CSR, Company Purpose and Trust

NOV-DEC 2017|BY DR. PAVLOS A. VLACHOS, ASSOCIATE PROFESSOR OF MARKETING, ACADEMIC DIRECTOR OF THE ALBA MBA, ALBA GRADUATE BUSINESS SCHOOL AT THE AMERICAN COLLEGE OF GREECE
According to Gallup Analytics, two out of three U.S. employees are not engaged at work. An engaged employee is someone who is involved in, enthusiastic about, and committed to her work and workplace. At the same time, according to the most recent PwC CEO Survey, a central concern for CEOs is the lack of consumer—and employee—trust in business.

To deal with the increasing stakeholder trust deficit and the interrelated employee engagement problem, CEOs report that they are committed to bringing back purpose in company practice by actively addressing their societal impact through Corporate Social Responsibility (CSR). Indeed, two out of three CEOs view CSR as being core to what organizations do—a key success factor for the next five years—and eight out of ten agree that business success should be defined by more than financial profit (PwC, 2016).

Bringing back purpose in company practice—through appropriately motivated CSR—seems to be the right strategy. Research shows that purpose (and potentially CSR as a practice) stimulates oxytocin production in the brain, which in turn stimulates trust, producing more oxytocin and finally happiness (Zak, 2017; see also Kosfeld et al., 2005). For example, compared with people at low-trust companies, people at high-trust companies report 74% less stress, 106% more energy at work, 50% greater productivity, 76% more engagement, and 40% less burnout (Zak, 2017). It should be noted here that there is work showing that CSR directly affects stakeholder trust (Vlachos et al., 2010).

However, although managers seem to be committed to investing in CSR they are uncertain as to how to engage with it. Next, I offer five research-backed guidelines that can help companies signal trustworthiness through CSR.

1. Focus on doing. CSR is an oxymoron, with stakeholders feeling comfortable when companies promote their products but uncomfortable when companies promote CSR. To effectively deal with this oxymoron, companies should first do and then tell—but not sell—what they did in terms of CSR activity.

2. Design CSR events that score low in distinctiveness (commit resources across several societal and environmental domains, not just those that match your business core/industry); and high in consistency (commit resources across time). This type of configuration is more likely to be perceived as being genuinely motivated.

3. Strive for innovative (engaged) giving. Generous giving works, but only innovative, engaged giving is likely to generate perceptions of genuine motives underlying CSR activity.

4. Make it about experiences. CSR reporting focuses on “dry” reporting such as statistics, amounts spent, total hours volunteered, etc. Enrich those, by telling stories of how people have been touched by the company’s CSR activity. This will satisfy individuals’ ancestral tendency that prioritizes self- over other-interest.

5. Go for employee-led CSR. Start by engaging female middle managers of higher organizational tenure and of higher moral identity.

Further reading:

  1. 1. Aguinis, H., & Glavas, A. (in press). On Corporate Social Responsibility, Sensemaking, and the Search for Meaningfulness Through Work. Journal of Management.
  2. 2. Kosfeld, M., Heinrichs, M., Zak, P. J., Fischbacher, U., & Fehr, E. (2005). Oxytocin Increases Trust in Humans. Nature, 435(7042), 673-676.
  3. 3. Griskevicius, V., Cantú, S. M., & Vugt, M. V. (2012). The evolutionary bases for sustainable behavior: Implications for marketing, policy, and social entrepreneurship. Journal of Public Policy & Marketing, 31(1), 115-128.
  4. 4. Vlachos, P. A., Theotokis, A., & Panagopoulos, N. G. (2010). Sales force reactions to corporate social responsibility: Attributions, outcomes, and the mediating role of organizational trust. Industrial Marketing Management, 39(7), 1207-1218.
  5. 5. Zak, P. J. (2017). The Neuroscience of Trust. Harvard Business Review, 95(1), 84-90.

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