Doing the right thing  

5 October 2007:

Why aren't more companies "doing the right thing?" Increasingly, data show "good" companies to work for means companies that care about the people and communities in which they operate. This isn't always the Wall Street definition of "good," which means strong earnings and financial results.

But new research shows an organization's active participation in corporate social responsibility efforts has a significant influence on employees' engagement levels and views of senior management -- in a good way.

This may skew the answer to the age-old question of which is better: To rule by love or fear?
For the purposes of research analysis, companies that engage in corporate social responsibility are engaging in "good" practices. CSR means taking into consideration employee labor rights, executive compensation, the environmental footprint of operations and the communities that the business affects, among other efforts.

These considerations go a long way with employees, it seems, and make a company a better place to work. A better working environment translates into higher productivity and employee tenure. And all that adds up to higher profits.

To be sure, companies that engage in strictly bottom-line activities and are entirely focused on numbers without social consideration can be profitable too. The jury is out on "for how long" these companies will remain in the black. But if the latest research is any indication, a lack of social consideration for the next generation of workers isn't a company characteristic they will stand.

"Corporate social responsibility is gaining traction as a strategic corporate initiative. Those organizations that have a clear CSR policy set themselves apart from the competition in terms of employment brand. Partaking in CSR activities not only has positive societal effects, but also increases an organization's competitive advantage when recruiting, especially younger workers," says Jack Wiley, executive director, Kenexa Research Institute.

Kenexa recently surveyed workers' opinions from Brazil, China, Germany, India, the United Kingdom and the United States. Among the six surveyed countries, the research indicates that working for an organization where employees positively view CSR efforts has a significant, favorable impact on how they rate their pride in the organization, willingness to recommend it as a place to work and overall satisfaction.

Furthermore, those employees with favorable opinions of their organizations' CSR activities are more likely to say they intend to remain in their jobs relative to those who have unfavorable opinions of their organizations' CSR efforts.

Any management executive or sports team executive will tell that they key to long-term success is attracting new ranks of the best and brightest talent.

Long-term views

Yet, many companies are short sighted. They see and seek profits to please analysts scrutinizing quarterly earnings rather than estimating the impact of disregard on the long-term prospects of their corporations.

Corporations are entities, almost with the same amount of rights as individuals in society. Likewise, they should have similar ethical duties as people in society.

When insurance companies fail to consider heightened weather patterns; when oil companies fail to consider pollution as well as the longevity of supplies and seek out alternatives; when chemical giants fail to consider the toxicity of their products; and when manufacturers fail to consider the refuse from their operations, they are failing society.

Sure they can hold high the big stick over employees in the forms of stock options and bonus checks. But what will these things be worth when catastrophe strikes and controversies ensue? Loyalty, I'll bet, won't remain. (Nor will the money in the coffers; its will be used to fight legal battles.) On loyalty's heels, executives and employees will go.

On the other hand, compassion goes a long way toward trust and tenure; it is the starting point for goodwill.

Just look at the motto of perhaps the fastest growing and most respected company in the world right now: "Don't be evil" is what Google proclaims.

It's smart ...and fearless.

Good companies are considerate. And that quality should be taken into account when investing too.

Source: Thomas Kostigen, MarketWatch

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