Corporate Social Responsibility and the economic downturn

Given the unstable nature of the world economy at the moment, how will the latest corporate trend, Corporate Social Responsibility, fair as companies tighten their belts and look to cut costs?

All major retailers have Corporate Social Responsibility (CSR) statements proudly displayed on their web sites, and being green and being seen to be green, is high up the agenda in all PR and Marketing departments. Retailers are fighting to have sector leading green credentials with the humble carrier bag thrust into the limelight, centre stage. Corporate Social Responsibility is not just about being green though, it's about promoting sustainability and one of the leading bodies to define standards for business sustainability, the Global Reporting Initiative, defines five areas where business needs to focus;

o Economic
o Environmental
o Human Rights
o Labour
o Product Responsibility

With the price of energy increasing all the time, it's easy to see that focusing effort on reducing your Carbon Footprint, is good business sense, as well as providing good PR material. The green movement has successfully persuaded companies that being green makes commercial sense. However being green is only a part of a companies CSR strategy, so as times get harder will we see a relaxing of the commitments made across the other key areas.

With sales weakening across the high street many retailers will be asking their supply chain to bear the costs of poor trade. Changing payments terms for suppliers and asking suppliers for extra discount are some of the ways retailers can put the squeeze on their suppliers. For suppliers though, struggling with their own increased energy costs, this additional pressure will be most unwelcome and for many, could push them close to the edge.

This doesn't strike me as a sustainable business strategy. Sure, your suppliers will need to bear some of the costs, but the sustainable way out of the downturn would be to work together. How sustainable can it be to destroy your supplier base?

Collaboration between client and supplier lead to project success

I've been frustrated recently by being surrounded by some 'Old Skool' supplier management techniques. I've always worked in Retail so I'm used to being in environments with very strong purchasing backgrounds, and suppliers being driven hard on deals. However, recent events have left me exasperated to the point of writing this.

The recent examples involves insuring yourself against failure to deliver by a supplier, which I think everyone would agree is a good thing. You can do this in a number of ways and permutations. Two approaches at opposite ends of the spectrum are, having bullet proof contracts that claw back money or services in the event of failure, at one end, or being pro-active and putting processes and resources in place to prevent the failure ever happening, at the other.

The former appears to cost you less, you get money back for any issues and you don't pay for anyone in a QA type role etc. and therefore seems quite attractive. I've also seen this create the 'big man effect' in those people who suddenly find themselves in a position to throw some weight around, which adds to the attractiveness for some. I feel this approach is short sighted and tends to focus on cash rather than value. It ignores the opportunity cost, or cost of failure.

Organisations who take this approach would do well to remember why they embarked on those projects in the first place. Generally (I know there are some exceptions) business undertakes new projects to add value, get a return on investment, call it what you will, spend some money, get more money back (lots more hopefully!). Or in the case of service, spend on support, to prevent issues happening that will cost you lots more.

So, if we're doing projects because we want to make more money, then any failure or delay, not only costs the additional sum to rectify the problem, but also costs the lost opportunity from delivering the project. In today's rapidly changing technology world, these opportunity costs can be enormous. Here at Retail Monster we've had the opportunity to work on cutting edge projects that have delivered massive returns on investment. You can read some of our case studies here.

My experience is to avoid this type of approach like the plague and take a more collaborative approach, more partner than supplier. Shared vision, shared objectives, collaborative teams, Agile approach, which is also how Retail Monster Consulting like to work. It's one of the reasons I formed the company. If you feel the same way, then maybe you'd like to Join us too.

Organisations that take the former approach, hiding behind contracts in the event of failure, can create a blame culture, where everyone is covering their back. Avoiding blame and responsibility becomes the primary driver. Organisations who embrace the partnership philosophy set themselves up for success, the culture of the organisation becomes based on success, delivery becomes key, and everyone internally, and 3rd parties, are focused on this. Because they're focused on the value of delivery. failure is just not an option....