Should PSFs do CSR?

post # 34 — March 23, 2006 — a Strategy post

Legalease, a UK publisher, has just released a report on Corporate Social Responsibility in the UK legal marketplace (copies available from david.burgess@legalease.co.uk), for which I wrote the introduction. Generalized for all profession service firms (PSFs) in all countries, here are the highlights of my remarks.

In the Corporate Social Responsibility (CSR) literature, many benefits are claimed for effective CSR programs, including better risk and crisis management; improved financial performance; increased productivity; enhanced brand value and reputation; the ability to attract better employees; and (not least) the ability to maintain any licences required to operate.

Deciding on CSR programs and policies immediately runs up against the problem of which audience the program is meant to address. Among the possibilities are clients, recruits, government in all its forms, social activists, media, professional peers and many more.

For all that many major corporate buyers are now requiring their vendors to comply with (or at least report) CSR initiatives (as a cascading obligation under their CSR program), it is reasonably clear that for professional firms, clients are not the primary audience for such initiatives. The buying constituency has a lot of other things to worry about than a professional firm’s CSR compliance.

On the other hand, universities are more likely to be the hotbeds of social responsibility concerns than are corporate boardrooms, and many CSR programs are. Many professional firm CSR programs are, in fact, aimed at establishing a firm’s appropriate credentials to be an employer of choice.

It would be interesting to survey top university graduates and find out the extent to which CSR policies affect their decisions on which job offers to accept. A first guess might be that component of CSR which has to do with employment practices (flexi-time, job sharing, maternity policies, etc.) that directly affect the individuals involved. (I may be being cynical here.)

Beyond the recruiting marketplace, CSR programs can serve to appeal to current employees and staff. For example, just donating money to a charity may not be as influential on employee engagement commitment as organizing a ‘Make a Difference Week’ whereby teams of people from the firm, with partners, associates and catering workers toiling side-by-side, all joining in to clean up a stretch of riverbank or pick up litter from a nearby park.

The chance to work together on a common undertaking outside of normal business roles, while doing something that has purpose can go a long way in forging the collaboration and teamwork that many firms seek back in the workplace.

If it is concluded that a primary goal is to win the trust, loyalty and commitment of current employees and staff, perhaps it would be worthwhile to survey them (or at least consult with them informally) on a regular basis to determine what they would like to see firm CSR resources and attention go. It would be sad for firms to do things that they think will appeal but that are not at all appreciated by those they are targeting (a syndrome that happens all too often.)

Beyond clients or recruits, even before governments or regulatory bodies, one could make the case that it is the media that is the prime audience for CSR initiatives.

Once the media starts asking firms to report regularly on their CSR programs, it may be too late to debate whether or not you should have such a program and what its character should be. The social pressure (or blackmail, depending upon your point of view) is nigh irresistible.

The only question is what choices exist among CSR programs, and which are wise to emphasize?

Taking a Position – Or Not!

A critical dilemma in CSR initiatives is that in choosing on which issues to engage, there rarely is a clear, non-controversial position to take.

The topics of human rights, job creation, support of local community, gender and racial harmony, support for the arts and so on may appear to qualify as appropriate CSR topics, but those who choose to pursue these goals will discover as many opponents as supporters.

The attempt to put in place CSR programs that are non-controversial is doomed to failure.

Consider for example the topic of gender and racial bias. Equality between genders and races can best be accomplished, according to different constituencies, either by treating all people as individuals and not as a member of a group (the meritocratic argument) or by putting in place programs to use their group membership to overcome social or historical disadvantages (the affirmative action argument.)

To suggest that the firm will make only friends and no enemies by taking either of these positions would be foolish.

Similarly, for every person who wants to protect the rights of ‘asylum seekers’, there are those who would want to use the term ‘illegal immigrants’ and want firms to work to uphold the integrity of immigration laws.

For everyone who thinks supporting the arts is an appropriate form of CSR, there are those who question the class-based bias of supporting elite activities that cannot pay their own way, while neglecting the activities that underprivileged people enjoy.

My point is not to argue either side of any of these illustrations, but to point out the obvious: there are at least two (and probably two thousand) sides to every case, and the risk of turning audience segments away is as likely as turning them on.

Because of these perspectives, some firms may attempt to develop a program of CSR activity is, and must be, of the ‘let’s stay out of trouble’ kind.

These programs, which are not based on strongly held causes or inherent values of the firm, are adopted to adapt (or be seen to be adapting) to social shifts.

Obviously, any CSR program based on ‘stay out of trouble’ will be risky. No business entity will ever be protected against charges that it is being biased, particularly as those who participate in debates about CSR cannot always be relied upon to engage in reasoned, logical discourse. Token policies will provide no shield to a determined social group that wants to impugn the motives of a business entity (or anyone else.)

As a result, management of CSR can easily become a protective shield against social blackmail, even among those who do not subscribe to its tenets. It exists not to accomplish anything significant or constructive, but as first-line defense against those who might accuse it of social crimes in the future.

The action advice that flows from this analysis is that appeasement almost never works, and that it is foolish and possibly dangerous to try to appeal to all of the various constituencies.

Firms would be better advised, I believe, to take a position on and support the issues they choose to get involved in (and even those they find themselves involved in but not of their own choosing.)

Trying to have it both ways and accommodate all parties is a strategy more likely to fail than succeed. Symbolic CSR activities provide no defense from attack by antagonistic parties.

Employment Practices as CSR

A case can be made that wise, apparently socially responsible employment policies, are in fact just a sensible response to the shifting supply-demand imbalances in a free-market economy.

As the demand for knowledge workers has grown, it has made sense that the employers that have a special need for them (the professions) have become at least a little more accommodating to those who had difficulties fitting in to the old ‘take-it-or-leave-it’ partnership-track model.

Is it economics or social responsibility that drives firms to be accommodating on flexible time, job-sharing, part-time, maternity leave with no loss of status and numerous other programs?

Some firms offer these programs not as rights, but as options that may be granted if the clients’ interests are not compromised.

Whatever the moral merits of the matter, I suspect that viewing (and communicating) the topic as an economic one and being completely honest that the firm is not inventing new ‘rights’ are both sensible approaches, even if they are less than immediately inspirational.

A more modest standard that you always live up to is better than pretending to hold a high principle that you are seen to be willing to break for self-interest.

It can be dangerous to pretend to be doing things on principle that, in fact, are self-serving. A prime example would be the concierge services (or ‘lifestyle management services’) that many law firms now offer to their associates.

Although touted as benefits to help people get their cleaning done, their dog walked, and so on, more than a few cynical on-line associate chat rooms characterize these programs as ‘one more way to keep us at the office billing hours.That’s fine, but stop pretending to a moral purpose you don’t have.’

In surveys conducted on CSR, charity and community involvement are grouped together (for convenience) as similar CSR activities. They are, of course, quite distinct and it is worthwhile to consider their differences.

While it is always easier to give cash and not get involved, people tend to be more influenced, swayed and impressed by donations of time and involvement than they do of cash.

Cash gets mixed in with other contributions and its identity lost, and is less ‘human’ anyway.

Accordingly, a firm would receive more credit and attention by identifying the causes that it truly supports, and figuring out a way to get involved with time so that they can make a real difference.

As in all things Gerald Weinberg’s raspberry jam principle applies – the wider you spread anything, the thinner it gets.

I cannot prove the following propositions, but I offer as a point of view that a firm will benefit more by contributing time and effort that reflect its special talents and interests.

It would probably be better for a professional firm to contribute the special expertise of its people to help others with substantive issues than, say, helping a school develop and nurture a backyard garden (a real example of, in my view, a misguided CSR program.).

On the same line of reasoning, Wal-Mart, in the United States, probably helped society most by contributing its logistics expertise after Hurricane Katrina than any other CSR activity it could engage in. Not coincidentally, it also received its best publicity.

The lesson probably is that the best way to contribute is to stick to your knitting and contribute what it is that you do best.

Individuals or firm?

For professional firms there is another dimension of conducting CSR to contemplate – Is it better for there to be firm-wide programs, or is the firm and society better served by doing the same amount of CSR work, but letting each person or team decide which issues and activities are most relevant to them?

A good case can be made for both sides, particularly in today’s mega-firms. The larger the firm, the more difficult it would be for the firm to decide all the initiatives on behalf of the whole firm.

Local programs may be better received than those attempting to address society-wide issues.

On the other hand, there are some risks in ‘turning loose’ large numbers of ‘CSR entrepreneurs’ in the firm, each pushing for or pursuing their own private passions and causes.

I have already argued the case for focus, so that the firm can make a real difference in society by concentrating its resources on things in which it can truly make a difference.

However, an equally good case can be made that, as Peter Drucker once wrote about business ‘nothing ever happens except when it is done by a monomaniac on a mission.’

Firms can (and have, very productively) encouraged their people to get involved in community activities, such as church, synagogue or mosque committees, social clubs, opera, ballet and village fete boards and other charitable endeavors.

The lessons of these activities are very clear. Where the individual is engaged in them because he or she has a true interest in that organization’s activities, the individual and the firm can benefit in reputation and even in business opportunities.

However, even the hint that the individual is participating for selfish reasons will be detected immediately by others involved, and the person will be rejected.

Following this logic, perhaps the course of wisdom, to ensure that the firm meets its CSR obligations with things that go beyond dabbling and hence make a real impact on the world is for the firm to throw the challenge of choosing CSR initiatives to individuals and small groups, letting them generate the initiatives.

Top management can then assess and select those programs that make a difference, are consistent with the firm’s ideology and protect its reputation.