Can CSR Make Your Business Customer-Centric?

The connection between corporate social responsibility (Hereafter referred to as “CSR”) and the financial success of a business is a controversial topic. CSR may improve a company’s reputation thus attracting more customers, however it has also been stated that CSR engagement may result in unnecessary expenses from which market returns are trivial (Brammer & Millington, 2008).

The importance of CSR as a marketing tool has been recognised since 2001, and growing evidence suggests that consumers have positive attitudes towards companies that adhere to ethical standards (Meenaghan, 2001). Companies’ stakeholders respond positively to the CSR initiatives of a business, and this favourable response results in an enhanced company reputation, enhanced human capital and improved innovation, which lead to increased corporate financial performance. It is therefore recommended that CSR and environmental sustainability initiatives be integrated into the final strategy of a business, in order to provide guidance for the strategy and the business conduct of a company’s employees. Such initiatives advance social good above that which is prescribed by law, are good business practice, and serve the self-interest of shareholders.

Following unethical strategies and accepting unethical conduct within an organisation damages a company’s reputation, and may lead to costly consequences such as visible costs in the form of fines and penalties, internal administrative costs due to remedial education, and intangible costs including customer churn, reputation damage, decreasing employee morale, and difficulty in recruiting talented employees.

Introducing a CSR strategy will ensure that social responsibility is incorporated into all of the company’s actions and initiatives. The CSR strategy is to be linked to a company’s core values, its market differentiation and its distinctive competence, and should assist the company in the achievement of its triple bottom line. The aim is to attain success in the economic, environmental and social dimensions through a visible CSR program that includes a genuine pledge to embark upon an ethical strategy and adhere to ethical principles in operations throughout the business. The CSR program is to ensure the provision of charitable contributions, support community service initiatives, and create a difference in the lives of the disadvantaged. The environment is to be safeguarded by minimising negatively impacting business activities, and it is recommended that the Global Reporting Initiative is used as a framework and a metric to facilitate benchmarking of CSR efforts.

In order for the value of the proposed CSR program to be effectively communicated to a company’s stakeholders, the organisation’s marketing capability must be competent. CSR benefits are confirmed through the existence of a marketing capability, thus it is recommended that a company cite the beneficial outcomes of their CSR strategy in local media and press releases.

A company has a duty to be a good corporate citizen and display a social conscience in the way it conducts business. Management decisions and company actions should not negatively impact the well-being of employees, the local community, the environment and society. Organisational leaders are  required to behave in a socially responsible manner, whereby trust and respect is earned from all its stakeholders.

An organisation’s success is largely dependent on sustaining high employee morale and the attraction and retention of top talent, therefore a work environment that enhances each employee’s quality of life is to be provided. The business is to endeavour to make the company an employer of choice, while respecting society and the environment.

In order to ensure that high ethical standards are incorporated into the corporate culture of a company, a company’s executive team can use culture as a mechanism for communicating ethical behavioural norms and attaining  employee buy-in to the company’s moral standards, business principles and corporate values. The company’s senior management team is to model compliance, and lead by example and commitment to the organisation’s values and ethical principles. Open discussion among strategy makers will ensure that strategic initiatives do not become disconnected from the company’s code of ethics (Thompson, Peteraf, Gamble & Strickland, 2016).

The drivers of unethical business strategies and behaviour are to be avoided by ensuring answerable corporate governance and direction of the company’s corporate board. Self-dealing and the manipulation of information to hide management actions are to be greatly discouraged and handled with swift remedial action. Clear oversight of the company’s financial practices is required, and management is to be held accountable for their actions. Short-termism is a real threat within any company. This does not create value for the company’s customers or improve the company’s competitiveness in the market, and is to be disfavoured. In order for a company to remain sustainable, customer-centricity and customer retention is to be introduced as a serious business objective, and short-termism does not support this objective.