Struggling Companies Need to Adjust Philanthropy
Even in bad times, companies struggle with efforts to be socially responsible. “But tough economic conditions underscore a blunt reality: A company’s foremost responsibility is to do well,” say former GE CEO Jack Welch and his wife, Suzy, in a BusinessWeek column. Winning companies strengthen the economy, thereby enabling social responsibility to happen — and not the other way around, they say:
So, right now — as always — companies should be putting profitability first. It’s the necessity that makes every other necessity possible.
But the Welches want to make clear that they are not suggesting abandoning philanthropy until times are more profitable. They are saying that corporate social responsibility needs to adapt to the circumstances at hand and leaders need to “pin down, for themselves and their employees, CSR’s place among the company’s priorities.” So how should companies view corporate responsibility now? The contribution of cash and goods has to decrease:
In troubled times, cash flow is critical and delivering it often means survival. Moreover, when you’re letting people go with one hand, doling out checks to “worthy causes” with the other is hard to rationalize. The decision for managers, then, is how to distribute a smaller pot. You can sprinkle the money evenly, giving a little money to a lot of causes, or you can prune your list and give somewhat more to fewer organizations.
That’s why the bar for strategic corporate responsibility is much higher now. And, no, the era of “socially responsible” products is not over, they say. It means that there are now intense cost pressures on the companies selling them. As the Welches say:
Even in these uncertain times, CSR belongs in every company. But every company must face reality. You have to make money first to give it away.
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