Tuesday, January 8, 2013

Getting Started with CSR - part 2 - First Steps

Once again, with the new companies bill, CSR becoming mandatory is good news!  As indicated in my previous note - the companies already engaged in it only need to review whether they are matching the mandated 2% of the average last three years net profit.  However, other companies that do not have a formal mechanism of CSR (I am assuming everyone does something for society always) and fall under the regulatory size will need to setup a formal approach.

One of the important things to look at is to follow the process suggested in the companies bill and I am only adding some reflective points to making the process work.  Any shortcuts and jumping forward are advised against.

The setting up of the committee in the board is the first step.  Its important to choose the 'driving' director.  A person who both understands the business well and is also motivated to impact companies stakeholders beyond the shareholders and the customers.
This person will be key driver of CSR in the group but with the intent of building the 'business' to be a 'long-term' business as well as a 'great' brand.  Why I am stating this is that it requires a business person, a passionate person and a person who will drive the intent of business in a holistic manner -- and most importantly will not take CSR as charity and hence an avoidable evil for business!

Second step is to create a CSR policy for the company.  While this is critical in the long-run, at the time of getting started one need not get too obsessed with perfection of the CSR.  I am not saying one must not deliberate well but the policy need not be cast in stone.  Too many companies lose time and effort over creating a perfect policy.
I believe that companies should evolve their CSR policies -- with both their people and testing and experimenting with the beliefs. Involving people is important for higher and sustained impact just as testing and experimenting helps identify the set of things that are well suited to the company business.

So begin with a 3 year view at first.  As I indicated earlier - each company is somewhere doing some good -- find that out for your company -- see if that itself can be expanded to begin with.

Still if you dont think you have anything going -- policy can be as simple a statement as - we will help develop families of our class 4 workers and contractors. Or we will support one NGO in education - near each of our offices.

Step three - critical and most important - create an annual plan.  This should be done in conjunction with step 2 and requires an ownership and drive at the operational level.  It requires a commitment from the Top management in terms of creating time and space for an operations manager to drive - needn't be a full time role but must be recognized and accepted through performance KRAs and reviews.  The variable compensation for the ops manager could come from the CSR budget.

The first year is about understanding how the business can be more socially responsible and not necessarily charity driven.  It has been demonstrated by a lot of enterprises globally that socially responsible practices bring concrete benefits in the long run and contribute to financial stability, brand and attracting and retaining the best people besides the social good.

The plan for the first year must lay out the following clearly:
1. Monies available with clear approving authorities
2. What the plan will 'Definitely do' and 'definitely not do' - in terms of learning for business, preventing any personal whims or insecurities to take over - like a friendly NGO gets all the monies as charity just because they showed up towards the end of the year when not much monies have been spent.
3. Outcomes for the year ... should not be number of people impacted ... rather should be how many staff got engaged for how much time.  What all came in a specific learning for the company - innovation areas, product changes, market reach ... any such.
4. Measure of internal and external communication of what the company is doing -- company must talk about what its going to do, then do it, and then again talk about what it did - both internally as well as externally.

The first year idea is to ensure we not only meet the Company bill CSR mandate but also build a unique understanding of how CSR improves company valuation in the market.  Doing good makes good business sense when done with both heart and mind and not just one of them.

More ideas on what we need to watch out for, how to engage staff more, and to ensure everyone enjoys the process including the finance guys -- in part 3!