What is business doing? - Strategic Management

'Sustainability' is the main business benefit.On the whole, companies who value corporate community involvement for the business benefits see it more in the light of aiding longer-term business sustainability than as a factor in boosting short-term competitiveness. The benefits are therefore more indirect and intangible than immediate and financial. The business case for valuing community interaction therefore seems to depend on companies having a grasp on the value of intangible assets and a vision of their longer-term goals. The corollary of this is that companies operating only with a short term business horizon will not see the returns that this area can bring.

Sectors’ motives vary
Resource companies emphasise securing from community and government the ‘licence to operate’. The retail and the service sectors, on the other hand, see ‘customer good will’ and ‘market access’ as more compelling benefits. The service sector saw ‘employee benefits’ as important A medium-size manufacturing company though, located in an industrial zone, may not perceive any of these benefits nor feel any additional pressure to engage with the community.

Poor data on the level of contribution
There is always a lot of interest in quantifying this area of business activity but our study was not able to shed a great deal of light on the dollars allocated. Interestingly, a critic from a company that does allocate a substantial proportion of earning to the community believes that business keeps this data to itself precisely because the amount is so low! We estimated about one third of corporate community funds goes to sporting and cultural sponsorships that cultivate community involvement and also serve marketing purposes. Community participation activities, philanthropic donations and community business partnerships each attract about 16 per cent of funds.

Support for education and partnerships are common themes
Again, industry sectors differ in their selection of activities. There are locally directed programs such education and training (the most popular theme, particularly with the service sector), social welfare programs such as assistance with the homeless and the young unemployed. Support is also provided to culture and the arts, often with a regional emphasis. Others assist in more integrated regional initiatives where communities evaluate their needs and are supported in economic and social development – an approach favoured by resource and energy sectors. Some have an arms-length approach while others consider partnerships with community bodies are more productive.

Converting a cost into an investment
Perhaps the most telling finding of this study was that companies are reflecting more deeply on how to maximise the business benefits that flow from community involvement. They clearly see the potential to convert these activities from a cost to an investment. For most, this has been a development of the past 3-5 years. The bad news is that many companies do not have the depth of management to achieve this. A small proportion — about 15-20 per cent — would nominate their programs as exemplary in that they gain substantial business benefits from their community involvement.

Future emphasis: smarter not necessarily more resources.
We asked companies for their views of the ‘ideal’ community involvement program and the anticipated direction of developments over the next five years. Essentially, it is early days for most companies. They do expect to see a greater emphasis in this area and seem clear about where improvements need to be made. The qualification is that there will not necessarily be more money allocated to the community; rather, a smarter effort and better use of resources.

Being Strategic
Many are considering greater specialisation with a tighter thematic focus that fits with business priorities. IBM internationally stands out in this respect in that it has narrowed its community focus to education – an area that is strategically linked to the future of their business and where they believe they have the capability to make a substantive contribution. One immediate consequence of adopting more concentrated business planning in community involvement, whether a tightly focussed or more diverse program, is that companies need to have the right level of expertise to make these choices.

Emphasis on employees
One of the surprising findings was that in the future most companies expect to see greater emphasis on the role of employees in corporate community involvement. Many CEOs anticipate employee activities will almost double. Indeed, securing employees’ support or involving them directly appears central to some companies’ motivation for community involvement. They see that employee involvement contributes to employee morale, broadens management perspective and contributes to a reputation as the ‘employer of choice’.

Growth in partnership: more effort not necessarily more dollars
The future activity profile for Australian business will also include more partnerships with community groups and more opportunities for dialogue with the community. In order to gain greater benefits and impact this will mean a narrower spread of activities with fewer partners, and projects that are conducted over a longer period of time. There may not be a greater allocation of financial resources, but smarter use of resources, perhaps through intermediaries, and leveraging of existing infrastructure.


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