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Section A: Evaluation of John Ross College Corporate Social Investing (CSI) response using Ten Steps of Weeden
Step 1 Replace the traditional notions of corporate philanthropy with a broader concept called corporate social investing
The term philanthropy is defined as an altruistic concern for human welfare and advancement, usually manifested by donations of money, property, or work to needy persons, by endowment of institutions of learning and hospitals, and by generosity to other socially useful purposes. Philanthropy has been and it is still used by organisations/corporations to help communities.
However, Weeden argues that if corporations are to become stronger allies of non-profit organizations, businesses must go beyond altruism when they look for ways to help nonprofits organizations (Weeden, C. 1998: 27).
He highlights the need to replace the traditional notions of corporate philanthropy with a broader concept called corporate social investing.
Real corporate social responsibility is not about philanthropy. It is much broader and much more demanding of management. According to Corporate Social Investment handbook (200) in Dickinson, corporate social responsibility should shift to more narrowly defined corporate social investment in which corporate giving makes business sense with returns in the form of image, employee moral and social stability. (Dickinson: 3)
Weeden claims that corporate payments to non-profit organizations should be declared common business expenses: marketing, advertising, research etc.
Prof Du Toit maintains that Business should realise that by investing in society they are not engaging in welfare but in actual investment. (Du Toit 2010: 12)
John Ross College has the following community involvement; Supporting cancer relay every year, Helping Amangwe HIV/AIDS Village with toiletry boxes and clothes, supporting several local orphanages with clothes and canned food and donation to SPCA every year. These donations and activities are philanthropic and John Ross College has not embraced the concept of corporate social investing yet although these donations earn the School a good reputation in the community.
Step 2 Identify a significant business reason for every corporate social investment and obtain as much business value from social investments as is allowable and practical
Social investments need to have a notable link to what the business is all about. CSR should not be done because it is merely the right thing to do. It should be done because it is being business-like to do it.
While society benefits from an organization's social investing, the organization is looking for a return. However, not all investments need to improve the bottom line; Reputation building and brand loyalty constitute long term benefits.
Weeden points out that corporate social investing, as the term implies, starts with the premise that the investor/corporation is looking for a return. He argues that corporate profits make corporate social investing possible and in turn, social investing uses charity to create conditions that are conducive to making a profit (Weeden, C. 1998: 39). Weeden maintains that social investing disciplines a company's charity (philanthropy) so that it is focused on the same general field of interest that the corporation has marked as its own primary business territory.
John Ross College as an organization has a number of charitable interventions that provide positive results for communities and the environment.some. The school collects money and other useful items and donates them to non-profit organizations in the community. However, there is no clear significant business reason for these John Ross College donations to the community.
In a School setting, Projects like appointing student teachers that the school can support financially while they teach and study at the same time can benefit both the school and the student teachers from the community. Offering extra classes for mathematics can benefit the school because it can improve the school pass rate and also help learners to pass and if this can be extended to learners from disadvantages schools who would like to attend it can earn the school much respect within the community and many new learners to register.
Step 3 Limit corporate social investments to non-profit organizations and exclusively public institutions.
John Ross College donate to non-profit organizations. However, non-profit organizations like Amangwe HIV/AIDS village and SPCA are well established and have a lot of support from other corporations/organisations. Therefore, John Ross College should revisit its selection criteria so as to apply its corporate social investing where it is needed the most in the community.
Step 4 Make an open statement that endorses corporate social investing or supports a broader concept that allows for social investing to be developed
Statements about corporations' social responsibility provide validation that corporations have taken responsible approaches.
According to Weeden, it may take a little time, maybe even a lot of time, for businesses to develop a full-blown social investment strategy, but letting management and employees know that they have a ticket to make the effort is the least a company can do.( Weeden, C.1998: 57)
At John Ross College everybody (management, staff, and learners) knows that the school has charity practice. There is charity collection every Thursday in school.
Step 5 Send a clear message to employees and other stakeholders that the CEO endorses corporate social investing
According to Weeden, social investing does not have a chance unless a company's chief executive gives it the nod. (Weeden, C.1998: 65). The Principal of John Ross College genuinely cares about the problems of the community and believes that John Ross College has a role to play in addressing those problems. She is indeed the most involved person in charity collection and allocation to the non-profit organizations.
Step 6 Produce a written corporate social involvement report that includes a review of social investments at least once a year
Producing a review of social investments at least once a year can give credibility to a company. Reporting allows companies to implement procedures that are manageable and logical. Furthermore, by reporting, companies demonstrate their creative and effective use of social investments. They move the business ahead while addressing social needs.
Professor Du Toit argues that the review of social investments should be evaluated for quite often companies are involved in corporate social responsibility without doing the necessary research beforehand which might lead to investment in society where it is not needed most or most efficiently. (Prof Du Toit: 13)
A further point is that the internal communication plan can help in providing feedback to staff and management on the corporate social investing policy and strategy, projects selected, project achievements and volunteer opportunities at existing corporate social investing projects. In a School setting like John Ross College in our case, this can be done through school newsletter, staff notice boards in public space areas, intranet and staff Meetings.
In addition, the external communication plan can create public awareness for the school's corporate social investing programme and the school role in community upliftment through school website, school newsletter, public relations programme including press releases and publicity.
At John Ross College there is no reporting of corporate social investments. There is indeed need for the development and implementation of the external and internal communication plan regarding social responsibility.
Step 7 Commit now or by specified date at least 2.5 percent (3.5 percent for manufacturing corporations that donate product) of an average of a company's last three years of pre-tax profits for corporate social investing
At John Ross College there is no formula to calculate corporate social investing expenditure. There is no budget for corporate social investing at all and the school support to no-profit organizations depend on what is collected from staff and learners. Although the students pay the school fees of R600 every month, the school does not use any percentage of this income for its support to non-profit organizations.
Step 8 Postpone some or all social investing if projected business conditions warrant such action
This step is the "emergency brake" for corporate social investing. Some or all corporate social investing may be postponed if conditions warrant it. If the emergency brake is applied, corporations can decide to increase future payments to make up for reductions. Another option is reinstating the previous level of giving.
Step 9 Lock in influential line and staff leaders as co-owners of the corporate social investing program
The Principal of the school should assemble the school corporate social investment committee. The Principal of the school should personally ask influential staff/teachers from across the school to take part. These influential staff/teachers should make a committee and organise meetings throughout the year to develop monitor assess and review the school social investment plan.
On the one hand, the corporate social investing committee should ensure that a co-ordinated, coherent and focused social investment strategy is realized. The needs of projects that the school can support should be identified and communicated to the rest of the school to ensure that the whole school is aware of the opportunities available for corporate social investment interventions.
The corporate social investing committee responsibilities should include determining the corporate social investing policy and strategy, determining the corporate social investing budget and allocation, selecting projects for investment, controlling the corporate social investing expenditure, monitoring the effectiveness of funded projects and reporting to the school and co-ordinating the implementation of an effective corporate social investing communication programme.
On the other hand the school management team responsibilities should include final approval of the corporate social investing policy and final approval of the corporate social investing budget.
Employees should be encouraged to get involved in projects that the school corporate social investing programme supports. This support can include volunteer time, financial contributions and donations in kind.
Social responsibility is for the school and local communities. It is therefore essential that both the school employees and local communities own the process and its outcomes. Without this ownership, commitment will wane and the school will struggle to implement its social responsibility strategies.
Employees should also be given the opportunity to nominate their own projects for consideration for funding and nominated projects should be screened according to the criteria of selection.
Step 10 Assign day-to-day management responsibility for corporate social investing to a position that is no more than one executive away from the CEO or COO
The corporate social investing requires competent day to day management. The manager handles administration once the plan is in place.
There should be a corporate social investing programme co-ordinator who reports on all corporate social investing activities on a regular basis.
John Ross College Corporate Social Investment practices should definitely:
Be closer aligned with core business
Put formula-based CSI budgets in line with Step
Come up with new and refined CSI strategies with defined benefits for the business
Have staff to manage formalised CSI programmes;
Form long-term working partnerships with Non-Profit Organisation
Put social investment, rather than grant making to the fore, with emphasis on development returns
Measure CSI results against output-based objectives and CSI indicators
Externally verify CSI results
Increase communication about CSI and formal reporting
Why it is important for organizations to be involved in supporting HIV/AIDS programmes in organizations and communities from a CSI angle
According to Bezuidenhout et al (2003) in Dickinson Corporate social responsibility refers to all of an organization's impacts on society and the need to deal responsibly with the impacts on each group of stakeholders.(Dickinson: 2)
Social responsibility activities can be internal or external to the business. Activities that benefit employees is internal social responsibility while aspects such as education, health etc for the community is external social responsibility.
Corporate social responsibility means that businesses should play an active role in supporting the community in which they operate.
Corporate social investment is part of corporate responsibility and is the investment part of a social responsibility programme.
Help to promote a positive image of the business in the community and among employees, customers and others
Study in the United States found that consumers who become aware of a company's negative practices: (Business for Social Responsibility), 91% would consider doing business with another company, 85% would transmit the information to family and friends, 83% would refuse to invest in the company, 80% would refuse to work for the company and 76% would boycott the company's products. (Strategies for an Expanded and Comprehensive Response to a National HIV/AIDS Epidemic: 5-7)
Companies that have a good reputation often derive economic benefits through customer loyalty to their products/services, greater employee satisfaction, a greater involvement with communities and better access to concerned leaders. (Strategies for an Expanded and Comprehensive Response to a National HIV/AIDS Epidemic: 5-7)
It will help maintain and gain customers
The success of any business depends upon the economic status of the consumers. If consumers cannot afford the product, business will not make profit. So, it is essential that people in community are healthy and wealthy.
Corporate social investment for the betterment of health, economic status, environment and other factors for the enhancement of the quality of life of the community would ensure that their profit margin continues.
According to Prof Du Toit (2010: 2), consumers are becoming increasingly more aware of the effect of companies on nature and society and if companies are acting irresponsible in respect of nature or society, consumers do not hesitate to not support them.
HIV/AIDS negatively affects workforce, market and, ultimately ability to earn a profit. Prof Du Toit (2010: 3) asserts that in the worst affected countries, one in four adults are now affected. He maintains that more than 80% of people dying of HIV/AIDS are in their 20s. And with a disproportionate number professionals and skilled workers, the disease is hollowing out economies and leaving entire communities composed only of the very young and very old.
Increase employee productivity
The number of people being affected by HIV/AIDS is increasing daily. This will reduce the labour force in due course. This will result in a drop in skilled people in the business. A drop in the work force will have negative effects on the economy e.g. Low productivity. HIV/AIDS can contribute towards high absenteeism as well
Volkswagen do Brazil has a comprehensive has a comprehensive programme for prevention, training and treatment for workers that has seen a 90% reduction in hospitalization and a huge positive impact on morale and productivity. (Prof Du Toit 2010: 4)
In 2003, a study on six companies in South Africa and Botswana has identified that costs associated with HIV/AIDS in the work force (increased medical costs, decreased productivity, etc) was as much as 5.9% of the companies' labor costs. However, the study demonstrated that all six companies would have earned positive returns on their investments and reduced this costs associated with HIV/AIDS in the work force by as much as 40.4% if they had provided free antiretroviral drugs to employees living with HIV/AIDS.
Furthermore, the study has reported that the returns, in terms of cost savings through preventing HIV/AIDS, are as high as 3.5 to 7.5 times the cost of intervention. (The Business Response to HIV/AIDS 2000:18)
Bloom, D. et al.2006: 11 are certainly correct in saying that HIV/AIDS affects corporations by increasing costs and reducing productivity.
Their argument is that rising costs result from Greater insurance costs (e.g. life insurance premiums in Zambia quadrupled in two years), higher health care costs, increased absenteeism due to illness or caring for infected family member(s), higher recruitment and training costs for new employees and Greater funeral costs, whether due to absenteeism or actual funeral costs.
Bloom, D. et al. maintain that declining productivity results from increased absenteeism, high staff turnover resulting in a loss of knowledge, intellectual capital and skills and poor morale due to loss of loved ones and/or fear of discrimination.( (Bloom, D. Et al. 2006:7)
It can be concluded that all these effects as stated by Bloom, D. et al. lead to decreased individual and household purchasing power (lower income), resulting in consumers buying fewer goods and services, saving less money and paying fewer taxes. In addition, these effects lead to fewer work force, production of fewer goods and services, reduced market size leading to more competition, fewer businesses surviving and lower profits for those that do survive. ((Bloom, D. Et al. 2006:7)
According to Rosen, S. et al, for most companies, HIV/AIDS can raise the cost of labor by 1-2% in companies. Rosen, S. et al conducted a study in the non-agriculture companies in South Africa, Uganda, and Zambia. This study has revealed that, in their last two years of service, employees who died of HIV/AIDS were on leave or absent from work between 18 to 50 days more than other employees. (Rosen, S. et al. 2006:8)
Increase the effectiveness to attract and retain employees
In business, reputation can have both economic and social returns. Many businesses are involved in HIV/AIDS work because they want to protect or develop their corporate reputation internally and externally.
Internally, a healthy, skilled and satisfied workforce is a major asset for a company. The employee's perception of the company is important for job recruitment and retention. (Strategies for an Expanded and Comprehensive Response to a National HIV/AIDS Epidemic: 5-7)
Investors prefer to invest in socially responsible organizations.
Firstly, business is arguably the most powerful institution of our society and the major force affecting world conditions, and secondarily, individual business corporations will survive only if they address individual and societal needs and become more effective in their processes.
Prof Du Toit (2010: 2) identifies four major stakeholder groups: shareholders, employees, customers and the general public.
If a company does not respond to its stakeholders' concerns, it can lose customers, valuable staff, investors and access to capital assets and market share.
The ILO estimates that as many as 36.5 million people who are engaged in productive activity are living with HIV. Therefore, the ILO maintains that HIV/AIDS must be recognized as a workplace issue and be treated like any other serious illness affecting employees.
The ILO argues that this is necessary because on one hand, HIV/AIDS affects the workforce and on the other hand because the workplace, being part of the wider community, has a role to play in the struggle to prevent the spread and effects of the epidemic. The ILO asserts that the workplace can be a central point for prevention and care within its existing human resource development and training programmes, health and safety structures and it is also the place where standards are set for working conditions, labour relations and the protection of workers' rights.( ILO AIDS Interim Report May 2006: 8)