CSR as part of business strategy:

A necessity, not a choice

By Marjorie Teresa Perez

THE vision of what the organization wants to be must be planned with an awareness of reality. From the vision, leaders can determine the strategy, set strategic initiatives and align the organization. The more sophisticated the planning process become, the harder it is to introduce the flexibility that accommodates changes in the situation.

In rigid systems, planning and obedience to the plan are regarded as the key to victory. Carefully laid-out plans rigorously implemented without deviation are regarded as the way to overcome the inevitable confusion. As ever-increasing time and attention are focused on “the process of planning,” the successful execution becomes secondary.

However, any football coach can tell you that rigidity does not win games. Every coach has plans that allow for flexibility in formations to adapt to reality. It follows that it is not strategists who cause changes in the plan—it is reality.

Operations succeed because someone knows how to concentrate strengths against weaknesses. The rule of ratios of strengths is simple: if we do not have real superiority, we cannot win. The objective is not an equal match; seek an unequal advantage in your favor. As Napoleon said, “God is on the side of the heaviest artillery.”

The issue is not one of raw numbers; superiority can be achieved in a variety of ways. In business competitions, the superiority can be in elements of the marketing mix such as place (locations or shelf space), price, promotion, product, etc. Superiority can also be attained in the fighting spirit of the organization.

This columnist has gained insights from hundreds of businessmen and women who have overcome insurmountable obstacles, scored phenomenal gains against the competition, or solidified their dominance of a category they already own. Indeed, this columnist has seen many of these winning marketers carrying out the various steps of marketing continuum and taking advantage of the turnaround trends. But they are also doing something more. They are exhibiting qualities of heart and guts and vision that can’t be taught by rules alone and that go beyond the tactical steps of the marketing process.

Marketing leadership is shifting to the “corporate social responsibility” (CSR) companies we see racing beyond the rules and ahead of the competition. Despite much focus on large multinationals, it is the changing behavior of the privately held business sector that is likely to make the greatest impact on global CSR. They may not have the expensive campaigns to catch the public’s attention, but they are making changes which affect their bottom line.

CSR and its growing importance on good business practices is becoming increasingly important to us all, both as individuals and in our professional lives. According to the latest Grant Thornton International Business Report, which was released by Grant Thornton Philippine member firm Punongbayan & Araullo (P&A), 78 percent of local businesses surveyed cite cost management as their main CSR driver. Next to cost management, investor relations is the next major CSR driver among local companies. This shows that companies here are striving to impress investors, both local and overseas. This appears to be a feature of emerging markets in general, as India (75 percent of respondents), Brazil (64 percent) and Turkey (63 percent) join the Philippines (71 percent) as the leading emerging economies citing the factor of investor relations.

When businesses were asked what they had done in the past year to manage their corporate responsibility, workforce-related matters topped the list: four of the top five initiatives are directly associated with people and their workplace.

Measures to improve workforce health and well-being are in place at most businesses surveyed. Employee health is essential not just to ensure productivity, but also to the morale of the workforce. Such incentives demonstrate an e mployer’s concern about the individuals it employs. In the Philippines, this is the most popular initiative as 45 percent of businesses confirmed they are undertaking such measures in an effort to attract and retain staff in a tight labor market.

Thirty percent of Filipino respondents said they have improved waste management as part of corporate responsibility, while 22 percent said they donated to community causes or charities. P&A, for example, has P&A-for-a-Cause, an employee-led effort that focuses on community development programs. And recently, a new waste management system was put in place at the firm’s offices to promote recycling.

“CSR is not a new concept in the Philippines,” says Greg Navarro, P&A managing partner and CEO. “During martial law, many nongovernmental organizations [NGOs] and private voluntary organizations [PVOs] were set up—initially by the religious sector—through whom local and international donors coursed their contributions. These many NGOs and PVOs adopted such causes as poverty alleviation, livelihood creation, health and nutrition, agriculture and even infrastructure needs that were also highly skeptical about the government’s ability to efficiently handle donors’ funds, hence, the bias to provide funding instead to NGOs and PVOs that have more direct delivery channels for donor aid. We are happy to note that companies—both big and small—are now steadily embracing CSR as part of their business strategy.”

The survey results showed that 59 percent of local businesses have incorporated CSR policies into a formal responsible business program. This is slightly higher than the global average of 56 percent.

“If you think about it, [businesses] are less accountable to multiple shareholders than listed companies, so it is encouraging to see that the sector is, just the same, doing its part to adopt ethical business practices,” Navarro points out. “Faced with issues such as global warming, concerns for the environment, increased competition for labor, stricter standards and more vigilant regulators, the need to embrace CSR will only get more serious. So the companies that address these issues earlier, rather than later, will be able to fine-tune their operations, consequently reap more benefits and have a better chance of staying competitive in the future.”

This columnist has directed the primary focus not just on successful companies, but on impressively successful companies whose gains (or equally impressive defense of the market share) can be attributed in large part to a vision that often goes where no company has gone before. If you believe that good ideas can be contagious, you will then know how these excellent companies went beyond the boundaries of commonly accepted business practices to score their singular gains.

We believe you can become a champion of the new power of CSR—moving your thinking and your company into new achievements and beyond, and reaping the rewards of reaching your own ultimate goal.

(As published in Ad Mix, a section of BusinessMirror, 25 March 2008.)