CSR or not, support relevant causes for sustained business growth
Contents News/Article Date: 7th September 2022
Relating to which Act: The Micro, Small and Medium Enterprises Development Act, 2006
Type : Newspaper Item
Pertains to Small and Medium enterprises that are members of MSME
Relevance of this news: Karma Global Consulting Solutions Pvt. Ltd has been in the business of Payroll, Outsourcing, and Regulatory Compliances from its inception in 2004 and since then, has brought in a lot of efficiencies and technological upgradations with experts on its roll, to ease the hassles of Payroll Processing, Temp Staffing On-boarding Management, Regulatory and Payroll compliances by providing customized solutions to all its elite clients.
Now Karma Global is also fully into labour compliances for nearly 18 years and is helping both establishments and workers for the fulfillment of obligations as per the laws of the land. It has over 200 staff, both direct and indirect on its rolls and operates on Pan India basis. Recently, it has diversified into foreign shores, into countries like the US, UK, UAE, Canada, Philippines, and Asia for handling payroll, outsourcing, recruitment, and governance.
This topic is about CSR and the news item says that supporting good causes is ideal for sustained business growth. Also, Section 135(1) of the Act states that every company having the specified net worth, turnover, or net profits must establish a CSR committee. Thus, section 8 companies must also establish a CSR committee and comply with CSR provisions when it meets the specified net worth, turnover, or net profits.
Karma renders the services of compliances to small, medium, and large-scale establishments, and incidentally, Karma Management Global Solutions Pvt. Ltd. is a member of MSME for the past many years.
Also, Karma does a lot of work with established NGOs in urban and rural areas. In fact, the entire team of Karma had once gone to a remote village with the help of a rural NGO and had carried out a lot of cleaning and painting work in shelter homes. Also during important occasions, it gives permission to some of the NGOs to bring children from Shelter Homes to its offices for holding activities, fun, and games. In fact, in 2015-16 it received the SME Award for its outstanding contribution.
Subject: CSR or not, support relevant causes for sustained business growth
For greater details, appended below is the complete news item
CSR or not, support relevant causes for sustained business growth
SMEs don’t have to wait for mandatory CSR to support a cause. The image of a responsible business can go a long way—a small business needn’t stay small forever
Source Money Control – SEPTEMBER 07, 2022 / 06:12 AM IST
India was the first country to make corporate social responsibility (CSR) mandatory for a certain set of companies. Though small businesses are not covered under the CSR mandate to set aside 2 percent of the net profit for such activities, some medium size companies could be.
It is always better to support social causes that one believes in for the long-term and sustained growth of businesses. Small and medium enterprises (SMEs) need not wait for a mandatory CSR to start building the image of a responsible business. After all, a small business needn’t stay small forever.
Pick the right cause
It is a good idea to partner with non-government organizations to back the right causes, which can be a win-win for all. If the right partner is selected, the result can be added revenue, increased media exposure, a positive image, or all three for both sides.
Instead of just donating money to an NGO, identify the causes to the business that has a natural affinity. Making roads cleaner will go well with an automotive ancillary business and instilling civic sense to prevent littering will be a natural fit for packaged goods or bottled water business.
These cause marketing initiatives and are different from philanthropy, which generally involves a specific donation. Cause marketing is more of a strategic marketing decision.
Giving back
Many SME promoters wonder why they should undertake such initiatives. They should want to give back to society is what I tell them.
The other reason could be to build their brand and business while doing social work. Maximizing shareholder value has backfired in many developed economies and this had prompted strategy gurus to advocate maximizing stakeholder value—society, suppliers, employees, and others linked to the business.
Long-term benefits can only come from developing areas in the business locality. Tata Steel’s work in Jamshedpur is a good example.
Cause with a difference
Most companies go by what the Leadership says. When selecting a cause, SMEs should check for strategic links. You cannot fund every good cause. Just as your strategy is to offer differentiated products or services, so should your CSR initiatives.
Look for NGO partners that share your mission, and your values. Anything to drive quality of life is what most companies should look for. It could be civic sense, better healthcare, uplift of women, or cleaner cities. Some companies look at higher education when they hire college students. Wipro is one such example.
Once the cause and the partner are identified, SMEs should work towards building a strong partnership. Here are a few guidelines:
1 Don’t just give money to the NGO partner and the cause. Get Involved. Hold joint meetings, conduct regular review meetings, develop success metrics, and make suggestions to bring in a more professional approach to drive the cause. The NGO may not have the kind of managerial expertise your business may have but do not impose your thinking. Nurture the relationship, which should be collaborative, for the success of the cause. The keyword is “co-creation”.
2 Build clear goals and expectations around which all stakeholders can be aligned. This leaves little room for mistrust and non-execution. It is best to thrash out these details before inking the partnership. Always set the expectation up front, just as you do for any project funding.
3 Inform the NGO about your business needs. They must know that companies are sincere about the cause but have business needs too. Unless these are met, the long-term sustenance of the cause marketing will be in doubt. Nothing wrong in seeking branding in their activities but this can be a sore issue, something a good discussion can easily resolve.
4 To build and sustain a successful partnership, the company, as well as the NGO, should keep communication channels open. If you are a substantial contributor, you may ask for a board seat in the NGO. If not, you should seek a steering committee membership.
5 Remember that the NGO and you speak different languages. If this is not understood, there can be confusion and anguish. For instance, many NGOs do not have a mechanism to track progress and many don’t use appropriate metrics. They are also publicity shy. For them, it is important to do good work and they do not understand how good PR can help them build and expand their cause. This is where businesses can help.
6 Put a governance mechanism in place. Both partners should know how well the mission is getting accomplished and how the milestones are being achieved. Set two types of metrics. One to measure the impact of the cause and the other to check the end-user awareness level.