As Corporate Social Responsibility grows more visible, there are clear signs that some global services providers are truly active in driving social impact, while others are simply masquerading and not acting on the socially-driven principles that are portrayed in their marketing and PR.
We wanted the low-down on firms’ CSR practices, especially in the global BPO/ITO industry, so we spoke with David Kinnear, Co-founder of the Global Sourcing Council, and a recognized expert in sourcing and sustainability. He describes how companies can navigate the changing social landscape to become more competitive, with the knowledge that buyers use CSR credentials to differentiate them from the competition. Read on for more.
CSR reporting with the click of a mouse
The business thinking behind Corporate Social Responsibility is that it makes a statement about a company’s values, and those values then create an emotional bond with investors and clients. Customers demonstrate a real loyalty to firms seen to commit to initiatives like sustainability or charitable giving. But the fact that customer loyalty is often driven more by perceptions than reality, causes some firms to simply pay lip service or develop CSR programs that are just for show.
However, says Kinnear, in today’s digital economy clients are more aware of firms’ fiscal and social standing, and there’s a great deal of visibility to the context in which businesses are working globally. “CSR is much more a matter of public record and public scrutiny”, he says. “Due to technology and social media like Twitter, the speed at which someone can comment on a firm’s activity is generating a very different response from the corporate sector than before.
Add this to the bad rep that outsourcing receives on the US political stage, and outsourcers across the board are working hard to be seen by customers as giving back to society. The Sunday Times (UK) Best 25 Big Companies for CSR 2010 ranked financial services giant Goldman Sachs 2nd, KPMG 10th, Deloitte 15th and Accenture 23rd. A similar Top 50 ranking in the US by Boston College placed Microsoft 4th, Intel 12th, Dell 26th, General Electric 40th and HP 48th.
Sustainability and CSR
Another avenue of CSR is environmental sustainability, a topic so fashionable today that firms cannot afford to be seen as lagging behind. But the smartest ones are those who use these initiatives to drive efficiency and cost savings, and gain a competitive edge. As clients and investors increasingly examine companies’ green data and sustainability credentials, it presents a tremendous PR opportunity – firms know that, and are working to be better corporate citizens.
“There’s now hard data showing the link between sustainability and customer loyalty”, says Kinnear. “My view is that more companies will be green because they want to be smart, than be green because they want to be green”. In other words, firms will be sustainable because it makes fiscal sense, and that includes CSR.
“These days there’s so much visibility in any workplace in the world, especially in outsourcing, that it would be very hard to operate credibly in a country if you’re seen to be exploiting the workforce or the economy there” – Kinnear
Responsibility to labor
Since the outsourcing industry relies on human capital as one of its primary assets, keeping workers happy is essential, and labor standards are the way to achieve it. According to Leila Janah, founder of social business Samasource, “Any successful outsourcing firm has already endogenized good labor practices in its business model. Newcomers won’t last long if they don’t follow suit”. Going back to the point about firms adhering to CSR as a way to remain competitive, the results of unhappy employees are high attrition rates, poor customer service, and sometimes a law suit, as we saw with Convergys this week. Knowledge workers, especially in the BPO and IT industries tend to be educated, and know their rights.
“These days there’s so much visibility in any workplace in the world, especially in outsourcing, that it would be very hard to operate credibly in a country if you’re seen to be exploiting the workforce or the economy there”, says Kinnear.
Just a PR front?
In spite of the business case for a strong social responsibility program, some companies make only token gestures towards CSR in ways like donations to charities, or sponsorship of events. Good CSR generally makes good PR, but unfortunately so does faux-CSR, at least for a while.
While not wanting to play a “naming and shaming game” as he calls it, Kinnear admits that it’s a practice that happens often. “This is a double edged sword for organizations. If they’re simply paying lip service, they have a reasonable expectation that at some point it will backfire, or that it will be exposed as lip service”.
The CSR opportunity
One of the most valuable insights we gained while chatting with David was this: Buy-side clients today use CSR data to select their providers. It’s a risk management tool – a way to select good and responsible vendors to partner your business with. “If you’re looking for ways to differentiate between providers, here’s a great place to start”, he says. “There’s an awareness that your sourcing counterpart, wherever he is, is more trustworthy if he’s engaging genuinely in CSR or sustainability initiatives”.
In other words vendors, if you give the client more reason to trust your judgment and your behavior, they’re more likely to work with you. The smartest providers will see this as the huge opportunity that it is. They will learn to leverage CSR to demonstrate the values or DNA of their organization and gain more credibility.