Professional Documents
Culture Documents
2.Look after the staff and the profits will look after
themselves
Responsibility however goes beyond suppliers and raw
materials. Another key stakeholder in any business is its
employees. By acting in a socially responsible way towards
them further benefits will be felt. Earlier this month the John
Lewis Partnership (which has 750,000 staff who co-own the
chain) announced that its employees would gain a bonus
equivalent to 17% of their annual pay as a reward for an
outstanding performance by the chain along with its Sister
chain Waitrose. Ironically the sale of the 10.4% stake the
group had in Ocado led to shares in Ocado falling in February
2011, it is hard to say that this is not a reflection on the good
standing of John Lewis.
The costs
Costs of CSR & Competitive disadvantage
Demonstrating CSR costs money. This can be through higher wage rates,
increased costs of raw materials through ethically sourced raw materials (e.g.
Fair Trade coffee growers receive a $0.05/lb premium over market price levels),
or superfluous activities such as local community projects. Higher costs therefore
have one of two implications – pass on the increased costs to customers and
become less price competitive, or absorb the costs increase and instead be a
less profitable business, or one which offers inferior products. Such a lack of
competitiveness is obviously detrimental to long-term corporate survival.
SME's and smaller organisaitons already find that they are unable to benefit from
the economies of scale that their larger competitors do. As such they will find the
costs aspect of acting in a CSR manner especially difficult to manage.
Shareholders money