As a Business Strategy

“You shall give to charity from the good things you earn, and from what we have produced for you from the earth. Do not pick out the bad therein to give away, when you yourselves do not accept it unless your eyes are closed. You should know that God is Rich, Praiseworthy…………Any charity you give will be repaid to you, without the least injustice”.- The divinely revealed ‘Quran’.

“Give charity without delay, for it stands in the way of calamity……Do not withhold your wealth, (for if you do so), God will withhold His blessings from you” – Prophet Mohammad (pbuh), the most successful of all prophets and religious personalities (Encyclopedia Britannica) .

 “Social responsibility objectives need to be built into the strategy of a business, rather than merely be statements of good intentions.”- Peter Drucker, 20th Century Management Guru.

“In a truly great company profits and cash flow become like blood and water to a healthy body: They are absolutely essential for life but they are not the very point of life” – Jim Collins, Author of management best seller “Good to Great”.

Perceptions are often stronger than realities; what your company stands for, its reputation, invariably counts for more than what it sells. In 2010, a private global consulting firm based in New York, invited about 47,000 consumers across 15 markets to participate in a study that ranked the world’s 100 most reputable companies–all multinational businesses with a global presence. In addition to finding the companies with the best reputations, the study discovered that people’s willingness to buy, recommend, work for, and invest in a company is driven 60% by their perceptions of the company, and only 40% by their perceptions of the products !

The survey emphatically confirmed that companies that make Corporate Social Responsibility (CSR) a driving force in their business strategy, materialize results. A five point increase in a CSR rating would result in around 10% rise in the number of people who would definitely recommend a company. There is real money in improving reputation through CSR, but companies are failing to leverage this. They are not applying the same focus to these investments as they do to their other core business priorities. They are not linking CSR to their business strategy but instead, treating it as a separate initiative and investment. Companies, be it small or large, that have a vision, do not spend on CSR for the sake of CSR. They spend on CSR as part of their management strategy to drive business growth. The result is always positive, whether in terms of financial gains or that of reputation and good will. The likes of Microsoft, Apple, Walt Disney, Cisco and Unilever have not indulged in Corporate Social Responsibilities projects just for the sake of doing it but as part of their investment strategy. As a result they have not only build their corporate empires but also contributed to the social infrastructure in the countries that they have established their set ups. This very contribution has added to their employee and customer loyalty, besides bringing them brand equity and tons of good will on company perception. But more needs to be done.

One route to achieving more on the ground is through enforcement. Perhaps there needs to be a policy change in the corporate tax laws, enforcing companies to pay 2 to 3 percent of their annual profits towards CSR. The govt can then spend the CSR collected funds on publicly approved community projects (giving the company a choice among the projects they would like to see their funds going into) with audited reports of the spend along with the contribution of each entity in these projects. This way the companies would be able to publicize their contribution in specific projects. Companies need to also prioritize the areas for CSR spending; education, health and environment for example should be the three most rewarding and fulfilling industries for social contribution, hitting at the very heart of the society in which the companies operate in, improving the lives and futures of all strata of the society. In the backdrop of today’s cut throat competition and rapid saturation, these industries can also present the company with more avenues for producing unique competitive advantages. One thing is for certain; whether CSR spending is enforced or not, the above facts make the choice very clear for the corporate; when the spending on CSR is guaranteeing  reputation and financial gains, then what is a more competitive than to make it part of the business strategy.

OliveLit has industry experts with international Ivy league academic as well as FTSE-100 corporate experience to plan and implement investments in areas that benefit the company, both financially as well as in reputation, as well as the society that the company operates in.