Corporate social responsibility (CSR) refers to all the initiatives businesses take on to make a positive impact on the world around them. Also referred to by the broader term, corporate responsibility (CR), these initiatives can include corporate philanthropy (awarding grants and donations to charities), employee volunteering, and corporate support or disavowal of social issues.
When small and medium businesses first look at that definition, the business benefits of corporate social responsibility may not be immediately apparent. As time goes on, however, it’s becoming more and more clear that corporate social responsibility not only has business benefits, it’s crucial to success.
CSR strategies can translate directly to increased employee engagement, talent acquisition and retention improvements, and even higher sales – all major benefits that can help SMBs grow. This is especially true as millennials, nearly 70% of whom are belief-driven buyers, become the economy’s primary movers. The importance of CSR is spreading throughout other generations as well – belief-driven buyers are the majority in every age category, not just millennials¹.
For more details take a look at these 10 workplace giving statistics that show CSR’s business benefits.
Where Small and Medium Businesses Fit into the CSR Landscape
CSR is usually thought of as something large enterprises do because it requires significant resources, including administration, funding, and time. But as consumers start voting with their wallets, choosing to support businesses with strong CSR programs, it’s becoming imperative for small and mid-sized businesses to get involved as well. In this article, we’ll explain why – and give you the main corporate social responsibility facts every SMB should know.
Corporate Social Responsibility Facts that Influence SMBs’ Business Success
1. SMBs Need CSR to Compete
Belief-driven buyers are just the tip of the iceberg when it comes to people’s new preference for socially and environmentally responsible companies. SMBs now need CSR to compete for both consumer sales as well as top talent.
Consumers: From 2014 to 2015 the percentage of consumers willing to pay more for sustainable goods rose from 55 percent to 66 percent. For millennials, it rose from 50 percent to 73 percent². In 2018, the percentage of millennials willing to pay more for products from brands with CSR claims was 80 percent, with consumers expected to spend $150 billion on sustainable goods by 2021³.
Employees: There are several studies about the impact of CSR on talent acquisition and retention. Their numbers vary, but every study agrees that CSR has a large impact on the talent you bring into your business and how long they stay. One study from Net Impact found that over half of workers want a job where they can make an impact. Almost three-quarters of students about to impact the workplace agreed, with most also saying they’d take a pay cut to secure a meaningful position4.
Large enterprises are already using CSR to recruit and retain top talent that keeps their businesses moving forward. They’re also leveraging CSR to influence consumer spending, growing their companies and their revenue. For SMBs to compete in any meaningful way and gain market share, they need CSR. Without it, SMBs simply aren’t on a level playing field.
2. Strategic CSR is Profitable
As mentioned CSR has been relegated to large companies because big brands have more money, bigger budgets, and human resources that can handle the costs of CSR, which can be significant. But CSR doesn’t have to be a cost center. Strategic philanthropy and CSR initiatives can be profitable.
SMBs can stand to reap massive benefits from corporate responsibility. According to ZenDesk’s Tiffany Apczynski, 90 percent of consumers are moving towards brands associated with good causes5.
This means that giving and being responsible can directly contribute to sales, which can increase your profits. It can also strengthen brand awareness since getting consumers to notice and stay with a responsible brand is easier, as 61 percent of consumers choosing to purchase from brands with a positive reputation6. In this sense, CSR can directly contribute to a small or mid-sized business’s bottom line.
That doesn’t mean that the costs associated with CSR (that have traditionally eaten into its influence on profits) have disappeared. They have, however, been minimalized. Corporate responsibility software is now leveraging automation to reduce administrative and time requirements, while adopting cost-effective models that maximize the impact SMBs can have, even without a big budget. By choosing the right software and leveraging CSR to meet business goals, SMBs can create CSR programs that are profitable.
3. CSR Improves Employee Engagement
Employee engagement is directly correlated to productivity, profits, and other business KPIs. Willis Towers Wattson reports that consistently engaged organizations have operating margins up to 3x higher than non-engaged ones7, while Gallup found that highly engaged employees contributed to 22 percent higher profits and 21 percent higher productivity than low engagement employees8.
Those gains are crucial not only for SMBs’ performance, but also for the US economy – over 98.2% of US businesses employ under 100 people9. SMBs power our nation, and CSR initiatives can help them improve their performance, creating cascading benefits for the rest of the country.
4. CSR Doesn’t Have to Be Difficult (Or Expensive)
People want organizations to be more responsible, both as employees and as consumers. Most leaders understand this. The snag is that many SMB managers and owners have been largely ignored in the market, at least up to now. CSR and corporate philanthropy companies simply haven’t created the targeted resources SMBs need to implement CSR without going through administrative hassle or allocating large percentages of their budgets.
Fortunately, the market is evolving. We’re seeing corporate philanthropy solutions specialized for SMBs as well as CSR software and strategy consultants who work with SMBs to develop custom programs that provide the resources SMBs need to achieve a positive ROI.
It may take some research to find the solution that works best for your company, but SMBs can find the solutions they need in today’s market. Look for custom solutions that are designed to be both affordable and effective and review each option through in-depth conversations with the vendor. The best strategic partners will act as consultants who help you design a program that fits into the resources and budget you have, along with providing advice on how to track your impact.
Start Your CSR Program Early
Big businesses already have CSR initiatives in place. They’re actively using those programs to outcompete SMBs. The earlier SMBs get into the game, the more likely they are to succeed.
Use the corporate social responsibility facts above to support the business case for your new CSR program, or to provide evidence for why you need to optimize the programs you already have in place. By creating highly engaging, highly impactful CSR initiatives, SMBs can gain a competitive advantage and accelerate their growth.