Corporate Social Responsibility - Burden, Sham or Golden Opportunity?

Corporate social responsibility (CSR) is an up- surging trend that has taken corporate boardrooms by storm. Government regulation in some countries along with pressure from myriad interest groups around the world is driving an increase in social responsibility initiatives and reporting. According to Professor Michael Porter of the Harvard Business School, in 2005, 360 different CSR-related shareholder resolutions were filed on issues ranging from labor conditions to global warming. And 64% of the 250 largest multi-national corporations published CSR reports, either within their annual report or in separate sustainability reports.

Is CSR a good or bad thing? Does it represent an opportunity to recognize the many ways that business and society are interdependent and to help make the world better while creating economic growth? Or does it place unfair and unrealistic obligations on corporations? Or is it a façade that businesses can hide behind to protect themselves while continuing to engage in activities that harm the environments and societies in which they operate?

These are important questions and some eloquent voices have emerged to debate them. Here we examine the key arguments of three distinct schools of thought about CSR.

Killing the Goose That Laid the Golden Egg

Advocates of the minimalist view of corporate social responsibility argue that capitalism does enough for society by generating economic growth and creating jobs. They subscribe to the belief espoused by Nobel economist Milton Friedman that beyond playing by the legal and ethical rules of society, a business only needs to pursue and deliver profit to be a positive contributor to society. In their view, it is the role of government to make and implement social policy, not corporations.

Clive Crook, writing in The Economist Survey of Corporate Social Responsibility, provocatively states that most permutations of CSR are not worth the cost. He berates corporate philanthropy as "borrowed virtue" because managers are giving away shareholder's money. He asserts that most CSR is "probably delusional" - in that its private costs likely exceed the public benefits produced.

The main beef of the minimalist camp with CSR is that it seems to intimate that capitalism is fundamentally flawed. Crook nails this when he states: "the basic set of attitudes that it (CSR) represents undermines support for capitalism and enterprise and the prospects for further economic advance". He argues that profit serves the public good and demonizing it only jeopardizes the benefits it delivers to society. Nor he says is it smart to use CSR to "privatize public policy". Governments should be making and carrying out public policy using regulation and taxes, not corporations. He states, "public policy is the proper role of government, accountable to citizens through the ballot box, not of company bosses accountable to nobody but their shareholders and too often not even to them." Thus, CSR can unleash loose and dangerously uncoordinated cannons that will often do more harm than good.

A Wolf in Sheep's Clothing

Proponents of this view argue that CSR is nothing more than public relations and warn all not to trust any CSR initiative, because in the end, all it represents is a ploy to distract attention away from otherwise rapacious behavior that is detrimental to society. Joel Bakan, a legal expert and author of the book, "The Corporation: The Pathological Pursuit of Profit and Power" asserts that businesses are legally required to do everything in their power to make money, and that more often than not, their financial interests will conflict with the broader interests of society, and they will always act in their own self- interest.

As a result, no one should be fooled by CSR, and deluded into thinking that business can be trusted to do what's right for society of its own accord. They won't, unless governments force them to. In this view, government has a substantial role to play in constraining and channeling the actions of the entity that it creates, namely the corporation, and holding it accountable. As environmentalist and writer Bill McKibben colorfully puts it, "Corporations are the infants of our society-they know very little except how to grow (though they're very good at that), and they howl when you set limits. Socializing them is the work of politics."

A Diamond in the Rough

In his Harvard Business Review article, "Strat egy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility", Professor Michael Porter casts CSR as "an inescapable priority for business leaders in every country". That's an attention-grabbing statement, to say the least, considering that Porter is the man who literally wrote the book on competitive strategy.

He tells businesses that rather than avoid, fight or pay lip service to CSR, they should instead "analyze their prospects for social responsibility using the same frameworks that guide their core business choices. They will discover that CSR can be much more than a cost, a constraint, a charitable deed - it can be a source of opportunity, innovation and competitive advantage."

Porter asserts that a healthy society ultimately creates expanding demand for business, as more human needs are met and aspirations grow. Any business that pursues its own ends at the expense of the society in which it operates will find its success to be illusory and ultimately temporary. He argues that the mutual dependence of business and society implies that both business decisions and social policies must follow the principle of shared value - that is, that the choices made must benefit both sides. If either a business or a society pursues policies that benefit its interests at the expense of the other, it will find itself on a dangerous path.

For CSR to really work in Porter's view, it must be viewed from a strategic standpoint and rooted in a broader understanding of the inter-relationship between a corporation and society, while at the same time anchoring it in the strategies and activities of specific companies. The article presents an analytical framework for identifying what Porter calls the 'points of intersection' between business and societal interests. Two main categories are identified - inside- out linkages and outside-in linkages. Inside-out linkages involve how the company affects the society in which it operates through its operations in the normal course of business. Outside-in linkages involve the ways in which external social conditions influence corporations for better or for worse.

In the typical business, each of these categories can provide numerous opportunities for socially- responsible actions. The challenge for businesses is to choose which social issues to address, and Porter advocates that they select the issues that intersect with their own particular business. "The essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value - that is, a meaningful benefit to society that is also valuable to the business."

Sparking Change in Corporate Values and Culture

While all three schools of thought about CSR make valid points, I ultimately come down in Porter's camp. His 'enlightened interdependence' view of CSR recognises that business and society have a huge amount of shared interest that managers with foresight will recognize can be developed in a long- term and mutually beneficial way.

CSR represents a set of societal values that companies ignore at their peril. Society has a right to set expectations of businesses but these don't necessarily have to kill economic growth and jobs. There is no reason why business can't be socially responsible and commercially successful. Just go into any Whole Foods Market to experience this concept in action.

But few organizations have embedded CSR so deeply into their cultures - in most instances, it's merely an initiative to be run on the side of the business, or bolted on to it at best. Truly integrating social responsibility into the business will likely demand a radical transformation of the culture, values and operating systems of most large corporations. This level of change doesn't happen overnight and will require that all stakeholders, including employees, push for open dialogue on what CSR means and should be in their organization.

A practical step forward lies with Porter's framework for focusing on the interdependencies between business and society. It is a tool that can help companies redefine and more completely understand value - a concept at the heart of free market capitalism - by identifying opportunities to provide more valuable (with value defined by their customers) products and services. As a result, they will profit and so will society overall - because the greater good is not being compromised and may in fact be enhanced. With some work, society and corporations can live together in harmony - they don't have to be at odds or engaged in self-defeating behavior.

Media-Savvy Workers: A New Front in the War for Talent

A new front in the War for Talent is opening up. Tens of millions of people adept at using interactive technology and media are set to join, or are already in, the workforce - bringing expectations, skills and ways of working that will revolutionize the workplace. Those organizations that can inspire the passion and harness the skills of these "media-savvy" workers will have an edge over their competitors. Here's why.

Until recently, workers of all levels could gain access to the most powerful computers, the fastest network connections, and the most sophisticated applications of information technology only at work.

No more.

Now, a large and growing number of people across the age, gender and socio-economic spectrum own or have access to all manner of gadgets, gizmos and Internet services that far exceeds, in variety and sophistication, much of the technology they use at work. Increasingly, it is these experiences using technology outside of work - e.g., playing online games, engaging in social networking, collaborating on projects - that are shaping the standards of what workers expect to use on the job.

The good news is that the knowledge and skills that workers are gaining outside of work can be put to good use on the job. The bad news is few organizations yet recognize or are doing anything to engage and leverage the skills of media-savvy workers.

Research recently conducted by a team of researchers and thought leaders brought together by QuestG suggests that the emergence of the media- savvy workforce may be a golden opportunity to transform organizational culture and performance that many companies seem to be missing so far.

Ready or Not, Here They Are

QuestG has just published the findings of a year-long research study - called the Media-Savvy Workforce and Learning Project. It links together two often discussed but rarely associated trends - the changing demographics of the workforce and the growing proliferation and use of interactive media such as social networking services like MySpace and Facebook and on-line role playing platforms like World of Warcraft and Second Life.

The study collected comprehensive data on the workplace expectations, learning habits and personal technology usage of close to 3000 workers. Analysis of this data strongly suggests that the combination of dramatic differences in the attitudes and technology skills of these workers and their exploding use of interactive media are together creating the conditions for the transformation of business and work as we know it.

"Media-savvy" individuals were identified from this global respondent base by measuring how frequently they used over thirty different personal technologies and Internet applications. A majority demonstrated at least moderate media-savvy (regularly using 11-15 different technologies and applications), with almost a third high media-savvy (regularly using 16 or more different technologies and applications).

Sending Up the Stereotypes

Our research identified some significant and rather counter-intuitive findings about media-savvy workers:

It's not only the young that are media- savvy. Nearly half of respondents under 30 years old were high media-savvy - no surprise there. But here's the shocker - one third of respondents 30-45 years old and one fifth of those over 45 placed in the same high category. This is a very significant finding because it challenges the conventional wisdom that only the young are adept at using the new technology. And it means that a substantial number of media- savvy workers are already in the workplace.

Media-savvy workers are more learning- oriented. Media-savvy workers spend up to 80% more time than their low media-savvy co-workers on different types of learning activities in and outside of work; and up to three times as many find electronically-enabled ways of learning like Internet searches, computer simulations and on-line courses valuable. They are also more likely to want their learning to be fun and entertaining, to choose what, when and where they learn, and to favor learning through experimentation.

Interactive games are setting a higher standard for corporate e-learning experiences. The study showed strong parallels between what people say the characteristics of their best learning experiences at work are, and what they value most from playing online role playing games. These included interaction with others to share experiences, interactive content, engaging challenges, immediate feedback, learning from peers, learning by doing, and immersion into an environment via role playing.

Corporate learning executives have a huge opportunity to harness the power of interactive media and the unconventional learning styles of media- savvy. This means making e-learning offerings as engaging and interactive as electronic games. Standard e-learning approaches are a total turnoff for this group.

Media-savvy workers are the least happy with the IT they use to do their jobs. Depending on age, they are up to three times more likely to believe their job performance is inhibited due to a lack of suitable technology, with the youngest the most dissatisfied with the IT they use at work. Many also believe their technology at home is superior and they often work there to circumvent hardware, software and security restrictions.

This finding suggests that IT departments need to rethink their IT design, provisioning and access policies. Does this mean letting workers use and do whatever they want? Of course not - but many IT executives and staff need to stop viewing media-savvy users as nuisances, and even enemies, and start proactively forging close working relationships with them. The media-savvy represent a core group of "lead users" that can be a valuable resource in identifying innovative and productive ways of using new interactive technology for the benefit of the entire business.

The media-savvy are also some of the organization's best performers and most learning-oriented workers. Understanding how technology can be used to enhance their productivity stands to reap large bottom line benefits and can pave the way for more effective uses of IT to increase the productivity of the whole organization. Improving knowledge worker performance is now critical in the current business cycle where the productivity of high value intangible assets - especially people - is a key business performance measure and success factor.

Senior Leaders Take Note

The double whammy of increasingly powerful and pervasive interactive media and changing workforce skills and attitudes challenges corporate leaders to adopt new business and management models that harness the power of the new technology and the advanced capabilities of workers. The responsibility for dealing with these changes goes beyond just IT and learning organizations.

Victory in this new theater of the talent war requires a total organizational commitment. HR leaders will need to direct the redesign of the entire work experience to better match the workplace preferences, learning styles and performance needs of media-savvy workers. And business unit heads and CEOs will need to champion the transformation of their business and organizational models to attract, leverage and retain this high performing, motivated and skilled segment of the workforce.