My first lesson in Business school, many years ago, was that, every activity undertaken by a business either create value or destroy value, that was so profound to me.
Of course, all businesses would want to those things that create value for the enterprise. So in the light of the above maxim, should SMEs undertake CSR programme? Would such programme have a positive impact on the bottom-line of the company?
First and foremost, let’s agree a working definition of Corporate Social Responsibility, at least for the purpose of this short article. I would define CSR as the voluntary contribution of resources, human and or material, by a company, for the development of the society in which she operates. It is sometimes referred to as social investment by some companies. Some CSR programmes are mandated by some governments around the world, including here in Nigeria. For example, oil and gas companies are required to pay 3% of their annual budget to the Niger Delta Development Commission as their contribution to the development of the Niger Delta region. For the purpose of this paper, we are only focusing on the voluntary CSR programmes.
There are mixed results emanating from research on the benefit of CSR projects on company financial performance. However, what is clear is that CSR can only deliver significant benefits to the business if done correctly.
SMEs are limited in resources, and looking to maximise gains from such limited resource base. It is therefore crucial that they should be very creative in the delivery of its CSR programme to make it count.
Guidelines for effective CSR programme
I would share a few guidelines that can help SMEs design and deliver an effective CSR programme.
Alignment of CSR goals with company core company objectives. I have seen companies in the medical sector delivering CSR programmes in the area of agriculture. Such interventions does not easily connect the company’s effort to its core stakeholders in the medical field. Such programmes can only deliver minimal benefits to the company. I have also seen good examples, where companies in the IT sector deliver interventions that are IT related. The recent announcement of Google to provide free Wi-Fi in some towns in Nigeria and Africa is a well calculated move. Which browser did you think people would use to access the internet in these locations? Of course, it would be Google, and advertisement revenue accruing from increased usage of Google browser can more than pay for any expense incurred in providing the free, and this beside the good reputation it would earn as a result of this intervention.
Delivering outcomes that matter to the society. CSR programme can easily become an exercise in corporate ego massage. Here, company executes simply choose to do what they fancy, and count that as CSR programme. It is also very easy for companies to sit in their office to decide what is the priority of the people and the solutions that are appropriate.
However, an effective programme must genuinely seek to understand key needs of the targeted societies and how best to contribute towards meeting those needs. This must be done through respectful engagements and collaborations with relevant stakeholders. Anything less is sub-optimal. This might be time consuming, but at the end, it is always worth the time. Such careful planning and execution can lead to the delivery of outcomes that are worthy of the amount spend and appreciated by all.
Communications: For a CSR programme to deliver benefits to the community, it must be communicated professionally and aggressively. Communications is one of the tools that allows you to extract maximum benefits from CSR programme implementation as a company. Some companies tend to be shy about their CSR programme, but if people don’t know the contributions you have made, you may not be able to change their perceptions towards you positively.
Adequate communications cost money and this must be provided for when budgeting for your CSR programme.
The benefits of CSR programmes
When done correctly, CSR programme implementation can deliver real tangible benefits to a company particularly SMEs. There are many benefits, but I would highlight a few important ones.
Credibility: SMEs struggles to gain credibility, especially in the early days. This is more common in a country with weak formal institutions regulating business practices. The reason is simple, government stamp of approval is taken with a ‘pinch of salt’ by members of the public who have little trust in the government itself. A very powerful way for SMEs to gain credibility is to design and deliver an appropriate CSR programme targeted at the right stakeholders. CSR programme delivery allow people from the society to experience the company, giving them a good enough opportunity to form a right impression of the business.
Reputation mileage and stakeholder support: The most direct benefit of a good CSR programme is a favourable perception by key stakeholders. If done correctly with lots of participation by relevant parties, a company is likely to see increased goodwill and support from members of society. Such support can lead to positive reputation mileage, which can be leveraged in several ways by the company.
Access to resources or markets: Increase credibility, reputation and support of stakeholders can help a company expand its market size. It is assumed that better perceptions of the company by consumers would lead to increase patronage of the company products or services. It might even enhance the company’s ability to access difficult to reach market or resources, particularly in a place with limited security.
The combination of these benefits would certainly have a positive impact on the company’s bottom-line over time. I strongly encourage CSR contributions should be tracked by companies to enable them gauge the value added by the scheme, and to change course where necessary.
Such measurement can be done annually as part of the annual monitoring and evaluation programme implemented to check if CSR programme delivers its intended benefit to the targeted stakeholders.
It is not out of place to seek help of consultants in designing an effective CSR programme if there is limited capacity in-house.
About the author:
Emmanuel David Ekpenyong is is a PhD researcher at the Nijmegen School of Management, Radbound University ( in The Netherlands). He holds an EMBA from HEC Paris. Emmanuel’s research interest focuses on strategies adopted by SMEs to exploit and or ‘navigate’ institutional voids in emerging markets. He is also the founder of Bizintelng, a firm providing advisory services to SMEs in Nigeria.
