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CSR for Smaller Businesses

David Connor | Monday 5th October 2009

In many developed countries approximately 99% of registered businesses are Small or Medium Enterprises (SMEs), a group where the term Corporate Social Responsibility alone creates barriers. Whilst every non-corporate company regardless of size probably has at least a couple of CSR related initiatives (whether they know it or not) or strong values percolating out of the owner / manager, most SMEs either ignore through poor understanding, or are completely unaware of the concept. So why don't smaller businesses engage more strategically? The first answer given is simple and always the same, 'what's in it for me?' will trip off the tongue of all but the most values driven entrepreneur. The other reasons usually given are that they don't have the time or budget.

Social enterprises are well catered for theses days as their side of the fence is maturing well with rapidly improving specialised support services. The corporate world has created a multi-billion dollar CSR bandwagon around reporting, standards, and marketing covered by growing specialist consultancy industry. The gap is in the middle and unfortunately very well populated but with precious little pro-active advice available in a language that appeals to its audience. The main reason for this gap has been higher level international focus on working with the corporates to deliver higer level impact against environmental and ethical issues. Why target an incredibly diverse mass audience requiring bespoke assistance when you can work more use a template approach with a smaller number of bigger clients?

You can't escape from having to understand the sheer diversity within SMEs before trying to offer a way to encourage, educate and support these organisations to play their part in the bigger picture for all the good reasons, including profit. In practicality you need to be able to adapt between the requirements of an individual entrepreneur and an organisation with approximately 250 employees, depending on your country's definition. No easy task, trust me I know.

I'm not going to light the fuse on what the agenda should be called as the debate still constantly rumbles on at corporate level, but Corporate Social Responsibility doesn't work and I've not been completely convinced by any of the replacements offered so far. What would your suggestion be?

CSR at this level shouldn't be ignored as there are numerous commercial, environmental and socially beneficial opportunities available now, today. Each maybe small in isolation but multiplied by such a large audience, could deliver truly impressive results. Another reason to sow seeds early in any organisation's development is that under the right circumstances, SMEs do grow into bigger corporations. Google, HP and many others started in garage like premises not too long ago. Values deliver better value when nurtured rather than grafted.

For me the future of CSR within the small and medium sized market is about focusing on what drives entrepreneurial spirit such as passion, flexibility, community, innovation and risk taking. Surely there is no better organisational type for inspiring a more sustainable future.

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Jernej Zavrl | Posted: 20 October 2009

A compilation of resources on "CSR for Smaller Businesses" is located at the following page at the NFRCSR (Non-Financial Reporting and CSR) Resource Centre: http://bit.ly/2dLFwh

John Kim | Posted: 9 October 2009

David - Great piece.

David Connor | Posted: 9 October 2009

Hi Ayken.

It's all about appropriate investment (cash or time) dependent on the stage of maturity of the SME. Another key consideration is that many smaller businesses / owner's personalities are almost inseparable and therefore any proposition has to appeal to both, i.e. on a business case and also the ego.

There is some great work being done by Chambers of Commerce, industry associations, etc. and increasing documentation - but like all other things hasn't been the top priority for a while. There is also a need for improving the skills and knowledge of those acting as CSR business advisors at SME level.

aykan gulten | Posted: 9 October 2009

Hi David, excellent piece. I agree with you the idea of spending cash makes small players afraid. From my experience SMEs approach to new things more positively if they know other companies in the industry are willing to do the same. One good solution could be approaching unions of employers or chambers of commerce and other industry associations.

David Connor | Posted: 9 October 2009

Hi Vikrant

I wouldn’t think about spending money on CSR specifically. It’s as much about understanding the opportunities and risks through a CSR lens and acting upon them with existing budgets. There maybe some direct benefits by investing appropriate resource on the professional development of employees to understand the CSR agenda, or particular topics within that are directly relevant to that SMEs commercial targets.

It should be about encouraging smaller business to take a wider view beyond their daily radar, which tends to be very narrow just to survive, but this also means they can miss short and longer term advantages.

I would suggest spending more time rather than cash. The trick is to find a guide to make best use of this time. There are many documents, websites, support agencies, private companies and even business peers that can help but some are better than others.

David

David Connor | Posted: 9 October 2009

Hi Kevin

Whereas it was only first level suppliers that were tasked with ticking the boxes, such committments are being forced contractually further along the chain. With pressure from Goverments & NGOs small businesses are being asked to ensure additional compliance. Whilst this can be seen as one way of improving engagement and impact it can also add a damaging administrative burden on already struggling smaller businesses.

The problem is scale. As you move down the chain the individual business size gets smaller but the number of businesses mutliplies rapidly. It is a logistical nightmare to effectively engage with so many smaller organisations. Apart from increased legislation, which is never received well, the only other option is voluntary education, i.e. selling the competitive advantage, which again has to be perceived as return on investment proposition for the business, and CSR doesn’t always offer the most tangible financial or social returns on investment.

David

David Connor | Posted: 9 October 2009

Hi Pete

I couldn’t agree more. There is a huge quick win opportunity to encourage those 50% of the workforce to align their own individual values with their workplace. How many people are eco-warriors or charity champions at home but feel they have to comply with an alien and contrived set of value statements or discouraged to display enthusiasm unless its directly linked to their role?

I try to engage with as many employees as possible whenever I work with a business to ensure ownership and engagement. It is this grassroots up approach that has been completely overlooked. Yes, you do need senior management buy-in but individuals can generate change by acting beyond their perceptions of authority - when motivated to do so.

David

Shahid Khan | Posted: 9 October 2009

Hi David Cannor How are You:::::::

Vikrant Labde | Posted: 9 October 2009

David, thanks for the great post but I still don't understand how SMEs get financial benefit from spending money on CSR?

Kevin Long | Posted: 9 October 2009

Really interesting David. Living in India I think I pass by a million small business owners just on my way to work every day. Big corporation like Tata or Nokia should better leverage their long tail suppliers/buyers not only for sales, but also for CSR. Ummm...seems to me that there is a huge double bottom line in there to be had. Do you know of any Fortune 500 doing this?