Quick look: In addition to benefiting the community and the earth, corporate social responsibility (CSR) accounts for nearly 30% of a business’ reputation. To celebrate National Volunteer Week and Earth Day, let’s explore what CSR includes, how it benefits small- and medium-sized businesses (SMBs), and best practices to keep in mind when designing a CSR program.
This week is a special one – it’s National Volunteer Week! Giving back to a worthy cause is something we should all do, and it’s something that is increasingly entering the realm of human resources (HR). In fact, according to McLean & Company’s 2022 HR Trends Report, 49% of HR professionals claim that CSR has been added to their role.
To honor everyone who gives back – including SMBs – let’s dive into what CSR is, the many ways that it can benefit business, and five best practices for building a CSR strategy.
What is CSR?
Most people have volunteered in some way in their personal lives – but what does giving back look like for SMBs?
CSR helps a business be socially accountable to itself, its stakeholders, and the community. By practicing CSR, SMBs can potentially impact economic, social, and environmental aspects of society. When properly executed, a CSR strategy positively affects the community and the environment.
CSR programs typically fall into four categories:
- Volunteering: Businesses can choose to support volunteering efforts for global, national, and/or local charities. This could look like partnering with a global charity like Habitat for Humanity or donating goods to local foster children.
- Philanthropy: SMBs can give back monetarily or by holding special fundraising events. While large corporations often make headlines by donating millions, smaller organizations can take part in philanthropic efforts as well. For example, an SMB could hold a bake sale with proceeds benefiting a local nonprofit organization.
- Environmental conservation: Protecting the planet also contributes to CSR. Examples of environmental conservation tactics that SMBs can complete are setting up a recycling program, utilizing wind and solar energy, or using environmentally friendly office supplies.
- Diversity and labor practices: Chances are, as an SMB employer, diversity, equity, and inclusion (DEI) is already on your corporate radar – and it can be a part of your CSR strategy, as well. By making a concerted effort to hire, include, and value employees from all backgrounds, SMBs help do their part to address the concerns of their local diverse communities.
Business benefits of CSR
Giving back is an integral part of corporate success. According to the 2019 Deloitte Global Human Capital Trends report, the number one issue CEOs cited as their most important measure of success was “impact on society, including income inequality, diversity, and the environment.”
The purpose of a CSR strategy is to improve society and the environment – but a well-executed program can provide SMBs with a myriad of benefits, as well, including:
Improved public image and brand awareness: When businesses contribute to local, national, and global charities and efforts, it shows they care about something larger than themselves which undoubtedly improves their public image and helps build brand recognition. A Reputation Institute report found that CSR accounts for nearly 30%of a business’ reputation – more than any other factor, except for products and services.
Increased customer loyalty: People want to feel like they’re supporting a business that helps, not hinders, the world. A survey from global technology firm CGS found that the second most important reason for a customer’s loyalty (after quality) is a brand’s sustainable and ethical business practices.
Better market performance: By giving back, you’ll have a leg up on your competitors that don’t – and the data proves that point. According to a 2021 study, 85% of people say they have shifted their purchase behavior towards being more sustainable in the past five years, and over one-third are willing to pay more for sustainable products or services.
Stand out to top talent: CSR efforts can help SMBs both attract and retain valuable employees. Candidates want to work for a company that cares about more than just profits, and employees are more likely to continue working for a business that empowers them to give back. In 2020, Generation (Gen) Z comprised 11.6% of the U.S. workforce – a number that will continue to climb – and these employees want their employers’ values to align with their own. Similarly, millennials (the largest segment of the workforce) believe businesses should address societal challenges.
Cost savings: In addition to helping the environment, when an SMB reduces its waste and emissions, it can also experience significant cost savings. From airlines to hotels to technology companies, businesses worldwide have increased their bottom lines through their CSR efforts.
Best practices for building a CSR strategy
When properly executed, CSR efforts benefit virtually everyone and everything. But how can SMBs be sure they’re crafting a plan that will set them up for success? It can be helpful to work with a professional employer organization (PEO) to hone your program, but if you’re developing your own policy, here are five best practices to keep in mind:
1. Identify what you stand for
Will your organization engage in volunteering, philanthropy, environmental conservation, diversity and labor practices, or a mixture of all of them? Is there an opportunity to align your CSR tactics with your business’ products or industry? What local, national, or global initiatives are you interested in joining?
2. Outline potential benefits
Outline all of the ways your CSR program could benefit your company (perhaps by creating a CSR scorecard). These reasons should be measurable, and could include:
- Community impact: What are you aiming to achieve in your community – maybe you want to raise $15,000 for the local food bank or reduce your office’s electricity usage by 25%.
- Employee attraction and retention: How do you hope these efforts will affect your recruiting and retention statistics? Perhaps you hope to lower your turnover rate by a certain percentage year-over-year after implementing the CSR program.
- Brand loyalty: When a company engages in CSR efforts and is purpose-driven, people are 72% more likely to be loyal to that company, according to global communications firm Porter Novelli. How may your CSR plan impact your customers’ loyalty to you, whether you are a business-to-business (B2B) or business-to-consumer (B2C) organization?
- Bottom line: In what ways can your socially responsible actions save the organization money?
3. Get people involved
Once you have determined the nuts and bolts of your CSR plan, it’s time to get executive buy-in, and then communicate the program to all employees. To garner more program interest and participation, it may be helpful to incorporate volunteer time off (VTO) into your current paid time off (PTO) policy.
4. Measure success
After your program has been active for a substantial period (one year could be a good benchmark point), it’s time to determine if you experienced the potential benefits outlined in tip #2. Not only will this data help you improve your CSR plan, but it’s critical to be accountable and report these numbers to employees, executives, and investors.
5. Be flexible
Life is unpredictable, and your CSR strategy should be agile enough to stay relevant to current events. For example, when the COVID-19 pandemic struck, some SMBs could shifted efforts to support nonprofit organizations that combatted the millions of children who faced hunger as a result of schools closing.
Partner up and give back
Good news: when it comes to developing an impactful CSR strategy, you don’t need to do it all by yourself. When you rely on the HR experts at a PEO – like ExtensisHR – you can receive dedicated support from a professional who understands the intricacies of your business.
ExtensisHR’s experts are readily available to help you craft your CSR program and update your VTO/PTO policies and employee handbook as needed. They also can assist with:
- Payroll and tax management
- Benefit administration
- Risk and compliance services
- Recruiting and talent management
- And more
Take the first step toward implementing a CSR strategy tailored to your business by contacting the pros at ExtensisHR today.