Page 182 - Performance Leadership

Chapter 10 The Social Role of Organizations • 171

the organization. The company rose on the lists of “most wanted
employer,” among other things, because of this initiative. It attracts the
type of ambitious staff TNT is looking for.
Employee satisfaction is positively affected, employees proudly talk
about their employer, and about the partnership TNT has with the pro-
gram as an integral part of the company. In some cases it can also be a
soft investment. If one of the countries where TNT has been active
through the world food program becomes an emerging economy, it
will need to invest in infrastructure. TNT, being a trusted party, will
likely get the opportunity to build a profitable business there. What
makes the TNT example interesting is that it contradicts the view of
Milton Friedman that charity is something for shareholders to do with
their earnings, and not something the company should do for those
investors. However, TNT contributes something no shareholder could
ever do: deep expertise. At the same time it benefits from the partner-
ship itself as well.
Another way of connecting CSR to the business is by creating mean-
ingful products and services for previously unprofitable customer seg-
ments at the “the bottom of the pyramid,” where there are immense
new opportunities. For instance, Hindustan Level Ltd. (HLL), a sub-
sidiary of Unilever, introduced an affordable detergent in small pack-
ages with a formula that allows poor people who wash in a river to get
clean laundry. Another example is a bank offering microcredits in
Bangladesh that had a 95 percent repayment rate, which is higher than
most other banks have. Often, this requires radically different business
models with different cost structures. Another example, Ruf&Tuf jeans,
sells ready-to-make jean kits that are distributed through local tailors
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for around $6. Another benefit of this type of CSR may very well be
that rethinking product and business models will drive new innovation
that is eventually profitable higher in the customer pyramid.
If CSR is about doing business, it needs to be managed like any other
type of business. We can treat CSR as an objective. We can revisit the
Direct Bank case study in Chapter 8, where two of the four options to
increase the return on capital employed (ROCE) had social implica-
tions. Cutting costs by centralizing call centers for multiple countries
would lead to layoffs and would likely negatively affect customer trust.
Investing in an infrastructure to connect the various call centers would