Corporate social responsibility (CSR) is enmeshed in the mission statements of most organisations these days, but how often does that truly shape a company’s culture or equate to wider and genuine social engagement?
That’s an issue that McKinsey & Company partner Robin Nuttall and his co-authors, former BP chief executive John Browne and technology entrepreneur Tommy Stadlen, explore in their new book, Connect: How Companies Succeed by Engaging Radically with Society.
As well as drawing on their own experiences and interviews with global leaders, the authors use the findings of a McKinsey survey of more than 3000 executives worldwide to examine attitudes and effectiveness of the often-jaded concept of social responsibility and engagement.
“There is a readiness in many companies and business sectors around the world to radically change the way they engage with society,” says Nuttall. “In talking to executives, we have found a great appetite for information, tools and strategies, and a desire to move ahead.”
Many corporate leaders, according to Nuttall, have grown increasingly dissatisfied with their CSR programs and philanthropic endeavours, which often operate at the periphery rather than as part of the corporate culture. Connect offers guidance for CEOs who want to re-think their engagement.
“Positive engagement with stakeholders and relevant social programs are not just worthy in their own right but create competitive advantage,” says Nuttall. “Companies that work towards responsibility, sustainability and engagement do better in the marketplace. It requires investment and time but will pay off.”
Armed with the McKinsey survey data, the authors established four tenets that articulate what companies must do in order to achieve connected leadership.
- First, they must map their world, understanding their stakeholders as they understand their customers.
- Second, they must clearly define their contribution to society, and place that contribution at the heart of the company’s purpose.
- Third, they must be ready to apply world-class management to traditionally “soft” societal topics.
- Fourth, they must demonstrate their commitment to an open, active and constructive approach to the outside world.
“Trying to fake it will backfire” says Nuttall. “There has to be authenticity. All employees, including the most senior, have to be willing to live the values, even if it means major changes of behaviour.
“Social media offers the opportunity for transparency, as well as a way for a company to understand its environment. We also saw, in researching the book, many cases where there were successful collaborations between companies and NGOs. I see these types of partnerships as a crucial way forward.”
Nuttall accepts that there may be activist groups who are not willing to enter into engagement, no matter how hard a company might try. “You have to ask whether such groups are really stakeholders,” he says. “But even with intractable groups, there is still a need to address their claims in the public space, and social media is a good tool for that.”
Nuttall says an emphasis on stakeholders might appear difficult for shareholders at first, especially where significant social investments have to be made.
“It is up to the company principals to explain the long-term benefits of good social leadership,” he says, adding that shareholders – whether individuals or institutions – actually want the companies they have invested in to be responsible and sustainable.
“They want to be proud of their investment,” he says, “and increasingly understand that long-term shareholder returns benefit from a compelling social proposition.”
Nuttall notes there are many Australian companies that are doing well in moving from CSR-type activities to true social engagement. They are, he believes, taking it seriously.