Academy of Management

Scandals Fueled the Rise of Corporate Social Responsibility

By Daniel Butcher

Whether it was the board, the CEO, or others in the C-suite who decided to put a corporate social responsibility (CSR) plan in place, it’s instructive to examine their motivations. Do their ideologies and values cause them to legitimately prioritize business ethics, sustainability, and CSR? Do they want the company to look good in the eyes of consumers and convince shareholders they’re doing the right thing? Was it a self-serving or cost-saving decision to implement a CSR program? The answers are keys to understanding whether organizations’ CSR initiatives will be perceived as genuine or contrived.

That’s according to Academy of Management Scholar Herman Aguinis of the George Washington University School of Business, who has conducted research for more than 20 years looking at how individuals decide to be involved in organizations’ CSR mission and who actually participates in CSR initiatives, from the C-suite to rank-and-file employees.

“In some cases, there are external stakeholders who see the organization’s CSR initiatives as genuine, while others complain that it’s just ‘CSR-washing,’ an attempt at PR on the part of a company to burnish its reputation,” Aguinis said. “We recently wrote a paper on how to avoid being labeled as a CSR-washer, which is important because it can take a lot of money and time and effort to overcome an incorrect perception, so we describe things that companies can do to minimize that risk and avoid being unfairly labeled as a CSR-washer.

“One is to involve employees: You should not have a top-down process, but rather a bottom-up process to encourage employees to participate actively, not just enacting the CSR process and intervention, but also in strategizing and creating it, because then they will be the best supporters of the CSR initiatives,” he said.

“They will talk to their families and friends about how good the company is, and that will help attract employees to the company, and its CSR efforts will be seen as more genuine and not just a PR [public-relations] plot.”

Translating CSR strategics plans and goals into action

As crucial as it is for leaders to make strategic plans and set objectives informed by CSR, it’s challenging to translate policies or missions into practice.

“Usually these nice, big strategic goals don’t cascade down, because, in many cases, frankly, it is a statement on their website or some memo or email about a strategic plan that employees don’t read, aren’t aware of, or don’t really care about,” Aguinis said. “In fact, if you ask employees about their companies’ strategic goals, not just about CSR, but in general, they typically don’t know them.”

One way to raise awareness about CSR objectives throughout an organization is through performance management. Leaders need to ask themselves, what are the specific goals regarding CSR for each of the organization’s units? And what are the specific CSR goals for individuals in terms of behaviors and results? Then leaders can start measuring key performance indicators (KPIs)and rewarding employees who perform well on those specific criteria.

“A lot of companies need to do two critical things to improve: number one, involving employees bottom-up in the design of CSR initiatives, and number two, embedding CSR goals within the performance-management system,” Aguinis said. “If you do just those two things alone, you will go a long way in ensuring that CSR is taken seriously and embedded, not just peripheral.”

Author

  • Daniel Butcher is a writer and the Managing Editor of AOM Today at the Academy of Management (AOM). Previously, he was a writer and the Finance Editor for Strategic Finance magazine and Management Accounting Quarterly, a scholarly journal, at the Institute of Management Accountants (IMA). Prior to that, he worked as a writer/editor at The Financial Times, including daily FT sister publications Ignites and FundFire, Crain Communications’s InvestmentNews and Crain’s Wealth, eFinancialCareers, and Arizent’s Financial Planning, Re:Invent|Wealth, On Wall Street, Bank Investment Consultant, and Money Management Executive. He earned his bachelor’s degree from the University of Colorado Boulder and his master’s degree from New York University. You can reach him at dbutcher@aom.org or via LinkedIn.

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