As per Williard (2012), corporate social responsibility (CSR) is similar to a stool with three legs where the legs symbolize the environmental, social, and financial aspects of a business. The principle of CSR along with its best practices helps businesses move towards a more sustainable business. Engagement and productivity are some of the many things that CSR helps to promote. According to Williard (2012), when talking about what drives the employeesapos engagement in the workplace, CSR appears as one of the multiple factors. Furthermore, more is the engagement of the employees in an organization, more they feel and believe that their company is responsible both environmentally and socially. Additionally, voluntarism helps increase productivity by improving the engagement of employees. When employees are engaged in the business environment, they are able to give their time, energy, and talent to perform and achieve their goals while also aligning with the goals of the organization. Through the practices of CSR, improvement, and development of leadership skills of the employees along with skills like enhanced loyalty and employee retention can be achieved, Not only this, it also helps in building trust and formulation of feelings of camaraderie in the employees. Reduction of absenteeism in the organization also contributes to increased productivity.
According to the University of Scranton (n.d.), the importance of CSR is increasing with time. A business that is socially responsible and sustainable requires proper implementation of strategies, with good operation and governance. CSR contributes in many ways towards the creation of a sustainable business such as it helps in building a reputation and positive press. An organization which is not able to take responsibility for the actions of the corporate can damage their company reputation. In addition, CSR relates to consumer appeal. For example, customers can develop a sense of association with the businesses in cases where the organization has partnered with charities that are of interest to the customers. It improves the motivation of the customers to develop a sense of loyalty and connect to the brand while also forming purchasing decisions that are in favor of the company. Furthermore, CSR is also related to the business in terms of attraction of new talent and retention of the employees as well. Williar (2012) has agreed with this and understands that hiring recruits is a difficult task for a company, and retention of the employees is equally challenging and corporate responsibility plays a crucial role in this. The satisfaction of employees has been linked with service outings provided by the company which also allows the employees to take time to avoid exhaustion and work towards improving other skills. Additionally, the productivity of the employees might be affected if the business fails to follow CSR and implement appropriate policies and procedures in accordance with the governance, social, and environmental aspects of the business. The practices of corporate responsibility allow businesses to improve their relations with the community and their clients. A business that is responsible increases its chances of working with important clients and also improves their relationships. Events such as services that are community-based allow the employees and members of the community to improve their interactions and allowing the business to have better association and recognition with future potential consumers. Things like customer appeal, increased connections, building reputation, and retention of talent not only contribute to the sustainability of the business but also helps towards improving the financial aspects of the company. The adoption of CSR practices by companies allows them to grow and sustain in the future. Although the goal of many companies is to grow financially, focusing on corporate responsibilities provides positive effects to the company despite the possible costs (The University of Scranton, n.d.).
According to Courtice (2014), leadership is one of the most important traits to be displayed in an organization. The leaders in a company are expected to make various decisions and solve different issues in the company. To be able to create a socially responsible and sustainable business, the organization needs to understand that collaboration is a key factor in bringing important changes such as development in terms of the environment, society, and economy in any organization. Collaborating with multiple organizations allows different ideas to proliferate. When proper time and understanding are given to available ideas, appropriate strategies can be made and structured which then can be implemented to achieve goals of sustainable development of the organization. MacDonald (n.d.) in an article mentioned the role that business leaders play towards sustainability in business. At first, sustainability only included the focus on the environment, but now it includes social equity as well as economy along with the environment. Corporate leaders also play a role in conducting the business in which they need to develop plans and execute them in a way that ensures social, economic, and environmental sustainability. They have to face the challenges and work to avoid any possibilities of the company losing community and their customer posts support.
According to Savitz (2013), the corporate leaders in any business should be able to impose their visions on the stakeholders of the company. The vision of the leaders needs to communicate clearly such that it inspires others in supporting it. Furthermore, the leaders must also understand the importance of employee engagement in the workplace which is becoming one of the top priorities of various organizations. It is necessary that they realize that employee engagement is crucial for increased productivity in the workplace and that it helps in achieving organizational goals and build a sustainable business. MacDonald (2013) mentioned that leaders have to face various barriers when creating or maintaining programs that promote sustainability in business. Differences in opinions of the companies about sustainability results in a lack of accuracy when creating business plans. In addition, leaders are required to create effective plans which they might find challenging because of the intangible nature of results along with the fact that such plans are delivered over a long period of time plus lack of deliverable which are tangible makes the evaluation of reports difficult. Sometimes there is not enough reliable data or it is outdated which equally creates difficulties in the process of creating sustainability reports.
Another important role of corporate leaders in the sustainable development of businesses is the management of resources used in the workplace. Moreover, the leaders are required to express their visions and ensure that ethical practices are being followed in the organization. Additionally, the business leaders have to work towards gaining the trust of the society for which they must act on prioritizing sustainability. The scenario of political leadership globally is not great and according to Savitz (2013), the private sectors are key in fulfilling the requirements of innovation and investment to move towards the goal of sustainability in the business setting. To be able to attract investors, the corporate leaders have to prepare themselves and formulate strategies that would allow them to express themselves in front of the potential leaders for which the leaders are required to create a connection with the use of stories and their main vision. The leaders play a key role in governing different policies in an organization and hence can create or modify existing programs and procedures which promote sustainability both effectively and efficiently (MacDonald, n.d.).
Stakeholder engagement is crucial to corporate social responsibility (CSR). According to Savitz (2013), in order to achieve the sustainability of the business, it is necessary to clear comprehension of the interdependent nature of the workplace in the company. It is important the company understands and promotes the interaction between the individuals. Stakeholder engagement should be an element of the management system of the organization, which operates in a systematic approach. Responsibilities in a company should be appropriately divided between the stakeholders of the company. The stakeholders are those members of a company that are either affected or they affect the decisions of a project due to which they have an influence on the decision-making. Stakeholders include employees, suppliers, shareholders, customers and communities and many companies now try to improve their relations with their stakeholders and increase their engagement so that economic, environmental, governance and social issues can be addressed to form a better decision in the company (Savitz, 2013).
Stakeholder engagement helps in building a business that is socially responsible and sustainable by increasing corporate value. Since the stakeholders have the potential to influence company posts' success, stakeholder engagement is performed to build and improve the relationships with the stakeholder. This allows the corporate to have a better understanding of stakeholderaposs perspectives on various issues and working towards formulating efficient corporate strategies that address those issues effectively. Furthermore, values that companies recognize include reducing or avoiding any potential business risks, enabling decision making which comprises of informed management and board, facilitating innovation through the incorporation of diverse perspectives, and working to expand and develop opportunities for business along with brand reputation and brand value. All of this helps to drive the sustainability of the company in the long term. Savitz (2013) has mentioned that freedom of a company to operate is greatly affected by the stakeholders because of which understanding their interests and recognizing their power is a smart choice for any business. In stakeholder engagement, it is necessary and important that the stakeholders are heard and that their opinions are noted because in most cases stakeholders bring fresh or new views to the table. Sustainability in businesses has various benefits such as employee engagement, talent recruitment and retention, improved company value and reputation, all of which can be achieved through CSR and stakeholder engagement.
Stakeholder engagement is good because it helps in increasing responsible and sustainable investing. The issues related to corporate social responsibility are being evaluated at an increased rate by potential investors to form decisions regarding investments, due to which addressing and understanding CSR concerns of stakeholders becomes important. Additionally, the importance of stakeholder engagement arises due to the increase in shareholder activism on social and environmental issues. This engagement of stakeholders required to address CSR issues aid the companies to discuss and address the concerns of stakeholders, and as a result of this, the organization would be able to avoid unnecessary costs while also improving the relationship between the stakeholders and the respective companies. PMI (n.d.) agreed to this and mentioned that stakeholder engagement allows a business to uncover any risks and then develop strategies that would help in reducing them. As the stakeholders are so important for the proper working of a business, it makes it a necessity for the organization to understand its stakeholders and know what things concern them and what things could hamper their business. In addition, Savitz (2013) stated that stakeholders can affect businesses like in cases where they have voting power. Effectiveness in stakeholder engagement can be ensured through a technique which identifies and prioritizes stakeholders, and is called stakeholder mapping plus developing effective communication and identifying their interests is crucial to increase the stakeholder engagement posts efficiency (Savitz, 2013).
Savitz (2013) has mentioned that the business plan of an organization should be aligned with the sustainability approach that the company is going to follow and they cannot operate separately at the same time. In a traditional business plan, different components of a business are discussed which talks about the financial aspects of the business, marketing strategies for the company products along with future predictions related to profits, and these topics vary depending on the need of the different businesses. A traditional business plan is designed in such a way that it clearly communicates to the investors about the nature of the business. The company posts vision along with the background of the company should be illustrated in such a way that it is comprehensible. Other components that a business plan consists of include analysis of the market, information on finances like accounts receivable and payable, financial projections, and break-even analysis. Furthermore, a business plan talks about the management structure and the plan of operation that the business would follow. The benefit of a traditional business plan is that it allows the owners to organize various goals of the company like managing current finances and the future ones as well, however, unexpected trends in the market impact the goals of the company (Savitz, 2013).
Apart from the traditional business plan, there is another plan known as sustainable business plan which an organization develops to be able to achieve goals of creating or attaining sustainability in regards with social, financial and environmental aspects. As per Constellation (n.d.), the development of a sustainable business plan has a number of steps. The first step is to understand sustainability which requires a business to learn different aspects of sustainability and how they are related to the social, environmental, and financial aspects of the business. Following this comes assessing any areas which can be improved and finding opportunities and then utilizing them. Finally, it comes to the creation of a vision that would differ according to the needs of businesses and then implementing changes to achieve goals of sustainability in the company with the use of effective communication, change in policies, reviewing performance, and getting feedback. The benefits of the sustainable development plan are that it helps in reducing energy use and increasing the efficiency of the business plus it also aids the health of the public through following health guidelines. Furthermore, a sustainable plan attracts more customers because customers believe in businesses which show responsibilities for their corporate actions (Constellation, n.d.).
Analyzing these things about both the traditional and sustainable plan, the differences which can be identified are that a traditional business plan is used to evaluate a business and how viable it is in the real world, whereas the sustainable development plan focuses on the development of achieving goals of sustainable advantage and mainly considers future planning. In addition, traditional business plans are used as a tool to represent a vision or an idea to the investors while the other one is used to convey the direction of the company to its stakeholders. Furthermore, a sustainable business plan is important to prioritize resources so that the revenue of the business grows and achieves an increase in return on investment, while the traditional plan is crucial if someone is looking for funding for their business. It should also be noted that companies that are startups are generally looking for funding to initiate their business, so in most of the case, it is likely that they go with the traditional business plan instead of a sustainable business plan.
Constellation. (n.d.). How to develop a small business sustainability plan. Retrieved from https//www.constellation.com/solutions/for-your-small-business/goals/developing-a-small-businesss-sustainability-plan.html
Courtice, P. (2014, December 3). Business leaders must prioritize sustainability to gain society's trust. The Guardian. Retrieved from https//theguardian.com/
MacDonald, L. (n.d.). The role of business leaders in sustainability. Retrieved from https//smallbusiness.chron.com/role-business-leaders-sustainability-22175.htmlPMI. (n.d.). 4 reasons why stakeholder management is important. Retrieved from https//pmi.hu/index.php/english-content/785-4-reasons-why-stakeholder-management-is-important
Savitz, A. W. (2013). The triple bottom line how today poses best-run companies is achieving economic, social, and environmental success And how you can too. Somerset John Wiley amp Sons, Incorporated.
The University of Scranton. (n.d.). Five ways corporate social responsibility promotes sustainable business. Retrieved from https//elearning.scranton.edu/resource/business-leadership/five-ways-corporate-social-responsibility-promotes-sustainable-businessWillard, B. (2012). The new sustainability advantage seven business case benefits of a triple bottom line. Gabriola Island, BC New Society Publishers.
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