Feature Article - January/February 2015

The Future or a Flash in the Pan?

Examining Corporate Social Responsibility

By Brian Summerfield

A funny thing happened on the way to the economic recovery…

In 2008, systemic failure on Wall Street caused a handful of major companies to implode or be acquired at fire-sale prices, and a number of financial firms required unprecedented government bailout packages to avoid the same fate. However, around that time, those surviving businesses sent several of their top-performing executives, managers and salespeople on extravagant trips to far-flung places as rewards for their achievements—just as they always had.

The general public and the politicians who represented them were incensed that these "too big to fail" organizations were conducting business as usual after being bailed out to the tune of (at least) hundreds of billions of taxpayer dollars. In fact, a bill was introduced in the U.S. Senate in early 2009 to curtail these incentives—among other things—within companies that had received funds from the Troubled Asset Relief Program (TARP).

People in both those corporations and the incentives industry argued at the time that these rewards had often been planned out and executed well in advance of the financial meltdown, and the people who earned them didn't deserve to have them retroactively revoked. They also pointed out that they needed to continue to motivate staff when morale was at all-time lows.

Still, they also recognized that ordinary people—many of whom had just lost their jobs, or their houses, or most of the value of their investments, or all of those things—weren't exactly in the mood to hear reasonable explanations about why a managing director was justified in getting a $5,000 weeklong spa trip in the Virgin Islands after his company had just received half a trillion dollars from the U.S. government. They needed something that allowed high-performing employees to continue to receive these incentives and addressed the public's understandable resentment.

"It was called 'The AIG Effect,'" said Karen Kasik, marketing manager for Atlanta-based incentives provider USMotivation. "There was a big backlash. There was real pressure for companies to scale back from that. The thinking was, 'If we're going to reward people in this way, we're going to have to include something that gives back.'"

Enter corporate social responsibility, or CSR. This concept was relatively established in departments like HR or marketing and branding, but was generally new and unproven in rewards and recognition programs for employees. That didn't matter: Many companies that had received government bailouts—and many that hadn't—quickly began incorporating CSR into incentives initiatives in order to win the battle of public perception. And they've been doing it ever since, for pretty much the same reason.

"It's not always because it's just a nice thing to do," said Roy Saunderson, chief learning officer at Rideau's Recognition Management Institute. "Corporations are being held over the fire a little. They feel like the public is pushing them to be more ethical and environmentally responsible. So CSR has been very leader-driven up to this point. Employees aren't really driving it."

Kasik agreed. "It's really top-down," she said. "Executives are the ones championing this within their companies."

That said, there are a few signs that the CSR-incentives pairing is more than just a passing fancy that will go away once economic conditions considerably improve and companies feel safe handing out whatever rewards they deem necessary. Here are a few factors that all but guarantee CSR will have a place for a long time to come.