The Other Side of Corporate Social Responsibility

Over the last 20 years, many organizations have adopted Corporate Social Responsibility (CSR) initiatives aimed at allocating some corporate profits and resources to address social, environmental, or other issues important to the community. In this recent TEDx talk entitled “The Social Responsibility of Business,” Alex Edmans, Professor of Finance at Oxford University in Great Britain, looks at another aspect of social responsibility: focusing on the virtuous link between employee satisfaction and shareholder returns.

Watching Edmans’ presentation on his research, which has found a clear link between employee satisfaction and share-price performance, I couldn’t help but think that CSR should start first at home with the organization’s policies related to customer, employee, vendor and shareholder engagement. Many companies invest in the traditional definition of CSR without making the fundamental investments in employees and customer satisfaction that will drive better financial performance and create conditions even more propitious for contributing to communities. Employees who are highly engaged, well compensated and skilled are not only less likely to be a burden on community social services than low-paid transient workers, they are much more likely to give back to their communities in terms of both money and volunteerism. If you watch Alex Edmans’ presentation, the first question you might ask is: Why aren’t more companies focused on engagement? If they do it right, they will actually make more money.