As a company, you likely want to play a positive role in society. In large part, that’s likely going to be through your corporate vision and goals. You want to serve your customers well—and you want to treat your employees fairly.
But increasingly, companies are recognizing that corporate responsibility goes beyond your employees, customers, or clients to encompass society as a whole.
What is corporate responsibility?
Corporate responsibility means that your company should be accountable to four main stakeholder groups: customers, employees, shareholders, and communities.
It’s distinct from corporate social responsibility (which is part of corporate responsibility).
As well as encompassing corporate social responsibility, corporate responsibility can encompass areas like legal and financial compliance, business ethics, brand management, public and community affairs, investor relations, and environmentally-friendly business practices.
Why is corporate responsibility so important?
Corporate responsibility is vital for a number of reasons. Not only is it the right thing to do, it also ensures that:
- Your company acts in accordance with the law—meaning you’re much less likely to face problems like lawsuits or fines. A lack of corporate responsibility has historically led to disasters like the Enron accounting scandal in 2001.
- Your company is ethically responsible—which helps avoid issues like bad PR or high turnover.
- Your company is accountable to stakeholders—who have money invested in your company. This helps your company remain strong and competitive over the long term.
- Your employees are happy and feel well-treated at work. This reduces turnover and absenteeism, fosters a positive work environment, and helps increase employees’ productivity.
- You’ll have good relationships with your suppliers, because you treat them fairly and with respect.
Corporate social responsibility, in particular, is important because it means that:
- Your business has a better public image, as well as increased brand awareness and recognition. For instance, if employees from your small business volunteer with a local charity, that’s likely to be reported positively in local newspapers and social media groups.
- Your business will potentially save money. Many environmentally-friendly measures, like using less packaging, are not only popular with customers and good for PR—they also reduce your costs and help your bottom line.
- You’ll likely have more repeat customers and greater loyalty from customers. If people know that you stand up for issues they care about, they’re much more likely to feel loyal to your brand—meaning they’ll keep buying from you. Plus, they’ll tell friends and family about your products.
- You can reach new customers more easily. An incredible 87 percent of people will purchase a product because a company advocated for an issue that they care about.
Examples of corporate responsibility
Corporate responsibility can be seen in every area of your business. Here are a few examples of corporate responsibility in action:
Truly caring about your company’s employees
As a responsible employer, you want your employees to be happy and productive. You care about them as people—not just as workers.
This means making sure that you put people first. For instance, if someone is unwell, they should be able to take time off without worrying about being berated for it.
Treating your employees well includes things that benefit your company as well as them, such as:
- Having a clear onboarding and training process. This helps employees settle in and feel like part of the team quickly—and it helps the company as it means employees will be ready to contribute to their full potential.
- Investigating complaints promptly and responding appropriately. This means employees are treated fairly, encourages others to report issues, and helps your company uncover systemic problems.
- Issuing employees with a clear employee handbook that lets them know company policies and procedures. This helps employees know what to expect and what to do in different situations, and it helps your company as it means that everyone is working to the same expectations.
Of course, putting all of these (and more) in place can feel daunting if you’re running a small business. Take a look at how a PEO can benefit your business if you want greater peace of mind plus access to high-quality benefits plans for your employees.
Philanthropy (supporting charities)
Could your company donate equipment, time, or money to charitable causes? This may not cost you much—but it could be hugely valuable to the charity.
Don’t rule out philanthropy because your business is small. Look for a similarly small charity that might benefit greatly from even an extra hundred dollars.
Letting your employees take (paid) time out from work to volunteer can help them feel more positive about their working life. It also lets employees develop new skills and network with people outside your company.
Environmentally friendly initiatives
Of course, you will want your product (or service) itself to be created with environmental principles in mind: this might mean changing materials, reducing packaging, or switching suppliers.
It’s also important to consider how environmentally friendly your workplace is. Many improvements here will also be positive for other areas of corporate responsibility. For instance, eco-friendly initiatives will often be of benefit to your employees:
- Allowing employees to work from home (at least some of the time) means reduced pollution through commuting. It also helps employees who’d benefit from greater flexibility – leading to a positive improvement in their working life.
- Reducing the amount of paper used in your office could lead to systems being improved so that more communication is taking place electronically. Employees may well find this saves them time and hassle: let’s face it, no one likes dealing with a printer meltdown. Depending on the industry you are working in there are numerous solutions nowadays. This way Paperless Pipeline is designed to help real estate agents and brokers manage the complex processes of real estate transactions
- In the long-term, designing your office buildings based on environmental principles can also lead to better workspaces for your employees. For instance, a design with more green spaces and more natural light is likely to boost your employees’ mood.
How to ensure you follow good principles of corporate responsibility
As an employer or part of the management team, how can you ensure that your company follows good principles of corporate responsibility?
Two basics to keep in mind are that:
- Your company should behave in an honest and fair way. If you’re tempted to hide something or fudge the truth, then that’s not being responsible. Of course, this is particularly important in areas like finances—but it’s also true in other aspects of your organization, like being honest with customers about delivery times.
- Your company should look for win-win solutions. For instance, as mentioned above, you might find that reducing your packaging pleases your customers and also reduces production costs. Having a good benefits plan in place is good for your employees and also helps you attract and retain the best talent.
Spend some time identifying areas of corporate responsibility where your company could offer something better for either customers, employees, stakeholders, or your community. Your company is likely to benefit too, as a result.