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Corporate social responsibility (CSR) makes good sense from a business perspective, and not just because companies stand to gain financial returns on these initiatives. Small businesses in particular have an opportunity to use corporate social responsibility programs to strengthen their organizations, promote their values and create loyal, innovative cultures.
So, how do they go about creating an effective CSR program?
The drive toward CSR
Across generations, people are motivated to become wealthy so that they can give back in some way. In its report, which surveyed 300 people with assets over $1 million, SVB Private found that 27 percent of baby boomers, 22 percent of Gen Xers and 26 percent of millennials are interested in gaining wealth for this reason.
Millennials are especially drawn to careers in which they can make a difference. Given this drive to earn money while making a positive impact in their communities, CSR is essential to retaining talented, highly motivated employees.
Business leaders are often driven by a fundamental desire to use their success for good. "The Why of Wealth" findings show that business owners are more likely to apply their wealth to civic initiatives than non-business owners, and they're also more inclined to pursue wealth for the sake of making a difference.
Successful CSR programs speak to the desire to effect change while also driving companies forward. According to some, such as the authors of a paper published by Harvard Business School, CSR is integral to fulfilling the business's obligations to their communities. When businesses implement CSR projects, however, they're not solely concerned with the greater good. They're still creating value for shareholders, as well as enhancing the company's image, retaining talent and bolstering the organization's long-term prospects.
Small business, big opportunity
Although many large corporations, including Google, Microsoft and Colgate-Palmolive, run CSR programs, small, privately owned businesses can benefit from running their own socially minded initiatives. While they may not have the same financial resources as bigger companies, small- and medium-sized enterprises (SMEs) have some unique advantages in this area.
As N. Craig Smith, Chaired Professor of Ethics and Social Responsibility at INSEAD, wrote for Forbes, SME owners are often closely involved in the day-to-day management of the organization. They may have started their businesses after being inspired by a need they saw in their communities, so they're intimately tied to their companies' missions.
The hands-on nature of running an SME may help them see where their companies can be the most useful, and they may have relationships in the community that inform their CSR initiatives, making them feel more personal. Grounding your CSR framework in your original mission can create meaningful change and improve the company's image and financial health.
Choosing your cause
That sense of connectedness is crucial for seeing a return on your CSR investment because these initiatives should be an extension of your brand. Instead of looking for trendy causes, you should be thinking about what makes sense for your organization.
Chances are, you built the company on a set of founding principles, then hired people to help you live up to those. Therefore, your CSR projects should not only reflect your brand values, but also align with your employees' passions and interests. A surgical supply company that provides scholarships to students in medical fields, for example, is a natural fit. Perhaps you run a restaurant or sell produce to local stores and eateries. You might consider allowing employees to spend a percentage of their work hours volunteering at food pantries or sustainable agriculture organizations, creating a clear link between your company and your broader impact on the community.
Aligning your CSR investments with your overarching business aims is important for getting your employees, investors and the program's beneficiaries on board. Ideally, you'll be enriching your community while also creating a more vibrant environment in which your business can thrive and grow. Choosing the right initiative will allow you to forge strategic, mutually beneficial relationships.
Measuring the impact
Because CSR is part of a broader business strategy, you want to track whether your initiatives are having the desired impact. Here's how to ensure that your corporate social responsibility program is creating the results you want to see:
1. Identify clear goals.
Know what you want to achieve and strategize around those specific aims. If you want to help low-income students learn computer programming skills, for instance, you might incentivize your staff programmers to volunteer at an after-school program. Whatever your chosen cause, be specific about what you're trying to do.
2. Set and measure benchmarks.
To know whether you're meeting your goals, you need to know what success looks like. How many children do you want to enroll in after-school programs? Which organizations do you want to partner with and by when? How many tablets do you want to get into local classrooms and what learning outcomes will they support?
Beyond initiative-specific benchmarks, establish key performance indicators for the business side as well. Are you implementing new infrastructure to help the community and lower your business costs? Is the event you're sponsoring meant to generate new client leads as well as raise money for a cause? Establishing measurable goals will show whether a CSR program is providing the returns you hoped to see.
3. Review your progress regularly.
As your company grows, your CSR resources and ambitions may change as well. What you could achieve as a company of 100 employees will look different from what you can do when you've hit 800. Schedule regular reviews to assess whether your current CSR programs still reflect the company's messages and values, and don't be afraid to change tactics when they no longer align.
As the leader of an SME, you have a unique opportunity. By developing a values-driven CSR program, you can cultivate a legacy of success and social-mindedness while fulfilling the ultimate goal of using wealth for good.