With plummeting oil prices, the mining industry facing sustained
low prices, high costs and economic turmoil and the world economy looking
scary, many firms are taking close looks at budgets and cutting far and wide.
When budgets get tight CSR is often at the top of the list
for cuts.
Sometimes this makes
strategic business sense. Sometimes
not.
When CSR is at the top of the cutting list it may be because
that makes the most sense, given all of the other constraints and issues the
company is facing.
After all, the business does need to survive financially if
it is to be able to produce value for society.
A bankrupt or shuttered business produces few benefits for society or
shareholders.
Sometimes CSR is at the top of the budget cut list for the
wrong reasons. This isn’t good for
shareholders or society.
I’ve found two main reasons that CSR can be wrongly placed
at the top of the budget crunch cut list.
After this I’ll list twelve strategies for addressing CSR when budgets
are getting cut. They are mostly about
CSR and value so are good practice at any time..
1.
Company CSR leaders were not effective at
internal communications and helping internal stakeholders understand the
strategic and shareholder value of CSR (
see Seven proven ways to engage
internal CSR stakeholders http://linkd.in/1z7vQN7
for more discussion on how to do this).
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Internal communications is critical |
2.
Not enough was done to capture all available
shareholder value from CSR projects, investments and activities (For more
discussion on this see
Smarter CSR Budgets: Connection budget to value http://linkd.in/1wa8W8L
and
Eight self-interested steps to a CSR Plan http://linkd.in/12viCNs)
Of course, there are exceptions and sometimes it is just a
bad decision to cut CSR first.
Or,
sometimes budget crunch times help CSR to be smarter, more streamlined and more
efficient at delivering social and shareholder value.
Over a lot of years, a lot of projects and working with a
lot of smart and experienced people I’ve come up with twelve strategies for CSR
in budget crunch times.
There are no magic bullets in this list. Budget crunch time is not easy, for anyone. Hopefully you might find one or two things in
this list that can be helpful.
And, remember, many of them are good to do on an ongoing
basis – you don’t have to wait for budget crunch time.
Here’s the list.
1. Know the link to shareholder value
This shouldn't wait for budget crunch time. The link between a CSR project/budget item
and shareholder value (and societal value) is absolutely key. Always.
Why else would you want to do a CSR project if it didn’t
create value? It doesn’t make sense.
Of course, you may not have a directly quantifiable
relationship between a specific project and value. It isn’t likely you can say something like ‘if
you invest in this CSR initiative share price is projected to go up by X% next
quarter’.
But, there should at least be logical and anecdotal
connections to shareholder value. Find
it. Build on it and know how and when to
communicate it.
2. Check how your budget lines are positioned
Sometimes CSR budgets and departments end up with projects
that are much more properly in another area of operations.
A colleague was recently telling me about a supply chain
project she was working on. She
discovered that basic things to bring workplace health and safety in-line with
regulations was budgeted and done through a Foundation the firm had set up.
Meeting workplace health and safety was booked as CSR in the
budget.
Nobody can question the importance of this work but it
certainly shouldn’t be seen as part of a CSR budget.
3. Don't leave money on the table
Look for ways to enhance shareholder value
Shareholder value doesn't happen by accident – at least not
very often.
With CSR projects initial
work on aligning interests can go a long way towards optimizing shareholder and
stakeholder value.
And to keeping CSR budgets from the top of the cut list
But, there is often a lot more that can be done to increase
shareholder and/or societal value.
Partnering and communications are two prime areas to look. Strategic initiatives in these areas can
often create additional value at little or no cost.
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Too often CSR projects leave all kinds of shareholder value on the table. This makes CSR more vulnerable when Budget Crunch time happens and cuts are being made |
4. Internal communications
There will be some in your company who think that $0.00 CSR
budget is probably about right.
Sometimes you can get through to them and sometimes you can’t. But, you can limit their influence on your
work and your budget.
Be sure that you are communicating effectively about the
value the company is getting from your CSR projects. Give
your internal allies information and motivation to advocate for CSR.
Helping people to understand the value that CSR work brings
to the company and to their work can help to bring them onside and neutralize
those who might like to totally eliminate CSR.
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You can’t get everyone onside but effective internal communications
can mitigate their impact on your budget and work |
5. Be proactive
Budget crunches seldom sneak up unannounced. You can see and feel them coming.
Know where you can cut and get by with less budget (and if
you don’t need to drop it for a budget cut, then look to repurpose that
spending to something with more value).
Always be looking for how your CSR budget can create more
value, for shareholders and society.
CSR projects and activities shouldn’t be designed to go on
forever. Periodically, and at least once
a year, take a look at your CSR budget and make sure that you are getting the
best value from all of your spending.
Identify projects and line items that can be phased out with
the budget repurposed to other CSR areas or offered up for cutting in budget
crunch times.
Saying everything is critical and can’t be cut likely won’t
work! If it does you either don't have a real budget crunch or there are some questionable decisions being made.
6. Be open with stakeholders and partners
If your company, your industry or the whole economy is in
trouble your stakeholders and partners likely know about it. If not, they should.
If you are hitting budget crunch time be open with them. Bring them inside your thinking. Tap into their thinking, networks and
resources.
You’d be surprised at how often out of the box solutions can
emerge that can end up actually being better than the starting point.
In one case budget cuts were about to eliminate two company
positions that were supporting a community/NGO/company partnership.
The CSR leader looked at this with project partners and then went back to the company with a proposal to move the positions to the NGO where
they would be cost-shared for two years and then the NGO would take them over
totally.
This eliminated operating budget for the company, reduced
overall cost and helped to grow the capacity of the NGO. Much better than just cutting the two
positions
7. Can partnering help reduce your direct cost
Always worth taking a look at this. Sometimes natural partnerships were somehow
overlooked, or failed to start at the beginning of a project. (See
13
Common mistakes that prevent and destroy multi-sector CSR partnerships http://linkd.in/1y830NH for more on this)
Or perhaps the motivation on the part of the company or
partner wasn’t all it could have been at the time.
When budget crunch happens motivations can change and/or new
synergies can be found. Definitely
worthwhile to take a close look before axing people, projects and programs.
8. Be ready to fight. But, stay rational.
Sometimes you just have to fight! Seriously.
There will be times when you are asked/ordered to make cuts to staff, programs
and activities that just don’t make sense.
Cutting them will clearly destroy shareholder and societal
value all out of proportion to the budget that is saved. It may cause long term damage to the company
and brand.
When this happens be ready to fight for your budget. But, fight rationally. Fight with logical and rational arguments,
tied to value and the interests of the company.
Use your communication skills to help key decision makers
and influencers understand how the company’s interests are harmed if they go
ahead with the cut.
But, before doing any of this, make sure that you are not
simply looking at things too subjectively.
Make sure that an objective, rational person can understand your
argument and justification.
Don’t let emotions drive your decisions and actions. It’s OK to be emotional about your projects
and work, but don’t lead with that.
Let your emotions drive you to develop and deliver strong
rational arguments in a way that can be heard and accepted.
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Sometimes you have to step up and battle hard for budget that you know is critical for the
company's success. Base your battle on rational arguments and value centered reasoning,
not on emotions |
9. But, be part of the team. Or leave.
When budgets get slashed it can get emotional. You will lose battles that you fervently
believe you should win. That’s life.
You will lose staff, budget and programs while others that
you think less deserving remain. This
can be incredibly frustrating.
Especially when you feel like you may have let down fellow workers,
communities or project partners.
At the end of the day the company needs to survive if it is
to be able to continue producing value for shareholders and stakeholders. Decisions have to be made and some of them
will be tough to accept.
Sometimes you will find, even after trying to create some emotional
distance you can’t support the decision or let go of it.
If you can’t agree to disagree maybe you owe it to yourself
and your company to resign. Take time,
make sure it is the right decision for you.
Hopefully it doesn’t come to that and you will continue on but sometimes
it does.
If you can’t be a fully engaged and contributing part of the
go-forward team do yourself, your stakeholders and the company a favour and
find another place where you can be fully engaged and contributing.
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Good teams are diverse. They don't have to all think alike, look alike or even like the same things. Diversity brings strength. But, you need to be able to fully engage with the team. |
10. Find the why.
Every CSR program started because it filled a need and
provided value to society and shareholders (or at least that should be why it
started!).
If you don’t know why a particular program started (and you
should know that) then find out. It may
be that the underlying why that prompted the creation of the program is gone
and the program is no longer crucial.
Or, it may be that it is there stronger than ever and what seemed like an
inconsequential program is really quite strategically important.
At any rate, find out the why of your CSR programs,
especially before cutting them. Finding the
why also helps you to focus your value creation thinking, arguments and
strategies.
11. Can you second staff to your partners?
Is it possible to move staff to partner organizations? Maybe this is good long term strategy
anyway.
Sometimes budget cuts will have
the capital to cover the costs of transferring a positon but not to retain a
position. This won’t work for all situations,
but there are some where it might work nicely.
12. Look for the value connection again
This really is worth doing twice. Identify all the ways in which each CSR
project or budget line is creating value for society and for shareholders.
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Look hard to make the connections to value. They aren’t always obvious. Missing them can be costly |
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Budget crunch time is difficult and nothing on this or any
list is going to erase that difficulty.
What is important to remember is that achieving success is
like solving a puzzle. It takes many
players, many pieces of the puzzle and different perspectives.
Nobody has all the answers.
None of us is as smart as all of us.