Objectives of the Study
The objectives of this research study are as follows:
- • To examine the scope of CSR in building the organizational reputation.
- • To understand the limitations of CSR.
- • To suggest CER (Corporate Environment Ready) model for building organizational reputation.
- • To suggest to implement the CER (Corporate Environment Ready) model as business strategy tool.
Exhaustive literature review regarding the title and its related concepts was done. Secondary data inclusive of quantitative and qualitative were analyzed. The sources of information are from various research publications, published newspapers, journals - online and printed, books, magazines, and websites. The information was collected from libraries and websites. The literature was cross-checked and validated to give the latest information.
Corporate Environment Ready Model
Before discussing the CER model, let’s have an overview of some models which explain the scope of CSR for companies. These models actually suggest a way to move toward social responsibility or obligation of an organization toward the society and environment. A few important and notable models include Carroll’s model, Halal’s model, and Ackerman’s model.
Archie B. Carroll in 1979 propounded his hierarchical model defined as CSR for the business houses toward the society. His model is in pyramid shape having four categories, starting from the bottom to the top. The four categories are:
i. Economic: This category is at the bottom of the model, mainly expressing about profit for the organization.
ii. Legal: It explains about compliance as per law.
iii. Ethical: It explains about the norms or practices which the society expects from the business organization.
iv. Philanthropic: It explains about the engagement of business enterprises in community development or other social projects.
This model discusses two aspects, the first one is about the organizational work, interest, and distribution of profit. The second aspect is about social activities. He suggests to have a coordination between the organization and social decisions so that the future of the organization and society would be safe.
This model has three phases for defining the CSR.
i. First Phase: To recognize the social issues to be addressed by the top management.
ii. Second Phase: To appoint an employee or specialist to understand the issues and take measures to eradicate such issues.
iii. Third Phase: To implement the strategy suggested by the specialist.
FIGURE 6.1 Corporate environment ready model. (Source: Authors’ own work.)
The Elements of the CER Model
Today brand image of an organization is one of the most important factors that is considered while evaluating the reputation of any organization. This reputation depends on many factors which are directly related to the organization, such as profit earned, employee’s welfare, business process, environment friendly, and CSR. The CER model is an integrated model or coordination of the abovementioned factors which contributes to the enhancement of organizational reputation (Figure 6.1).
Let’s understand what the model tries to explain.
An organization is a body which is interconnected with profit, process, people and planet. The organization cannot survive in the absence of any one of these factors. Let us explain it in detail successively and individually.
Profit is like oxygen for an organization; without it an organization’s survival cannot be expected. An organization earns profit by satisfying its customers by the products or services it offers. Apart from this the organization enhances profit by reducing the unnecessary cost incurred in the business. This reduction can occur by introducing new efficient technology, by innovation, product modification, etc. These innovations or newness brings a competitive advantage which also facilitates profit enhancement. The competitive advantage puts the organization at a higher level which leads to a strong brand image in the market, which generates more revenue in terms of business, thus resulting in more profit.
The business process is an important variable which affects the overall organizational reputation. The organization’s business process is mostly directed toward efficiency and effectiveness. This is actually the correct way to examine the business process. The business process includes the methods or techniques used in the business activities. It is an important factor in terms of effectiveness of the CSR and organizational reputation. This particular factor consists of Total Quality Management (TQM), Business Process Reengineering (BPR), Supply Chain Management (SCM), and Research & Development (R&D).
TQM: Quality has become an important term or aspect in corporate world. “The term quality refers to a sense of recognizing that something is better than something else” (VSP Rao, 2005, p. 60). It means doing things right the first time, rather than committing mistakes and then correcting it further. According to Edward Deming (internationally recognized contributor to Japanese quality improvement initiatives) TQM is an organizational culture which is committed to continuous advancement of skills, process, product and services, and customer satisfaction. TQM is termed as an organizational culture because it is seen as a deeply inherited practice which reflects in every aspect of the organization. A few of the Deming’s advice on quality achievement are the following:
- a) Always have a reason or purpose for improvement of process and cost reduction.
- b) Stop recognizing business on the basis of price tag only.
- c) Constantly and continuously improve the production system and services.
- d) Accept modern methods of technology.
- e) Create a sense of innovation in the organization.
- f) Take actions to achieve positive transformation.
The main idea: TQM
i. Do it right in the first time.
ii. Be customer oriented.
iii. Adapt continuous improvement as an important and inseparable aspect of life.
iv. Build a team and empower them.
BPR: Business Process Reengineering primarily focuses on doing things in better way by continuous and incremental improvements. BPR means an evaluation of what an organization is all about, thus making significant changes for the organizational success and for achieving its core values.
R&D: Research and Development - every organization is mostly dependent on the R&D team for some new or improved innovative products or services. The trend which is seen in R&D department is to mostly improve or innovate existing or new products or services on the parameter of cost reduction, usage, added features, packaging and handling, recycling of wastages, etc. The evaluation of the above parameters is necessary, but evaluating them in terms of the societal and environmental impact is also important. This small improvement can add more to the organizational reputation. This new approach can save resources of the organization which can be utilized for more beneficial activities.
SCM: There is a term in computer language “Garbage in, Garbage out”. The supply chain management involves this same concept. It involves flow of raw materials to the final distribution of products and sendees. Suppose if an organization is procuring below standard raw material with a view to reduce cost, then the final product after processing will be of a low standard finished good. This will have its own consequences in terms of health and on the environment. The top management will have to consider it too as it also impacts organizational reputation.
Corporate is nothing but a group of people engaged in an integrated activity to run the business keeping in view the profit or the expected common end result. The group of people in this model comprise employers, employees, suppliers, stakeholders, and customers. Employees here represent the people working in any organization, with their family members, friends, and relatives who constitute a society or community.
Stakeholders comprise the owners, who have initiated this activity or taken a risk with an objective of earning profit and serving the community.
Suppliers are those members who are facilitating the business activity from outside, right from the raw material procurement to the distribution of finished goods.
The customers are those who actually purchase the products or avail the services to satisfy their needs and wants.
Planet is a silent player which is contributing in a major manner in the business functioning, with its limited resources without asking a single question. The earth is providing its resources by the composition of air, land, and water along with from the forest and wildlife. The efficient utilization and conservation of these resources is necessary for long-term survival of a business.
CSR and Four Factors
All these interrelated factors play a vital role in the existence of CSR and make CSR effective and meaningful. If you will give an insight, you will find that most of the organizations (excluding the exceptional ones) focus on only three factors of CSR, that is, people, profit, and planet. They either ignore or not consider process as an important factor for success of a CSR activity.
Profit is something that determines the level of CSR activity by an organization. So if there is no profit, then there will be no CSR as it is the base of this activity. So undoubtedly considering profit is necessary.
CSR from one point of view can be said that it is for people, whether be an employee who expects both monetary and non-monetary benefits in return for the contribution toward the organizational growth. Customers and members of the society are the users of the products or services and they also contribute in the success of the business, so they are also part of CSR. Suppliers are those who facilitate the business activities. The stakeholders are the actual players or planners of CSR because of government regulations as well as their self-interest.
The planet is the purveyor of resources, so it becomes the obligation of the business houses to act toward the safeguard and conservation of the planet. But there is a loophole in the practicing of conserving or protecting the planet. Suppose an organization is involved in a business activity and the wastage of the industry is being disposed in the nearby area whether in a river or on land. At the same time the company is involved in CSR activities like education, wildlife protection or ancient monument conservation. Then this good deed can’t justify the aforesaid wrong practice. The issues should be resolved at the originating point, that is, water should be treated properly and then discharged to the river. A few organizations are doing this job.
The composition or integration of all these four factors, that is, people, planet, process, and profit, will take CSR to a new level with more effectiveness. Then the organization will be termed as CER (Corporate Environment Ready). This CER label will undoubtedly enhance the reputation of the organization. The CER model can result in various advantages, such as strong brand equity, competitive advantage, reduced cost, delighted customers, motivated employees, and a balanced ecology.