One of the topics I’m most passionate about in business is corporate social responsibility. Until now, I have written and spoken about this topic with varied reactions from people. Most often, the reaction is something like “corporate social responsibility or philanthropy is nice and good to do, but how does it really tie to a business in a tangible way?” No one in my audience ever totally discards the concepts I talk about, because to do that would be somehow inhumane or insensitive. But there is always a segment of people who are skeptical about its real impact on the business itself. Business people are capitalists, right?
I have tried to make the argument many times that there are both subjective gains to companies doing right by their employees, customers and the broader business and social community AND objective gains in the form of increased revenue, customer loyalty and an enhanced corporate image measured by public relations value. Until now, I hadn’t seen many actual studies which measured this effect. I think most everyone would agree that the subjective or intangible virtues of corporate social responsibility are evident. It is the objective or tangible assertions which are questioned and which skeptics point to.
Enter a recent study I read by Advertising Age, in the consumer goods retail sector. The study measured the effects of four dimensions of Corporate Social Responsibility including environmental friendliness, treating employees fairly, community support & philanthropy, and sourcing from local providers. The results showed that subjectively all four dimensions positively influenced consumers’ attitudes towards a retailer or business. This isn’t surprising.
Objectively, two of the four – environmental friendliness and community support – built only goodwill with no direct effect on sales. But, initiatives that related directly to the products and people that consumers face yielded both goodwill and a higher share of wallet. In fact, this greater economic return was significant: 10% to 15% greater as a matter of fact!
The other interesting finding of the study was that the benefits of a corporate social responsibility program were very direct: consumers patronize the responsible business more because they see personal benefit that resonates with their own values. In fact, there is less sensitivity to price increases seen by companies that engage in aspects of corporate social responsibility because consumers believe any increases are “fair” and can better be attributed to positive motives rather than simply price gauging.
None of this data actually changes my perception of the importance that corporate social responsibility plays for a business. I’ve always believed it is a necessity, not a nicety, for businesses to run their workplace equitably and provide support for the community and for charities. What this does change, however, is that hopefully more people will understand the tremendous tangible impact it can have on your business. It is one thing to know that what you’re doing in business is inherently “good”; it is another thing to be able to talk to skeptics who might complain that spending time or resources in building a program is wasteful.
I have built several types of corporate social responsibility programs in my career and I can tell you that in every case, except one, there was someone who complained that while it was good to do from an image standpoint, it wasn’t worth the time or money to actually invest in. Damn the torpedoes, because I went ahead anyway. And in every case, within about six months, those perceptions were changed and the naysayers saw the light (and the returns, double digits just like the study referenced above). For those of you passionate about this area, I would urge you to continue to be passionate about it and know that there is data out there – with more coming in the future – to support your objectives.
