The role of corporate social responsibility (CSR) in companies’ strategic decision making will increase in the coming years. This was one of the main conclusions reached during the panel discussion Global Corporate Social Responsibility in the Midst of Crisis and Uncertainty that took place in Prague in August 2014. The panel was part of the yearly Global Executive Forum organized by the University of Pittsburgh’s Joseph M. Katz Graduate School of Business Executive MBA (EMBA) Worldwide program in Prague.
The Katz panel was attended by Hannu Kasi, Country Manager for the Czech Republic and Cluster Leader for Slovakia, Hungary and Ukraine with the technology and automation group ABB; by Martin Novák, chief financial officer with the Czech power group ČEZ; and by Cristina Muntean, strategic communications advisor with Media Education CEE. The panel was moderated by Audrey J. Murrell, Associate Dean and Professor of Business Administration with the University of Pittsburgh’s Katz School of Business.
Ivana Goossen, director for Katz’s EMBA Worldwide program in Europe, said CSR, despite its utility in assessing global business issues, remains a nascent field of study. The panel sought to change that by addressing a variety of topics.
“The role of CSR in periods of uncertainly, high risk and global crisis has only recently been considered. CSR can enhance effective risk and crisis management as well as provide a way for private industry to collaborate with policymakers and civil society to have a positive impact for their organization and around the world. This is the reason behind our debate,” Goossen said.
Economic crisis: an excuse for going rogue?
“One of the things that don’t let me sleep at night is the need to evolve in terms of how we measure, track and communicate what different organizations and industries are doing in the area of CSR,” said Audrey Murrell. “This becomes important because in times of crisis or high uncertainty we have some companies pulling back on their commitment to social responsibility as a measure to reduce perceived risk, save costs, or address other competitive pressures.”
“One of our key messages in CSR is to do to the other people what you’d like them to do to you. Just behave normally. A crisis isn’t an excuse for behaving immorally,” said Hannu Kasi. “What we need to do in a crisis is to recognize that we are dealing with a crisis, to tell people that we are seeing it and handling it, and to behave in business as we would behave in our personal lives — morally.”
“We operate several coal mines, power plants and numerous other entities where we need to pay close attention to CSR. We are aware that in our industry one can cause a lot of damage by doing things incorrectly. That’s why we allocate special attention to all our activities in the environmental and social field,” said Martin Novák. “It is my belief that we didn’t actually go through a real crisis since 2008. We are just about getting there together with the entire energy industry in Europe. We can see power prices declining and we can foresee some challenges ahead even though we are one of the most profitable utilities in Europe.”
Panelists agreed that CSR can often be perceived as one more marketing buzzword; however, when done properly, CSR can bring numerous advantages in terms of talent attraction and company employee engagement.
Credibility and transparency are essential in crisis
“I believe that our main job as CEOs during crisis situations is to give people hope. This means that you need to carefully balance the level of transparency of your communications on the one hand, and on the other hand the facts and information that you must keep confidential for the sake of the company interests,” said Hannu Kasi. “To be able to give people hope during a crisis is an essential ability that helps people go through pretty much everything the company is facing. However, that cannot be done by falsifying the facts.”
Kasi continued, saying that, “It’s always up to the top manager to jump in and lead the way. If he delegates communication, he delegates 50 percent of his management tasks. If the leader doesn’t step in and address issues openly, allowing people to ask questions, and also sometimes saying I don’t know, he is not credible. A leader’s credibility contributes a lot to people remaining engaged in tough times.”
Another interesting issue of CSR that is quite uplifting for people during economic crisis is to become aware that, despite facing a downturn, they still have things to give. “In my experience this can be an extremely powerful motivator that energizes people and helps them to go through tough times,” said Cristina Muntean. She also noted that a good CSR report always includes human stories for the media. “A CSR report needs to include facts and figures for sure. However, in order to catch a reporter’s attention you need to be able to tell a good story about how your company made a difference in somebody’s life,” she said.
Kasi agreed, adding that a good CSR report can also help in attracting new talent to the company.
“Financial reports are extremely regulated. This is why we can put some of our most interesting stories only in the CSR report. I hope I won’t ever catch the day when a CSR report would be as regulated as a financial one,” he joked. “Good people will always find a place to work. That’s why you need to make sure that you tell them exactly how you are different from the competition and attract only the people with whom you can identify with in terms of their values matching the company’s."
Kasi mentioned the recent floods in Trutnov, North Bohemia, when ABB released its employees to go aid with flood relief. “It is in these moments that we create real human values,” he said.
“The research is clear that there is a clear connection, especially in terms of the role of leadership, in setting the organization’s expectation toward CSR and the positive response in terms of employee engagement, employee recruitment , and also organizational reputation when meaningful CSR policies, programs and actions are put into place,” Audrey Murrell said.
Europe is catching up with the US in CSR
Murrell said that she sees the evolution of Europe’s regulatory standards around sustainability as one aspect of social responsibility that has evolved much faster in Europe than in the U.S.
“However, consensus in some industries over issues of compliance, disclosure, and reporting as a voluntary standard appears to be moving faster within the U.S,” Murrell said.
“CSR is becoming definitely more important than it was five years ago, at least in Europe,” Novák said, adding that “it is developing really fast and catching up with the U.S., driven by the fact that many companies went through difficult times and now they need to communicate positive things and motivate their employees by doing good things for the society. This trend will continue.”
Muntean agreed and noted that the immediate reaction when the economic crisis started in 2008 was to cut off anything that was only nice to have. “However, under the pressure of the new economic reality, more and more companies become aware that crisis, including crisis communications, can hit them from many sides. It means we will certainly see an effort to build more goodwill with the public, also as a matter of crisis prevention and mitigation in the future,” she said.
CSR starts with little things
ABB Kasi mentioned that CSR isn’t always about handling a big crisis, such as a factory explosion.
“In fact, it lies in much more simple things. In our company we have everyone sign an ethical code that we take very seriously. At the beginning people were smiling but then they saw that we are actually enforcing the code into practice. We are really strict on any racist comment, bullying, sexual harassment or any other issue – we deal with it right away and stop it. It’s like with children – you can’t wait to address behavior when you have a junkie teenager at home; you must address it sooner, when the problem first occurs, so it won’t happen again,” he said.
“The issue of ethics and CSR across the supply chain is one facing most organizations for the next decade — particularly global organizations. Ensuring the quality, safety, and logistics of goods and raw materials across the supply chain is not a small task for most companies. Getting to know vendors and suppliers, understanding different regulatory standards both locally and globally, as well as responding to risk in unstable parts of the world, are just a few examples of issues that will need to be addressed by most organizations of today and tomorrow,” Murrell said.
“CSR is a matter of leadership and strategic communications,” Muntean said. “With an increase of self-awareness with Czech and global leaders and a higher understanding that we need to secure sustainable growth — not just growth for the sake of double-digit growth, but for long-term sustainable development — there is also a positive shift in the perception of the role of CSR with Czech companies. I am expecting this role to grow in the near future.”
Global experience in Prague
The Joseph M. Katz Graduate School of Business with the University of Pittsburgh is one of the oldest and most prestigious universities in the United States. With an annual enrollment of over 35,000 students, the University is a key center of scientific research, offering more than 400 different study programs across 16 schools of study. The graduates and professors of the University of Pittsburgh include not only Pulitzer Prize and Nobel Prize laureates but also the first scientists to synthesize insulin and to develop a vaccine for polio.
The Joseph M. Katz Graduate School of Business is one of the most important schools of the University of Pittsburgh. It is led by world-renowned, broadly-cited professors. Its representation in Prague provides programs of management education for the whole CEE region. Its Executive MBA Worldwide program, the highest rated program in the Czech Republic, aims to prepare experienced managers for the role of global leaders. It has been continually recognized as one of the top 100 programs of its kind globally. It also has the accreditation provided by the AACSB International, which is internationally recognized as the gold standard in the certification of business schools.