The Role the CEO in Promoting Corporate Social Responsibility (CSR) programs in an Organization
The Chief Executive Officer plays a significant role in the actualization of the Corporate Social Responsibility in the respective organizational settings in which they are in charge. This is fundamentally driven by the fact that the CEO influences the direction to which the organization’s business goals, objectives, and perspectives are inclined. Research has established the CEO is the organization’s guiding instrument leading to the organization’s accomplishment of contemporary factors, which are needed to establish a desired position in the social arena among other key competitors. This is essentially determined on the respective industry potential with regard to contemporary economy indices. In a study focusing on the cement sector of Pakistan it was established that the existing corporate governance structure variables, for instance, the percentage block holdings of an individual, size of the board, and firm size impact positively on the performance indices (Wise & Ali, 2009). These factors are primarily the CEO’s efforts steering the organization’s resource utilization towards the attainment of an admirable image, thus transforming the organization into a global entity. The CEO wields significant powers in transforming these deliverables through incorporation of a competent corporate social responsibility program.
The Application of the CSR Strategies in Accordance to International Law Requirements
Relevance of CSR Strategies to International Law
CSR Strategies are essentially a social marketing tool, which pursue the implementation of a competent communications program. In most cases, it is the duty of the CEO to formulate a communications program that will match the desired branding objectives of the organization. Ordinarily, the marketing communications are subject to control of national laws, international law and voluntary codes like the one prescribed by the International Chamber of Commerce called the International Code of Advertising practice and the Organization for Economic Cooperation & Development established Guidelines for Multinational Enterprises (Cisco Systems, 2009). In essence, the CEO forms a key path through which these fundamentals can be adequately implemented into the company’s strategic development in terms of Corporate Social Responsibility. Furthermore, Wise and Ali (2009) observe that, “the firm’s performance is adversely affected if the CEO also acts as chairperson of the board of directors…” (p.7). This shows the relevance of the CEO in the attainment of CSR strategies.
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The interplay of the corporate social responsibility and international law cannot be overlooked in the current business and economic dispensation. As a matter of fact, there are tools which have been developed by standard setting organizations to identify business entities matching their CRS strategies with the international law requirements. In the case of CSR, the too is the ISO 26000, which stipulates standard criterion for the assessment of organizational performance in line with CSR goals and objectives. However, there still exists a significant gap in measuring the precise input of the CEO in matching these requirements considering the fact that he or she forms a central role in the decision framework and implementation of a working CSR program.
The relationship between the potential factors involved in the Chief Executive Officer (CEO) and Corporate Social Responsibility (CSR) programs
Relationship between a successful CSR program and the role of the CEO
The position of the CEO in the organizational power arrangement plays a significant role in the attainment of a working formula for the organization’s achievement of CSR objectives. In the company ‘Reed Elsevier’ the CEO comes second after the board in the hierarchical arrangement of the company. Reed Elsevier’s Corporate Responsibility structure is arranged in the following order: Board, CEO, CR Forum, Business Unit CEOs, Champion networks, and finally employees (Davis, 2009). Such a top down arrangement puts the CEO at a better position to determine the movement of desired deliverables of the CSR program. Hence, the CEO is more direct control of the program and can effectively steer its objectives as appropriate.
The CEO also has a direct link in the attainment of CSR initiatives by impacting upon the resultant economic, social, ethical and environmental variables affecting the organization directly. There are usually as a result of the impending stakeholder relationships affecting the CSR program and which the CEO is in direct control. The Scotia Bank CEO observes that “Corporate social responsibility is an opportunity for Scotiabank to strengthen these stakeholders’ relationships by paying closer attention to our social, economic, environmental and ethical responsibilities. CSR considerations inform our everyday decisions” (Searcy, 2009).
Relationship between a successful CSR program and a favorable brand image
Corporate branding plays a significant role in the attainment of a firm’s desired prime CSR objectives. Research has established regarding the role of an organization’s members in guide the corporate brand strategy. “The findings indicated that while organizational members rated quality products, customer service and corporate governance highly as key components of CSR activity, they were much more ambivalent about their companies commitment to broader actions which involve the ‘community’ and ‘society” (Vassileva, 2009). These elements essentially form the major determinants towards the achievement of a successful CSR program. This is primarily because the individual success elements of the CSR program are inherently connected to the perceived image by the stakeholders of the firm.
The requirements under international law look upon the existence of the required compliance parameters, which is portrayed by the perceived brand image of the firm. In essence, majority of insurers, investors and underwriters primarily focus on the existing CRS reports to collect pertinent information needed for assessing environmentally and socially responsible investment portfolios of the business entity and use these as a background for measuring the resultant risks due to noncompliance (Tate, Ellram, & Kirchhoff, 2009). This introduces some of the most critical variables that the CEO need to ensure that the company is fulfilling in line with its CSR program with due consideration of the environmental law boundaries stipulating social and environmental provisions that need to be met.
Role of Shareholders, Consumers, Suppliers, and General Public in terms of influencing the CSR strategies of a particular organization:
Shareholders form the backbone in the formulation of a firm’s strategic component by virtue of their position in the decision making cycle. Shareholders are fundamentally concerned with the company’s attainment of the desired business deliverables in terms of profits as opposed to CSR initiatives. This generates significant friction and problems for the CEO especially on account of meeting international law requirements that go with the CSR initiatives. “This perhaps getting closer to the contemporary understanding of CSR as being an obligation to the community and the environment and not merely to shareholders or wealth creation but also fulfilling the two basic obligations – economic and legal” (Min, 2010). The CEO therefore must make great strides to ensure that the stakeholder input into the business is duly taken care of with regard to profitable indices. Min (2010) further observes that, “By taking on social responsibilities, the firm may compromise their profitability and therefore short change shareholders” (p.38). Stakeholders therefore form one of the greatest tasks for the CEOs in attaining the desired company deliverables.
Consumers being the primary target of the company’s deliverable need to adopt positive brand recognition mentality of the product being marketed. Consumers also portray different tendencies on account of brand loyalty and respective service component depending on the type of product being marketed to them. Normally, social marketing strategies are pursued aim at sensitizing the consumer on the benefits of the product, which usually includes a component of corporate social responsibility. For instance, CRS initiatives demand that adequate certification and labeling requirements need to be met as determined by the jurisdiction of the international laws, which cut across various geographical boundaries on account of jurisdiction. The certification and labeling provide consumers with reliable information to make competent purchasing decisions (Hohnen, 2009). Supposing some of these parameters have not been met then this would have a potential negative impact on the attainment of CSR initiatives for that particular product. The CEOs therefore need to consult conclusively on the international law measures that need to be fulfilled especially for markets where consumers are keen on the attainment of certain issues.
Suppliers can significantly affect the company’s attainment of the desired product deliverables in as far as the CSR program is concerned. This especially with regard to their significant fulfillment of the desired brand identity. Ordinarily, the company designs its brand image with the consumer in mind and even the CRS program designed by the CEOs are fundamentally targeting the end consumer of the products and services. In addition, the attainment of CSR initiatives fundamentally depends upon the fulfillment of certain codes of conduct by the supplier. This is primarily because in most times, the suppliers are left out of the equation thus complicating the auditing exercises to assess the company’s CSR status quo. According to Hohnen (2009), “Codes of conduct are directive statements which provide guidance and prohibit certain kinds of conduct. Some are used to guide a company’s own environmental and social impacts; others focus on the impacts of their suppliers; still others apply to both” (p.238). This therefore represent some of the international law stipulations which the suppliers need to pass and will in the end form part of the CEO’s cumulative assessment regarding the attainment of CRS initiatives. Previously, significant problems have been identified regarding the trend of companies choosing international standards matching their personal interests and that of their stakeholders amid constantly increasing numbers of codes of conduct, consequently leading to their improper practice or application (Clavet et al, 2008).
The general public plays a significant role in giving the community’s perspective of the product, which usually includes both loyal users and non-users of the product. The assessment of whether a corporation is meeting the CRS initiatives is usually based on the achievement of a desires social auditing exercise. The general public perspective of CRS eliminates the concept of profitability. “The limits are bigger issues, such as ethics and the responsibilities required of the owners and investors. Owners and investors are not only concerned with the bottom line. Today, with the growing interest of CSR, owners and investors are looking at accountability rather than profit” (Gordon & Daniels, 2009). This same virtue is also shared by the general public domain. By virtue of this fact, the public analyses the performance of the company’s performance based on the social and environmental dynamics portrayed by the company. This has a great impact leading to the different results supposing an assessment was conducted on the public.
Influence of Company Shareholders, Consumers, Suppliers and the General public on CEO’s strategy of implementing the CSR program
Legal Factors and Ethical Perspectives
Shareholders and consumers of the company play a fundamental role in influencing the direction to which the CRS program will take. This is especially because in the sphere of international law, more focus in form of measures is usually included to prevent the fundamental exploitation of the shareholders and consumers under any given circumstances. Therefore, this gives rise to legal and ethical parameters of which the CEO needs to consciously incorporate into the program of significant success is to be achieved in the CRS program. Wise and Ali (2009) observe that, “Examples of ethical practices such as protection of consumers, protection of creditors, establishment of rights of shareholders and enforcement of law and order situation are important indicators of corporate governance of any country, particularly in developing countries like Bangladesh” (p.9). This further introduces another element into the CSR framework based on geographical advantages of a certain location. Hence, the CEO needs to adequately consider the different geographical entities in which consumers and stakeholders (during branding formulation) are located in attaining a functional CSR framework.
There is a significant impact of the consumers, shareholders, suppliers, and general public on account of the resultant rights issue affecting the company. In as much rights issues are directly linked to stakeholder control the interplay of international law tends to cover rights issues on a larger scale. In a market lacking appropriate laws, a structure for supporting transparency and corporate disclosure system fundamentally provides less protection for some of the minority shareholder rights (Wise & Ali, 2009). Moreover, it is common place to find suppliers, members of the general public, and loyal consumers having significant stakes in the company. On the same right issues emerges another factor of ownership of the firm. There is a positive relationship observed between firm performance and institutional ownership, which suggests that institutional shareholders have significant incentive, monitoring capability or power, and can wield control over the firm’s behavior, in addition to the role they play in actual corporate governance (Wise & Ali, 2009). These factors therefore have a great impact in the attainment of desired CSR goals by the CEO since he or she needs to identify critical build up points to support the desired corporate functions. Once the desired mix has been identified, the CEO can effectively run the program with fewer hindrances.
It is important to note that CEOs belonging to respective organizations play a fundamental role in ensuring that their companies fit within the requirements of the international laws, which govern the carrying out of the business activities. This arises from the fact that CEOs are at the top of the firm’s hierarchy who are charged with the decision of fulfilling shareholders’ profits, consumers quality, suppliers consumables, and meet the general public demands. In order to achieve these aspects concisely there is need to recognize the proper mix that will see the CSR program formulated fits in line with the aforementioned company targets, goals and objectives. In essence, international laws form the necessary instruments that enable the CEO to achieve CRS initiatives.