Description
This is a presentation describes on common mistakes in CSR.
CSR as a Business Practice
Decision Making and Key Concerns
Introduction
• Competencies molded into a strategy and supported by structure are no longer sufficient for meeting the organizational objectives seen in term of “triple bottom line”. • It is vital that firms also consider the societal and stakeholder implications of these aspects of operations. • CSR filter is a screen through which strategic and tactical decisions are evaluated for their impact on the firm’s various stakeholders.
The CSR Filter
• It is a fact that CSR is only one part of the strategic big picture. • But, best of the strategies can fail if the strategy on its implementation is perceived as socially and environmentally irresponsible. • The CSR filter injects multiple considerations into the decision mix beyond the profit maximization goals that are central to the firm’s survival.
The CSR Filter
• Here the intent is to take a viable strategy and make it optimal for the stakeholder environment in which the strategy must be executed.
Managerial Mind-set and CSR Imperative
• Doing (business) in socially responsible ways involves a major shift in managerial mind-set – from a risk-based, reputational view of corporate responsibility to one focused on product and process innovations that will help to realign the business and the market according to shifting societal concerns.
Cont…
• There are several dimensions of the management of CSR which can be mentioned:
– How to get the corporation more committed to CSR, a commitment that extends well beyond complying with relevant legal requirement; – Developing a strategy of CSR related impact, and planning and effectively executing projects and programmes; and – Management of collaborating and networking to maximize impact.
The Key Concerns
• Corporations and not designed for CSR; they are designed for growth, capturing market share and profits; CSR is usually an afterthought. • How then are we achieve greater commitment to CSR in
– Hierarchies; – Control, incentive and management systems/processes; – Business strategy (tactics)
Some Emerging Solutions
• The structure of the corporate board is a commonly suggested solution.
– In a study of CSR-orientation of 307 members of corporate board, 198 independent directors exhibited a greater orientation that 109 inside directors (Ibrahim et al. 2003). – Getting independent directors with a social conscience into the board is a good idea for CSR orientation of top management.
• An MIS for the board that brief it about progress of CSR initiatives, is another solution. • Adoption by the board of a formal policy framework related to CSR • A committee of the board to supervise implementation could also be helpful
Cont…
• Globalization of the corporation should be supported by social and environmental initiatives
– ISO 14001 is a certification obtained for practices that reduce firm’s negative environmental impact and promote sustainable development. – In a study in America, early adopters of ISO 14001 were found to have greater international presence than late adopters. – In another study of 96 subsidiaries of MNCs operating in Spain, the number of countries an MNC operated was correlated with CSR practices of subsidiaries.
Cont…
• The right choice of managers can also be a strong contributory factor for CSR. In a MNC, local managers may be strong promoters of CSR than foreigners unfamiliar with local conditions. • Selection / promotion of managers for their commitments to values compatible with CSR, and their awareness of CSR issues can be helpful. • Often, it helps to set-up a separate organizations (foundation) and/or division for CSR initiatives.
Ten Common Mistakes
1. Lack of Vision
– Most companies begin their corporate responsibility journey by asking questions such as, ‘where are we now and what might we do about CR?’ – An alternative and more creative approach is to ask: “What does this company want to be in ten years time?”
• Example: Du Pont announced its 2015 Sustainability Goals in 2006, signaling a major shift in envisioning. • From reducing environmental footprints in manufacturing operations in 1989 to investing in R&D to deliver sustainable solutions
2. Oblivious to the scale of required change
- CSR-related demands and pressures on business are having enormous impact on the bottom line - There is a clear need to consider organization change and development based on completely new managerial perspectives.
3. Sub-strategic
• CSR practices are often managed as a staff function, at a sub-strategic level, with little connection to the strategy of the business, its core competencies or management knowhow. • Companies fail to address the possibility of changing the structure of incentive system, the focus of decision-making, and management systems in the core of business.
4. Mundane View of CSR
• Many companies do not separate the two roles of corporate responsibility: protecting the assets of the firm and creation of new value.
– Protecting the value of existing assets requires managerial control (systems/processes, performance indicators, reporting adherence to codes and standards); – New value creation requires the capacity to innovate and change, which takes place not only in R&D, but across the whole company.
5. Inability to hear outside voices
• Corporate responsibility demands new views on how a company’s activities affect a range of stakeholders. • This lack of focus often leads to pressures and responses not being identified and relationships languishing in misunderstanding.
6. Sticking with old managerial competencies
• Few companies have recognized that the competencies they have regarded as central to performance in the past may not meet the needs of the future business. • For example, the skill of successfully interacting with stakeholders in strategic planning or product development is not widespread. • The lack of such skills in the typical manager reflects current business culture and education, not future requirement.
7. One Worldwide Approach
• Most corporate responsibility programmes, even for MNCs with wide experience of international business, still operate according to one worldwide approach, often based on agenda and practices based on the company’s home country. • This does not do justice to cross-cultural nature of stakeholders’ concerns. • Excessive uniformity is an universal mistake in corporate responsibility.
8. Uneven approach
• Companies make substantial commitments and achieve good corporate responsibility performance in some divisions, locations, or functional areas, while behaviour in other parts of the company may continue to be irresponsible. • For example, making huge investments in reducing carbon footprints, and neglecting safety at work place in their supply chain. • This shows a reputational and image conscious approach to CR
9. Non-participative management
• Not making CSR as part of company culture and procedures and driving the initiatives through top-down approach. • As a result, companies have difficulty in drawing on ideas, energy and commitment of the their workers and closest suppliers. • Best practices have shown that CSR initiative can be effectively managed through a network of “change champions”, which is rarely done.
10. Failure to see CSR as an opportunity for innovation
• Many companies fail to see that CSR practices are best based on continuous innovation process that links these to company’s business model.
Summay
• By avoiding these common mistakes, management can go a long way towards managing CSR in a way that fits the company’s changing needs while maximizing the potential for value creation. • The reason these mistakes continue to be made is principally that it is easier to get in wrong than it is to get it right.
doc_872401274.pptx
This is a presentation describes on common mistakes in CSR.
CSR as a Business Practice
Decision Making and Key Concerns
Introduction
• Competencies molded into a strategy and supported by structure are no longer sufficient for meeting the organizational objectives seen in term of “triple bottom line”. • It is vital that firms also consider the societal and stakeholder implications of these aspects of operations. • CSR filter is a screen through which strategic and tactical decisions are evaluated for their impact on the firm’s various stakeholders.
The CSR Filter
• It is a fact that CSR is only one part of the strategic big picture. • But, best of the strategies can fail if the strategy on its implementation is perceived as socially and environmentally irresponsible. • The CSR filter injects multiple considerations into the decision mix beyond the profit maximization goals that are central to the firm’s survival.
The CSR Filter
• Here the intent is to take a viable strategy and make it optimal for the stakeholder environment in which the strategy must be executed.
Managerial Mind-set and CSR Imperative
• Doing (business) in socially responsible ways involves a major shift in managerial mind-set – from a risk-based, reputational view of corporate responsibility to one focused on product and process innovations that will help to realign the business and the market according to shifting societal concerns.
Cont…
• There are several dimensions of the management of CSR which can be mentioned:
– How to get the corporation more committed to CSR, a commitment that extends well beyond complying with relevant legal requirement; – Developing a strategy of CSR related impact, and planning and effectively executing projects and programmes; and – Management of collaborating and networking to maximize impact.
The Key Concerns
• Corporations and not designed for CSR; they are designed for growth, capturing market share and profits; CSR is usually an afterthought. • How then are we achieve greater commitment to CSR in
– Hierarchies; – Control, incentive and management systems/processes; – Business strategy (tactics)
Some Emerging Solutions
• The structure of the corporate board is a commonly suggested solution.
– In a study of CSR-orientation of 307 members of corporate board, 198 independent directors exhibited a greater orientation that 109 inside directors (Ibrahim et al. 2003). – Getting independent directors with a social conscience into the board is a good idea for CSR orientation of top management.
• An MIS for the board that brief it about progress of CSR initiatives, is another solution. • Adoption by the board of a formal policy framework related to CSR • A committee of the board to supervise implementation could also be helpful
Cont…
• Globalization of the corporation should be supported by social and environmental initiatives
– ISO 14001 is a certification obtained for practices that reduce firm’s negative environmental impact and promote sustainable development. – In a study in America, early adopters of ISO 14001 were found to have greater international presence than late adopters. – In another study of 96 subsidiaries of MNCs operating in Spain, the number of countries an MNC operated was correlated with CSR practices of subsidiaries.
Cont…
• The right choice of managers can also be a strong contributory factor for CSR. In a MNC, local managers may be strong promoters of CSR than foreigners unfamiliar with local conditions. • Selection / promotion of managers for their commitments to values compatible with CSR, and their awareness of CSR issues can be helpful. • Often, it helps to set-up a separate organizations (foundation) and/or division for CSR initiatives.
Ten Common Mistakes
1. Lack of Vision
– Most companies begin their corporate responsibility journey by asking questions such as, ‘where are we now and what might we do about CR?’ – An alternative and more creative approach is to ask: “What does this company want to be in ten years time?”
• Example: Du Pont announced its 2015 Sustainability Goals in 2006, signaling a major shift in envisioning. • From reducing environmental footprints in manufacturing operations in 1989 to investing in R&D to deliver sustainable solutions
2. Oblivious to the scale of required change
- CSR-related demands and pressures on business are having enormous impact on the bottom line - There is a clear need to consider organization change and development based on completely new managerial perspectives.
3. Sub-strategic
• CSR practices are often managed as a staff function, at a sub-strategic level, with little connection to the strategy of the business, its core competencies or management knowhow. • Companies fail to address the possibility of changing the structure of incentive system, the focus of decision-making, and management systems in the core of business.
4. Mundane View of CSR
• Many companies do not separate the two roles of corporate responsibility: protecting the assets of the firm and creation of new value.
– Protecting the value of existing assets requires managerial control (systems/processes, performance indicators, reporting adherence to codes and standards); – New value creation requires the capacity to innovate and change, which takes place not only in R&D, but across the whole company.
5. Inability to hear outside voices
• Corporate responsibility demands new views on how a company’s activities affect a range of stakeholders. • This lack of focus often leads to pressures and responses not being identified and relationships languishing in misunderstanding.
6. Sticking with old managerial competencies
• Few companies have recognized that the competencies they have regarded as central to performance in the past may not meet the needs of the future business. • For example, the skill of successfully interacting with stakeholders in strategic planning or product development is not widespread. • The lack of such skills in the typical manager reflects current business culture and education, not future requirement.
7. One Worldwide Approach
• Most corporate responsibility programmes, even for MNCs with wide experience of international business, still operate according to one worldwide approach, often based on agenda and practices based on the company’s home country. • This does not do justice to cross-cultural nature of stakeholders’ concerns. • Excessive uniformity is an universal mistake in corporate responsibility.
8. Uneven approach
• Companies make substantial commitments and achieve good corporate responsibility performance in some divisions, locations, or functional areas, while behaviour in other parts of the company may continue to be irresponsible. • For example, making huge investments in reducing carbon footprints, and neglecting safety at work place in their supply chain. • This shows a reputational and image conscious approach to CR
9. Non-participative management
• Not making CSR as part of company culture and procedures and driving the initiatives through top-down approach. • As a result, companies have difficulty in drawing on ideas, energy and commitment of the their workers and closest suppliers. • Best practices have shown that CSR initiative can be effectively managed through a network of “change champions”, which is rarely done.
10. Failure to see CSR as an opportunity for innovation
• Many companies fail to see that CSR practices are best based on continuous innovation process that links these to company’s business model.
Summay
• By avoiding these common mistakes, management can go a long way towards managing CSR in a way that fits the company’s changing needs while maximizing the potential for value creation. • The reason these mistakes continue to be made is principally that it is easier to get in wrong than it is to get it right.
doc_872401274.pptx