The impact of corporate social responsibility on organisational stability

Corporate social responsibility is the concept that a business needs to be concerned with more than just profit. Protecting the environment is one aspect of social responsibility; another is making an effort to address social problems such as poverty and hunger. A business’ social responsibility also is expressed through its ethical standards — how it treats its various stakeholders, including vendors, employees and customers.

Importance of Stability

A small business owner initially may not view organizational stability as an important goal. He strives for growth, to create a dynamic, rapidly evolving organization that becomes a recognized force in its industry. Stability may sound like a company that is standing still. Nevertheless, his long-term goals of revenue growth and increased profits can be served by maintaining stability with certain aspects of his company.

Customer Retention

Consumers may choose to not do business with companies that have a reputation for being socially irresponsible. Conversely, businesses that show a commitment to the community and the environment can attract customers who share these values. The good the company does is part of the perceived value of its products and services and can result in higher customer satisfaction. These satisfied customers are likely to continue to do business with the company. Thus, a stable, loyal customer base is a valuable asset.

Access to Funding

Capital often is needed to launch a company, and several capital infusions may be needed later on to fund expansion plans. Capital can be viewed as a mechanism to ensure organizational stability in the sense that it helps the business owner make continued progress toward achieving his long-range growth objectives. Investors look at the ethical and social standards exhibited by a business when deciding whether to commit capital to the company. Some investors focus exclusively on companies that have a demonstrable track record of social responsibility.

Employee Recruitment

A small company must create a stable workforce by retaining its top talent and not losing these individuals to competitors. The company also must compete to acquire the best talent. Younger members of the workforce in particular have grown up in an era of heightened awareness of environmental protection, and a company’s commitment to the environment and to society can be a significant, even determining, factor in whether they elect to join an organisation.

Positive Image

Companies that have ethical lapses such as ignoring environmental regulations or standards for how employees should be treated can suffer damage to their reputation when these lapses come to light in traditional or social media. A company’s image affects its relationship with all of its stakeholders, and remaking a company’s troubled image into one of stability — sometimes referred to as damage control — can take time and draw managerial resources from the important tasks of building the company. Customers who leave because they do not approve of the company’s image can be difficult to win back.

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