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EJ's Economic Edits - Impacts of Corporate Social Responsibility

| December 10, 2018
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With the holiday season rapidly approaching and the spirit of giving in the air, I thought it would be fitting to look at the impacts of community giving, social responsibility and the economic benefits for businesses. As a locally owned and operated business, we have always placed a high value on giving back. Generally experts are in consensus that there are four main company benefits of giving back: building respect and a good reputation, improving the community, engaging employees and making new connections. After all, as Richard Branson so eloquently said, “Doing good is good for business.” But giving back can be very hard to quantify for small businesses especially when they ask themselves, “What will our return on our investment actually be?”

This is where the waters get a bit murky.  In my opinion, giving back to the community as a business has to originate from the right place. It cannot be seen as an investment in say technology or a new process improvement, but rather a commitment that is ideally in line with the firm’s overall mission and moral compass.  If companies solely look at the dollars spent on community giving and attempt to match a monetary benefit to them on the other end of the equation, their mission will fail.  The problem even goes deeper than this, for if they can’t quantify the benefit, the communities they operate within will also lose out when they decide to pull the plug on such initiatives.

Giving back through volunteer work and event sponsorship can also be seen as a lost leader, for it is impossible to again quantify the results.  However, are your employees now more engaged and productive at work because they are part of a firm that cares about others and causes they too support?  Is building a reputation as a good community steward helpful in building a brand and a firm’s reputation to attract new clients?  I would go out on a limb here and answer “yes” to both.  It is also important to note the perception from prospective clients. Consumers across the globe are keenly aware of how companies they support act and traditionally they have rewarded them for being good corporate citizens. In fact, 82% of U.S. consumers consider a company's approach to social good when considering a purchase. But it even goes farther. Nearly 47% of consumers worldwide report they will be more loyal to the company that supports a social or environmental issue close to their hearts and 53% of consumers admit they would be more likely to recommend the company’s products or services to others.

 

Source: https://www.mageworx.com/blog/2015/05/donations-benefit-for-ecommerce/

So as you can see, the results of being good company stewards are not necessarily found as a separate line item on a firm’s balance sheet. Donating a raffle item once a year surely is not going to keep any business front and center for consumers contemplating a purchase or other engagement. The support has to be real and a longer term commitment is necessary.  An old corporate boss of mine used to preach that it “takes six to stick.”  That is six potential customer engagements before a decision is made.  Community support can assist with these non-traditional touches, be that the name of your firm on a local sports team’s jersey, donating to a local charity or running some of the types of annual food and toy drives like we do here at Rocco & Associates. In addition to generating goodwill, this type of involvement allows your potential customers to see a side of you and your business in a completely different light.  A light that goes beyond products and services and more into who you really are as a person, while extending the firm’s values and beliefs. 

Source: https://www.mageworx.com/blog/2015/05/donations-benefit-for-ecommerce/

Today, consumers have access to a wealth of information on the companies they choose to do business with and the types of causes they support. They desire for companies of all sizes to be involved at all levels, including in the communities they operate in and can have an impact on. With competition fierce, a firm that chooses to engage within their community can immediately differentiate themselves from others and begin to see a noticeable impact and eventual monetary benefit.  However, this is not where it should end.  How a company gives back can give consumers a direct look into what really drives a firm’s culture, its people and overall mission outside of the board room.  So as the holiday season approaches, do your best to support those firms that not only have what you are looking for from a goods and services standpoint, but also are aligned with your own values and belief systems within the community.  You will be glad you did and I am sure they too will appreciate the support.  Until next time…keep the faith!

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