Consumers are becoming increasingly concerned about the types of businesses they choose to support. Similarly, employees are making career decisions based on the practices of organizations. Learn the four dimensions of social responsibility so that you can positively impact the society around you and attract more like-minded consumers and employees.
TipThe four components of social responsibility are ethical, legal, economic and philanthropic.
Understanding the Elements of Corporate Social Responsibility
Social responsibility is the concept that people should be accountable for their actions and not impact their society in a negative manner. When applied to businesses, corporate social responsibility [CSR], which is also referred to as corporate citizenship, involves being aware of the impact a company has on the community or world around them. Businesses that have a corporate social responsibility mandate frequently work to enhance their communities in different ways.
There are four key aspects of social responsibility: ethical, legal, economic and philanthropic. Businesses that have CSR policies first ensure they are accountable to themselves, their shareholders and their employees. In addition, they hold themselves accountable to their customers and the world around them.
Ethical Actions
As one of the most important elements of social responsibility, ethical actions define the core values of a business. Instead of merely abiding by the law, a business that focuses on corporate social responsibility needs to go above and beyond that and make choices based on what is right, not just what is legal.
For example, if a business pays its employees minimum wage, that action follows a legal directive. However, if an employer chooses to pay its employees more than minimum wage in the belief that the employees do important work and deserve to be compensated accordingly, that is making a socially responsible decision. In addition to the compensation, employers can offer paid vacation, education and training perks and health coverage to improve the lives of their employees.
Legal Aspects
From a legal perspective, it’s critical for businesses to follow the letter of the law. In addition to being aware of local, federal and international laws, companies also need to understand the rules of regulatory bodies for their industries. All businesses have a legal responsibility to do so.
For example, if a small business sells toys for children, it needs to ensure that the products meet all safety regulations specified by the regulatory bodies. In addition, it needs to check that any international manufacturers used appropriate materials, since businesses in other countries may have different rules and regulations.
Economic Interests
Part of being socially responsible is remaining profitable. Businesses support a lot of people, including shareholders and investors, employees and partners. It is socially responsible for the company to thrive and meet its revenue goals. In addition to increasing revenue, businesses need to work to reduce expenses and costs so they can maximize their profits.
However, economic interests are not the only guideposts and should not be viewed in a vacuum. Businesses maintain profitability and minimize expenses by keeping the broader community in mind and not taking any actions to harm it. This means ethical sourcing of products, using sustainable business practices, treating employees and customers fairly, and taking responsibility for business actions.
Philanthropic Responsibilities
One of the best-known aspects of social responsibility is philanthropy. Companies take actions that improve the society around them, such as donating money or products and volunteering time. By helping those in need, businesses make a positive difference in the lives of people in their communities.
For example, a bakery could send leftover bread at the end of the day to a nearby food bank, or a hairdresser can offer free haircuts to homeless people in the community. These philanthropic actions help the businesses to remain accountable and show employees and customers the true values of their businesses.
All businesses must do more than seek strong profit margins for success; being socially responsible is part of business survival in today's economy. Companies should take a stance on important social issues to build a brand that consumers trust and respect. As a business leader, consider these four types of corporate social responsibility and how you can implement programs that are good for the community and good for your company.
Tip
The four types of Corporate Social Responsibility are philanthropy, environment conservation, diversity and labor practices, and volunteerism.
Philanthropic Efforts
The largest companies in the world are aligned with philanthropic efforts. Microsoft works closely with the Bill and Melinda Gates Foundation to bring technology to communities around the world. The company understands that its success requires not just continued innovation, but building a next generation capable of understanding, using and improving technology.
Even small companies benefit from aligning with philanthropic causes. A local car wash might offer schools a platform to host fundraisers for sports teams. Restaurants have fundraising nights when proceeds benefit a local school or charity. Supporting these causes happens to also be good marketing, because the community is invited into the business, has a good experience and sees the company in a positive light.
Environmental Conservation
Environmental concerns regularly make the headlines, whether a long-term problem like global climate change or a more local issue such as a toxic chemical spill. Companies that align themselves in these efforts help minimize environmental problems by taking steps such as reducing their overall carbon footprint. Although major corporations get most of the attention for their environmental commitments — General Mills has committed to a 28 percent reduction in greenhouse gas emissions, for example — there are plenty of opportunities for small and mid-sized business as well.
Does your business have an active recycling program on site? Have you considered using alternative energy sources like solar and wind to help power your operations? There are plenty of "green cleaning" alternatives that can help reduce your use of harsh toxic cleaning chemicals. All these steps can make a small but significant contribution to improving the environment. You can also ask your suppliers to do the same, letting them know that their environmental measures will be a factor in your purchasing decisions. By doing so, your environmental commitments are multiplied along the supply chain.
Company Diversity and Labor Practices
Business leaders realize that diversity in the workplace is beneficial when everyone is getting along and working as a team. However, labor policies must apply to all employees, even those at the highest levels of the company. The scandals with Harvey Weinstein and Steve Wynn show that no company is impervious to the ramifications of sexual harassment. This movement has also given rise to other diversity issues in the workplace that need attention and consistent action. As a business leader, review your own diversity policies and protocol to address any complaints and violations. This is not only good for your company image, it also helps build a positive company culture with good morale and high productivity.
Supporting Volunteer Efforts
Local communities and charities always need help. Smart business leaders know that being involved in the community in a productive way is good for the company too. Give employees the opportunity to help a local school plant trees or work with the city council on addressing homelessness in the area. Business leaders have the opportunity to choose where to spend volunteer efforts to best help the local area along with the company. The important thing for businesses is to choose a cause and contribute time.