Committing to Corporate Citizenship

Investopedia defines corporate citizenship as "the social responsibility of businesses and the extent to which they meet legal, ethical, and economic responsibilities, as established by shareholders."  So how does citizenship impact profit, after all profit is the reason most businesses exist.  However, putting profit over people can eventually cause a company to loose some customers, which does impact the bottom line.

Most organizations understand meeting legal requirements and how the economy affects them, in order to stay on business but do they understand social responsibility?  For decades companies have been training employees and leadership in business ethics  and corporate values.  The clearest way to understand social responsibility is it is taking corporate ethics and values outside the company and into the community.  This can be done via charitable activities and contributions, which may be done corporately or by sponsoring the actions of specific employees.  

There are five stages to developing corporate citizenship: Elementary, Engaged, Innovative, Integrated, and Transforming (similar to the stages of team-building).  In between each the five stages, companies develop the four C's: Credibility, Capacity, Coherence, and Commitment. 

Entrepreneur says the initial cost of becoming socially responsible in stage one will negatively affect profits, which is why many companies move no further than elementary stage.  However their article uses the case that consistent  citizenship can build a good corporate reputation that may eventually lead to profits in a socially conscience environment.  To ensure that corporate citizenship happens within the company, it is important to include it in long-term strategy planning and goal setting.  However, be careful in how you use your citizenship actions and contributions in marketing on social media and corporate websites.  Aligning unwisely to the wrong types of non-profit organizations or causes can result in looking unpatriotic or overly political, which may result in possible boycotts and lost business.  

Want more information on how to create corporate social responsibility (CSR), watch the 1 hour video Corporate Citizen: Risk & Internal Controls by Strategic Business Leadership (SBL). 

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