Paper Presentation

SPECS Framework

Gaurav Madaan Nirav Soni Narsee Monjee Institute of Management Studies, Hyderabad

January 2013

Abstract Corporate Social Responsibility (CSR) is the way by which corporations tend to manage their business processes to produce a long lasting impression on the mind of its stakeholders. The importance of CSR for any corporations gained momentum in the late 1960s and early 1970s when these corporations started using the term Stakeholder. These are the people on whom all the activities performed by the corporations have an impact. These corporations started looking for Value Proposition beyond the limits of the shareholders and found out that the modern day business demands a corporation to design its policies around its stakeholders who have a higher impact of the working of the corporation. As time went on, the importance of CSR saw a widespread increase when the corporations started making note of the fact that in order to sustain itself in the society, it has to give back something to the society itself as well as to the people who are working inside the corporation so as to maintain a high level of commitment from them. This research paper aims at finding the various reasons which made a corporation realise the need to conduct CSR activities, the various factors that can have an effect on the conduction of those activities, the benefits which a corporation gains from doing such an activity and finally a look at a comprehensive solution to achieve sustainability through the use of the SPECS model which takes into account the reason of less engagement of employees in Corporate Social Responsibility activities. Moreover it highlights the flawed structural thinking behind CSR initiatives

SPECS Framework

Gaurav Madaan Nirav Soni Narsee Monjee Institute of Management Studies, Hyderabad 1. Introduction In the fast track world of hyper-competition where all the corporations were only focussed on its rise, CSR came up as an activity through which they tried to ensure not only their rise but it was also a commitment wherein they tried to improve the quality of life of its employees which ensured continuous engagement to contribute to the economic development of their corporation as well as improving the quality of life of the society that has a major impact on the various activities conducted by a corporation. But in the early 1970s when CSR was basically a new terminology, Milton Friedman said that most of the corporations conduct their business in accordance with their shareholders that will be able to make as much money as possible. The corporation will also abide by the basic rules of the society where it is based both in terms of law as well as ethical customs to achieve profits. But then this perspective of Milton Freidman on CSR is viewed as very controversial in terms of todays modern business. Some people agree with the philosophy while others dont. To say whether Friedman was right or wrong actually depends on the different situations in which a corporation is running its business. Profit is the main focus of every corporation in the world as they would not be in business without it, but the main thing in terms of CSR is how the corporation uses the profits to conduct activities which will be beneficial to all of its stakeholders which can eventually lead to sustainability of the corporation. But being an economist, Friedmans Theory does support the above fact in a way that the more the corporation achieves profits, the more the rise in the economy and eventually an increase in the benefits which is provided to the society. On the other hand, Friedman also believed that CSR is an activity which cannot be forced on the corporations. But to say that social responsibility is only done on the willingness of the corporation is wrong since the corporation still use many different techniques to undertake CSR activities while maintaining their target or vision which they have set. A prime example of this would be when a corporation makes a product as per the needs of the consumers and ensures that the product will be safer to use. It is in lines that it can be said that the definitions of CSR changes from corporation to corporation as well as countries to countries. Whereas CSR can be viewed as an activity of capacity building for sustainable livelihoods for all the stakeholders in one country, it can be viewed as a business which thinks of giving something back to its society in the other. Traditionally in countries like USA, CSR is viewed as a Philanthropic Model where in after removing the taxes from the profits, the corporation donates a certain share of it to conduct CSR activities. The model followed in Europe is one where in the corporation operates its business in a socially responsible way wherein they combine the social and environmental

issues in their business operations and also get regular insides from its stakeholders. The also put in a huge part of money in communities that gives the core of the business a solid sustainability. Through this CSR becomes an important part of the way through which the corporation tries and achieves its profits. Through which we can say that with any process that a corporation follows, there is none which can fit the bill of all the countries. CSR is conducted in different ways with different priorities in different countries and so as such it still depends on the corporation to conduct its CSR activities in the way it desires. It was widely assumed that the early CSR models were based on philanthropy where in as mentioned above, the corporation was only focusing of giving some part of their profit to conduct social activities for the society it was based in. In due course of time, the corporations initiated a process where in they would make their products in a socially responsible way that would be accepted to the society. This process still had the flaw where in the corporations still didnt take any inputs from the society to build their products. But now in todays hyper competition market, it has become essential for the corporates to align CSR with their vision and mission so that every person who is a part of the corporation, be it the stake holder or the employees has an idea about the CSR activities which the organization aims to conduct. They can gradually aligned their efforts towards achieving the goals. But still there are many alternative perspective to Milton Friedmans theory. Through the SPECS model, we would try and figure out an alternative perspective to Friedmans theory will can lead to the sustainability of the corporation. The crux of this theory still lies with the fact that to achieve sustainability, no matter what the corporations do, it still comes down majorly to the following two factors: 1) The activities which the corporation carries out should ensure maximum and cent percent engagement of its employees so that they work passionately to achieve the goals of the corporation. 2) The corporation should also make sure that it should align its vision and mission with its CSR activities so that all of its stakeholders can contribute to that program.
2. The SPECS Model:

Spectacles (SPECS) are used to get a clear vision of people with poor eyesight. In a similar fashion the SPECS model brings out the reason of less engagement of employees in Corporate Social Responsibility activities. Moreover it highlights the flawed structural

thinking behind CSR initiatives. The model consists of five circles pivoted in a stacked Venn

Social Landscape

T O B E T R E N D

Corporations

Employees

P R E S E N T T R E N D

People

Sustainability

manner. Each circle represents a distinctive dimension of CSR. It also enables us to connect and to know that the sustainability of a corporation is achieved through CSR if it takes into account all the things that are mentioned in the SPECS model. And if a corporation doesnt fit into the SPECS model, it doesnt mean that its sustainability is not there or whether their CSR activity is not up to the mark, but its just that these corporates dont engage in making relationships with their stakeholders at an optimum level. We have further highlighted these facts with the help of the examples mentioned below. Social Landscape: - The outermost circle stands for Social landscape, with the amendment of Companies Act 2011 it is mandatory for companies to invest some part of their profit into CSR. So they have to think about giving back to the society anyhow. So for any CSR activity companies think of society first as to how it should do something for the society. What means should it opt for either open an NGO or join hands with some NGO? Corporations: - The second thing which companies wish to do is maximize the shareholder value. In other words increase the benefit for the corporation, could be either monetary or non-monetary. As Friedman has rightly said that corporation is a business entity and businesses always work for profits. Employees: - The third circle represents employees. Any CSR initiative though planned by the corporation or the board has to be driven by the employees, so they form an important part of the whole CSR process. For any CSR initiative to be successful, high employee engagement is required. People: - The fourth circle represents the people (customers), who should be involved in the activity to benefit them and also at the same time increasing the shareholder value.

Sustainability: - The innermost circle represents sustainability which should be thought about in order to align the task with the vision of the corporation. Also there should be a window open for Disruptive innovation. This way corporations will be able to win latitude as well as longitudinally.

Corporations Present Approach: - As of today the corporation or the shareholders have an outside in approach wherein they think about the outermost circle which is the biggest and the most visible i.e. society. They think of ways to get the benefit for the corporation or themselves and not actually do the CSR. Then they look at the employees, the middle circle. They think of driving the whole process through this medium and that too without giving any incentives. If they have actually thought up to this extent then they think of people or their customers, which very less corporations have done till date. After surpassing all these levels comes the sustainability which the corporates are hardly concerned about. They are just using NGOs and other CSR activities to gain the employer branding or a customer emotional attachment to society as a touch point. This is the reality, a sad irrationality. Corporations Ideal Approach: - The Corporations ideal approach should be inside out wherein they start thinking from the inner circle towards the outer circle. If they follow this model, profitability can also be achieved with sustainability.

Examples Supporting the Model: 1. Microsoft Corporate Citizenship: - One of the most successful corporation for CSR activities around the globe is Microsoft. They have achieved it through their corporate citizenship program wherein they have actually followed an inside out approach. Now lets analyse the program on the basis of the model. a) People/Customers: - Microsoft has simply given back to the people by providing them with the new technologies at a cheaper cost to enable them to excel in their respective fields. We can clearly see that the customers are incentivised from this model. They have a vision of making people achieve their full potential with the help of technology. They are also launching Microsoft Youth Spark which aims at connecting hundreds of millions of young people to opportunities for education, employment and entrepreneurship. b) Employees: - The engagement was encouraged by a role called volunteer manager wherein the employees get an opportunity to manage the activities, build networks and a sense of satisfaction. More than 10,000 employees signed up for the role. They also made the most significant investment in overall employee compensation in corporation history. c) Corporations/Shareholders: - They have been rated the best corporation for their CSR activities. It has led to employer branding, corporations branding and a lot more. They have been able to touch the customer touch points by connecting to them emotionally.

d) Social Landscape: - They have been able to identify the need of the society and also successfully give it back. They have di=one it in almost all sectors like education, employment, health care (particularly AIDS) so on and so forth. e) Sustainability: - If we see the final outcome of all the efforts made by the corporation, it has been able to successfully implement and sustain the activities with a healthy employee engagement, keeping stakeholders happy at the same time.

2. BMW Intercultural Dialogue: - This is one of the many activities that BMW as a corporation do for CSR. In this area they support initiatives and individuals working for a better understanding between different social, cultural and religious backgrounds. They also work to build safe roads around the country through social initiatives. In Munich they improved 39 million school bus routes. a) People/Customers: - With the help of social organisations BMW has been consistently improving roads condition. This way the group is doing a lot for the people or their customers. b) Employees: - Through intercultural dialogue the corporation is giving exposure to its employees to work with different groups which is helping its employees to better themselves. It also help to lessen multicultural institutes in the country. c) Corporations/Shareholders: - The shareholders have been getting benefit through these activities, the group has social affinity. It has helped them to gain a number 4 place in the world rankings for best CSR activities. They have a strong brand equity, goo employer branding and a strong position in the industry. d) Social Landscape: - Again there area of building roads shows that the corporation has been able to identify the right need of the society and they have catered it well. They have used the social landscape in the right way. e) Sustainability: - All these activities, wherein they have included all aspects of the SPECS model proves its sustainability. Moreover they have a strong brand name and they have achieved a healthy market share.

3. Reliance Industries Limited (RIL): On the biggest example of the success of CSR in India has to be the activities which are carried out at Reliance Industries Limited, one of the biggest conglomerates of the world. RIL has always been ranked in the top few positions of corporates in Asia where CSR has been a success. If we look at RIL from the perspective of the SPECS Model, we can cite the examples of the following things. a) People: RIL has always been unequivocally committed to all of its customers. It has trained all of its employees in a way where they know that the customers is of foremost importance. It has a very professional set of Sales and Marketing Executives along with a highly trained technical service team that offers solutions and performance upgrades by suggesting and working alongside its customers production units.

b) Employees: RIL conducts a lot of activities to improve the engagement of its employees. One of the prime examples will be the state of the art Occupational Health Centres (OHC) at all of its manufacturing divisions and major offices through which it focuses on achieving excellence in occupational and personal health of its employees across locations. It conducts Health Promotional activities on a regularly basis for not only its employees but also for their families so that lifestyle diseases like Heart Problems, Hypertensions etc. are avoided. Another thing where in Reliance engages its employees is that it never frowns upon the mistakes made by its employees. The Craft Centre at Jamnagar is of the biggest in the world where in around 150000 workmen are trained cumulatively. It was a mistake converted into learning that created this centre. c) Corporation and Social Landscape: RIL, being on the largest corporation in India conducts a lot of activities on the CSR front. It ensures that all its subsidiaries are involved in CSR activities. Further it ensures that all the places where its corporations are located, people around it get highly benefited from it. This is ensured by conducting regular health check-up camps, creating employment for them as well spreading knowledge about other social activities. Mrs Nita Ambani is one of the frontrunners from RIL leading them in the CSR activities. She is the wife of Mr Mukesh Ambani who is the CEO of RIL and also the head of Dhirubhai Ambani Foundation. She took part in the joint partnership of RIL and UNAIDS which aims towards halting and reversing the HIV epidemic in India. She also spearheads Project Drishti, a unique initiative by RIL and NAB (National Association for the Blind), which has a vision to give sight to blind people from the underprivileged segment at no cost. Under the project, she stated a Hindi fortnightly newspaper in Braille. d) Sustainability: These all activities had seen Reliance maintain a good relationship with all of its stakeholders as well as sustaining itself as of the front running corporates in India. 4. ITC Limited (ITC): ITC is another conglomerate of India which is very well known for its CSR activities. One of the CSR initiatives of ITC has also become the subject matter of a case study at Harvard Business School. The activity that were are talking about is e-Choupal an initiative of ITC which enables the Indian Agriculture sector to significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. The initiatives can be further studied through the SPECS model: a) People: ITC had an adopted a model through which it makes its customer realise that a part of their investment in ITC products goes to a social initiative. For every 4 Classmate notebooks, a product of ITC, that are sold the corporation contributes 1 rupee towards the education of poor children. ITC though Classmate has also launched a programme called Classmate Ideas for India Challenge that is a part of the corporations centenary initiative. It is a nationwide programme which invites ideas from youth who have the potential to transform India. The initiative plans to reach out to around 25 Lakhs students across 30 cities, 500 schools and 200 colleges across India.

b) Employees: ITC improves the employee engagement of its employees but its core values that supports a process that aligns its employees with a shared vision and purpose in the belief that every individual brings a different perspective and capability to the team. The implementation of this policy is ensured by that fact that Business Plans are shared with employees at all units through a series of meeting and intranet portals. And this policy is regularly monitored by the unit head. This ensures high engagement of the employees throughout. c) Corporation and Society Landscape: As already mentioned, ITC is one of the leading corporates in India that engages in CSR activities. An example of this would be ITC Green Centre, a 170000 sq. feet building in Gurgaon, which is the worlds largest 0% water discharge, non-commercial Green building, and compared to similar buildings, has a 30% smaller carbon footprint. Coming back to the biggest CSR initiative of ITC i.e. e-Choupal, it is a portal through which it creatively leverages IT to set up a meta-market in favour of Indias small and poor farmers, who would otherwise continue to operate in a un evolved market. Through this, ITC not only trains local farmers into the usage of computers but also ensures that it is giving back to the society in a huge way. The indicator of eChoupal is that it has reached across 10 states, more that 40lakhs farmers in about 40000 villages. d) Sustainability: Thus like RIL, ITC also has ensured sustainability for a long time through its CSR activities which comes right in accordance with the specs model that we had proposed earlier. 3. Conclusion
So we have seen that by using SPECS model corporations can check the feasibility of their existing idea and identify the loop holes in the implementation to make it more sustainable and get employee engagement. Also they can think on these lines when they are planning to select asocial medium or a plan for their CSR activities. There is always a space for disruptive innovation as we have seen through the example of e-Choupal, simple yet so impactful and successful. The best is the combination of inclined innovation (sustainability) and disruptive innovation. So by using the model corporations will be able to see the things more clearly and hence improve their sustainability.

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