee of a medium-sized enterprise noted, "there's more to life than money. I want my kids to grow up in a nice neighborhood and if I see my company working to make this community better, I'm going to work harder for them". This sort of sentiment is echoed across the globe and the innovative HR specialists are beginning to capitalize on such feelings. After all, who would not want to be employer of choice?
Profit through principles?
Of course, there is still a great deal of cynicism to overcome. People have heard too many empty promises to believe that organizations will change overnight, and there is always one question at the back of everyone's mind:
Can an organization really make money by being nice? It is one thing to concentrate on CSR once you have made billions of dollars profit (to buy CSR once you can afford it), but to make money initially is another thing altogether.
The shining example of the Weizhi Group
But it is not impossible, as the Weizhi Group has shown. This Chinese clothing manufacturer and wholesaler was founded in 1987 by Xiang Bing-- Wei and is a truly virtuous corporation. Wei's tale is very much one of rags to riches. He was supporting his family from the age of 16 and suffered many hardships as a child. After working as a tailor he took out a small loan and set up his own business.
Wei founded his company on four basic principles:
(1) kindness;
(2) sincerity;
(3) wisdom;
(4) diligence.
More than rhetoric
These beliefs are his own and permeate the Weizhi culture. The organization has many moral maxims based on the value of kindness and honesty and although management by rules and regulations exists, it is coupled with management by values and feelings. But most importantly, this is more than just rhetoric. For example:
* Weizhi Group was the first company in China to introduce a no quibbles refund policy. In a country flooded with shoddy quality and imitation goods, this strategy immediately boosted consumer trust and loyalty.
* It has a department of corporate culture in a bid to promote company values on a continuous and evolutionary basis.
* The CEO, Wei, is an inspirational leader who practices what he preaches. Because the four key principles of the organization are the very beliefs he lives by, a strong positive cultural message cascades through the organization.
* When recruiting staff, the Weizhi Group sees morality as more important than competence.
* These values have been cultivated over time. Wei was aware that such a moral culture would take a long time to fully establish itself and so took gradual, lasting steps (that began by institutionalizing ideas into procedures). This left employees in no doubt that becoming a virtuous organization was more than just a fad.
To the surprise of many critics, Wei's organization is thriving in a highly competitive market. For the past five years it has consistently been listed in the top 100 enterprises in the garment industry, with annual sales values of over $72 million.
In addition, employees appear genuinely motivated by working for a valuebased organization. When questioned, 100 percent of respondents said they knew their corporate mission, 95 percent agreed that a business should have ethics, and over 95 percent agreed that honesty and trustworthiness are paramount in business.
The Weizhi Group has proved that, contrary to popular belief, principles and profit can live side by side. All you need is time, commitment and, of course, morals.
Comment
This review is based upon "McDonalds' responds to anti-capitalist grilling" by Maitland (2002), "Virtue and reality (corporate social responsibility)" by Trapp and Pickard (2001) and "The Weizhi Group of Xian: a chinese virtuous corporation" by Ip (2002).
The article in the Financial Times reveals an interesting twist to the McLibel tale the production of a McDonalds CSR report. As well as highlighting the growth in popularity of ethical reporting, Maitland (2002) explores the pros and cons of McDonalds' effort. A compelling read.
"Virtue and reality" describes a number of organizations that are concerned with CSR. After looking briefly at the history of this concept, the authors draw on the potential of CSR to enhance an organization, particularly in terms of HR, suggesting that this area could be used by HR to make a more pronounced strategic contribution to their organization.
Ip's (2002) case study proves that CSR and profit can indeed go hand in hand. The Weizhi group is the perfect example of a virtuous corporation and this article includes much practical advice for any company looking to improve its moral culture.
References
Ip, P.-K. (2002), "The Weizhi Group of Xian: a chinese virtuous corporation", Journal of Business Ethics, Vol. 35 No. 1, p. 15.
Maitland, A. (2002), "McDonald's responds to anti-capitalist grilling", Financial Times (UK), 15 April.
Trapp, R. and Pickard, J. (2001), "Virtue and reality (corporate social responsibility)", People Management, Vol. 7 No. 20, p. 28.
Copyright MCB UP Limited (MCB) Sep 2002