BEYOND CORPORATE SOCIAL RESPONSIBILITY:

INTEGRATED EXTERNAL ENGAGEMENT

-Tirru Sharrma

Mba

139

1 NEW APPROACH TO CORPORATE SOCIAL RESPONSIBILITY.

What is the problem?

Recently traditional corporate social responsibility has come under serious

criticism. Emphasis is being given on engaging the stakeholder deeply into the

decision making.

This approach is called integrated external engagement (IEE).

In simple words called integrated external engagement (IEE) means that

companies must incorporate interaction with stakeholders into decision making

at every level of the organization.

There has been a shift in the point of view. Traditional corporate social

responsibility has its positive effects but in majority of the cases it has failed.

According to a recent Mckinsey survey of more than 3,500 executives around the

world, less than 20 percent of the respondents reported having frequent success

influencing government policy and the outcome of regulatory decisions.

This has in turn created an opportunity for significant competitive advantage. Big

Companies such as Statoil and Unilever have used this opportunity to their

advantage.

Where is the problem?

Initiatives rarely gain the full support of the business and tend to break down in

discussions over who pays and who gets the credit.

Organization have less knowledge about external stakeholders. Managers on the

ground have a much better understanding of the local context.

Companies often see it only as an exercise in protecting their reputations—to get

away with irresponsible behavior elsewhere. Effective external engagement is

much more than that: it can attract new customers, motivate employees, and win

over governments.

CSR programmes are short lived because they are separate from the commercial

activity of a company.

2 NEED FOR INTEGRATED EXTERNAL ENGAGEMENT (IEE).

Expectations of citizens and governments have been higher. Companies are

expected not only to obey the law or meet certain standards within their own

businesses but also to ensure high standards across their supply chains.

Companies are expected to solve major economic, environmental, and social

problems—even those unrelated to their businesses. Moreover, as the

expectations of citizens have increased, so has their power to scrutinize.

There was an Occupy movement in the United States that showed little sign of

discontent, but polls show that levels of trust in business are below 55 percent in

many countries.

3 HOW CAN OUR COMPANY FOLLOW INTEGRATED EXTERNAL ENGAGEMENT

(IEE) WHILE TAKING CSR INITIATIVES.

We must deeply integrate external engagement into our strategy and operations. The

success of a business depends on its relationships with the external world—regulators,

potential customers and staff, activists, and legislators.

According to the article Mckinsey & company spoke to seven leaders who excel in this

area. They conclude that you need to do four things:

Define what you contribute

Know your stakeholders

Apply world-class management

Engage radically

Defining what we contribute

We should not focus on what we can get from the society. We should refrain from

extracting value from society.

Our aim should be to build profitable relationship with the external world that

should benefit the society.

External engagement cannot be separated from everyday business, it must be

part and parcel of everyday business.

Knowing our stakeholders

The McKinsey survey found a strong correlation between the in-depth profiling of

stakeholders and success at engaging with them. Sixty-seven percent of

respondents from successful companies report that they are very effective at

understanding the priorities and objectives of the stakeholders, versus 28 percent

of respondents from less successful companies.

Effective external engagement relies on a detailed knowledge of the preferences

and resources of stakeholders. This means learning, on an individual and

institutional level, what they want, when they want it, how much they are

prepared to compromise, how our activities affect their goals, and what resources

and influence they can bring to bear.

We should have a rigorous and exhaustive process, including personal

conversations with stakeholders, expert analysis for Effective external

engagement.

Effective external engagement identifies potential problems and opportunities

before they arise. That allows a company to act before its competitors do.

We have to be tune in the society.

Apply world-class management

Employees need the right skills to include external considerations in their decision

making. We can develop their external-engagement skills through a mixture of

on-the-job experience and formal training for employees. Formal training is a

useful supplement, particularly for more specialized skills, such as negotiation. At

the lower levels of the company, training helps every employee and contractor to

understand the importance of relationships with the external world and to know

the company’s policy on social issues.

To formally incorporate external engagement into business processes at all levels

we need to have establish a process.

Clarity among all these topics would be necessary- conflicting policies, standards,

guidelines, and initiatives can be counterproductive, creating overload and

confusion.

We should retain a focus on outcomes, by setting targets, measuring progress

against them, and by linking incentives to their achievement.

How to measure outcomes? Ideally it should be measured in the outcomes in

terms of value added to the business. But sometimes financial benefits are

indirect and far in the future or can be quantified only against an unobserved

counterfactual.

Engage radically

We should have a radical approach in communication.

Avoid the three errors that most of the organizations do –by engaging or involving

too late by this we can lose shareholders trust, treating stakeholder engagement

as a propaganda exercise, it should be understood as negation and knowing them

better and lastly trying to please everyone.

4 CONCLUSION

Although traditional csr had its own benefits but it doesn’t include external environment

at all in everyday business. Its approach and meaning is now being outdated and

replaced by integrate external engagement (IEE). It’s time we think beyond it.

Therefore it is important to change our approach as management is dynamic in nature.

Those that have acted already are now reaping the rewards.

THANK YOU