CSR: The Biggest Corporate Protector of the 21st Century

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Corporations have historically used CSR to identify their brand with the greater good and make a statement about what they were all about, but in today’s litigation-happy, rumor-mongering society, CSR can offer a brand protection beyond just appearing to be the “good guy.”

In my years in crisis management, CSR has been the key factor in either fueling or stopping lawsuits and reputational damage. I investigated the common denominator of what companies that got into long-term reputational trouble did not have: a goodwill fund of publicized corporate social responsibility (PCSR).

Breaking down the factors that control the court of public opinion, it becomes abundantly clear: In today’s business arena, you need people to be comfortable and interested in doing business with you.

So, what about when you have a scandal? When you discover your CSO has been having sexual relations with your top competitor’s senior VP for years—date coincident with you losing sales consultants to the competitor and inside trade secrets getting out mysteriously? Then lawsuits ensue and usually, the criminal uses the law to attack the victim of their crimes so they can “publicize” how bad you are and justify their actions—using the bad publicity as a red herring to fake out the media, your clients and the public.

How do you keep that from happening? Publicized CSR—long before it happens and in volume throughout your scandal. Why does it work? Because CSR generates positive word of mouth.

42% of how people feel about a company is based on their perceptions of the firm’s CSR efforts. People today believe that businesses have a civic duty to utilize their wealth and success to coincide with strides to improve society by aiding in the growth and well-being of society. Cone Communications and Echo Research found that 91% of shoppers worldwide will switch to brands that support a social or environmental cause. Conversely, 90% of shoppers will boycott a company based off moral or irresponsible business practices. Studies show that being socially responsible has become essential for companies looking to meet consumer demand. Consumers say brands being socially responsible is an influence on their purchase decisions, rating "being green" (83%), reducing consumption (81%) and contributing financially to nonprofits (65%) as important actions.

With only about 20% of mid-sized companies measuring their CSR program's success, many are missing opportunities to tie community-focused programs to the company’s bottom line—and the protection of the bottom line. Filling the vacuum, preemptively, before anything bad happens is one of the smartest corporate protections you could have.

Bottom-line, Millennials are going to be the biggest workforce and spending force by 2020. And what is so significant about them? They will spend their money and pay more to companies who contribute to the greater good—and publicize it—because face it, if you don’t tell anyone, no one will know.

And CSR, along with having an excellent product or service, generates Word of Mouth (WoM).

  • WoM drives 13% of sales
  • Offline WoM drives 2/3 of business impact
  • Online WoM drives 1/3 impact
  • 1 offline WoM impression drives sales 5X more than 1 paid ad
  • WoM amplifies paid media by 15%
  • WoM = $6 trillion in annual consumer spending

How to Begin

What does your company do that can help the nation or your own community? Does it align with your passions and the purpose of your company? If it doesn’t align with your company’s direction, you are going to have to tell your story for getting behind it even better. CSR for the sake of CSR is as distasteful to the consumer public as lying.

Take Nutiva, for example. Nutiva aligns its CSR program with environmental and sustainability issues. Before "social responsibility" was a Silicon Valley buzzword meant to put a face on faceless companies, John Roulac, CEO of Nutiva, has not only been outspoken about health fads and mainstream environmental causes, but has thrived on them, creating an empire. “Nutiva revenue has grown 482% in the past three years. In 2012, it brought in $12 million. In 2014, Nutiva was projected to take in more than $100 million.”

I surmise that the reason more companies do not engage in CSR efforts is because they do not know how to track the ROI of CSR projects to the bottom line. I recently had the opportunity to listen to Bill Brand, president of HSN, speak about CSR. In asking him how HSN executives track CSR initiatives to show the board of directors the ROI, he stated four KPIs:

  • Online persona—garnering publicity for it so that the search engines tell the company’s story and further the brand
  • Brand strength
  • Client retention and
  • Employee retention

Worried about bragging? The adage that “good works speak for themselves” is a falsehood. If you don’t let people know what you have done, how are they going to support you? Tastefully publicizing CSR is simply making the people or group you are helping the hero of the story. And if you truly are doing it to help, you will have no trouble doing this.

Any industry can benefit from CSR efforts. But those that are plagued with false data, past scandals and repeated bad news must outdo the fear, hate and cynicism with good works well-publicized continuously.

People intrinsically are decent and moral, which is why B2B and B2C consumers reward those companies who are doing good. As Joel Osteen said, “Being successful doesn't necessarily make you great. What makes you great is when you reach back and help something else become great.”

Karla Jo Helms is the CEO of JoTo PR, and speaks globally on public relations and how corporations can harness it to drive markets.