Corporate social responsibility strategy

Corporate social responsibility strategy is a hot topic for many organizations.

Both directors and managers have a role in corporate social responsibilities. It is not just another management fad. Some social responsibility strategies may be just following trends. In other cases, it may be a public relations exercise. However, there is a stronger reason to have a corporate social responsibility strategy.

Where we are in the strategic planning process

After the early steps of the process, we have the data for strategic options and decisions on the overall strategy for the firm. Social responsibility strategy can be part of business strategy for some enterprises.

However, it is vital that the right work has been done at the second stage of purpose and target setting before embarking on social responsibility as a separate business strategy. Every organization should have claer polcies on how iy is going to conduct itself while pursuing its purpose.

Why have a corporate social responsibility strategy

There is increasing community concern about the effects of business activities. This concern puts pressure on governments at all levels to work harder to protect our environment and to meet the needs of disadvantaged groups.

Trying to legislate for businesses to behave more responsibly may have problems. Some places like Denmark have laws for big business to include corporate responsibility policies in annual reports. Having corporate conduct strategies usually remains voluntary on the part of the firms.

Other countries like India have tried to fix a percentage of firm revenues for corporate social responsibility activities.

For a human rights perspective, see the Australian information.

Is corporate social responsibility strategy
just like any other strategy?

Corporate social responsibility strategy may or may not affect performance of the enterprise.

A corporate strategy is action that top managers believe will help to achieve the corporate purpose. Increasing market share or technical innovation may be strategies. These and other things are strategies that may achieve the purpose of making profit.

On the other hand, a commitment to socially responsible way is a general rule that guides one’s actions on ethical grounds. Being a fair employer would be an example. This is not usually a strategy chosen to enhance the bottom line. It is simply doing the right thing. This is regardless of what business strategies the firm has. This does not exclude having an organizational social responsibility strategy to do this. However, this would not be instead of acting ethically at all times, and it may be designed to enhance firm performance. What do I mean?

There are three different concepts
that keep getting confused

There are only three types of decision for a corporate body to take.

  • Deciding the corporate governing objective, i.e. describing what is its purpose or raison d’être
  • Defining its corporate conduct, i.e., describing how it will behave while achieving its purpose
  • Determining its corporate strategies, i.e. choosing how it is going to achieve its purpose while adhering to its code of conduct.

A Hippocratic Oath for managers?

The Hippocratic Oath is a commitment by physicians to practice medicine honestly.

The first point is “…I will prescribe regimens for the good of my patients according to my ability and my judgment and never do harm to anyone…” This latter part of the statement is the ‘no harm principle’. For an account of how this has evolved in recent times see - Smith, C. M. (2005). "Origin and Uses of Primum Non Nocere— Above All, Do No Harm!” The Journal of Clinical Pharmacology 45 (4): 371–377.

I think that any professional, whether lawyer, teacher, or managers should commit to a similar requirement.

For business managers what would the no harm principle mean? In pursuing the interests of the shareholders, the firm would cause no harm to any of its interest groups. These include the shareholders themselves, employees, suppliers, customers, and other parties with an interest in the effects of the activities of the enterprise.

This requirement sets a minimum standard for corporate conduct. Something more positive is required, that is interest group engagement.

Managers should seek out every group of people who would be willing to contribute to enhancing the benefit delivered to the intended beneficiaries.

It is the duty of governing directors to set the extent to which their firm should observe the the no harm principle, and the principle of engagement .They should use these criteria to monitor the implementation of corporate social responsibility strategy.

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