CSR and the bottom line

Jun 15 2011 by Brian Amble Print This Article

Organisations that are committed to corporate social responsibility (CSR) have far higher levels of employee engagement, provide better customer service and substantially outperform those that are not, new research has found.

The study, by the Kenexa High Performance Institute, surveyed some 30,000 employees in 21 countries for their views on corporate responsibility and its impact on their organisations.

Globally, more than half of employees (56 per cent) said that their organisation contributed to the community and displayed a genuine commitment to corporate responsibility efforts. These employees also believed their companies properly balanced short-term business decisions with longer term investments in the community.

Employees of organisations in which CSR is a cultural value and practiced with consistency also displayed startling high levels of engagement (89 per cent) compared to just 21 per cent for employees of organisations working in a 'low' CSR culture.

"Our study shows a statistically significant relationship between corporate responsibility and organisational success," said Dr Brenda Kowske, co-author of the report.

"Employees who work in organisations that have a greater sense of responsibility towards their communities and environment, both ecological and social, have an engagement level that is four times higher than it is for employees who work in a low CSR culture.

"We also found that companies that prioritise CSR have a considerably higher rating for providing excellent customer service," she added.

In fact, the report found that 84 per cent of employees working in 'high' CSR cultures rated their organisation's performance highly, and 91 per cent believed that their customers were very satisfied.

In contrast, where corporate responsibility is not a cultural value, just 29 per cent of employees reported strong organisational performance, and only 27 per cent believe their organisation provides better quality products than the competition.

An analysis of the financial metrics confirms this. The study examined the results of 175 companies and found that those organisations that were most committed to CSR reported an average return on assets that was 19 times higher than the average of those least committed to CSR (a gain of 4.83 per cent, against a mere 0.25 per cent).

When analysing the total shareholder returns of these companies over the three years from 2007 to 2009, the researchers found that many of the organisations had reported a financial loss. However, low-scoring CSR organisations lost, on average, 11 percentage points more than high-scoring CSR companies.

"There is now a need to expand the body of research into CSR to further explore and understand the relationship between CSR and organisational success," said Dr Kowske.

"For example, do CSR actions actually produce these tangible business benefits or do highly successful companies simply have more resources to devote to CSR, creating a positive cycle? Whether they do it to manage their public image or because it's the ethical and right thing to do, one thing is certain: organisations in every industry in all of the major economies around the world are now paying heed to the notion of corporate responsibility."