There was an interesting discussion on the Mentors for SMEs LinkedIn Group this week.
Jonnah asked how Small and Medium Enterprises (SMEs) should take on Corporate Social Responsibility (CSR) in their business and financial reporting.
In the debate that followed no one argued that SMEs were exempt from the requirement to be socially responsible. Indeed, there was a concensus that social responsibility, which might be defined as self-regulated behaviour that meets and exceeds regulatory requirements regarding the impact of the organisation, needs to be embedded in the values and activities of the organisation. There was some discussion as to whether CSR was necessarily about the external impact of the organisation, or whether CSR also covered how an organisation behaves toward its own employees (the majority felt that there should be no distinction between internal and external impact).
So if CSR is relevant outside of the corporate sector, are there differences in how it should be applied within small businesses? Well, many felt that, for small organisations, adopting a formal CSR policy is not the best approach. Better, it was argued, to focus on establishing clear values that the organisation decides it wants to underpin its activities, and then defining behaviours that support these values. There were different views as to how formalised and auditable the resultant activities should be and there are resources out there that can help you analyse your own organisation’s approach – for example the Organisation for Responsible Business offers a “responsible business questionnaire” geared to SMEs and the organisation has developed “The Responsible Business Standard”. The MBA Oath was also mentioned as an individual approach to responsibility and ethical behaviour.
There was agreement that, for many small organisations, their Accountant may play a particularly important role, as they may be their only source of professional advice. As such, it may be particularly important for Accountants to act in a socially responsible manner and to be concious of the importance of their role.
One accountancy that has adopted a particularly value-driven approach was described by Steve Pipe in his book “The UK’s best accountancy practices“. Pipe quotes Simon Chaplin, practice principal at GreenStones, as saying that everything starts with purpose and values “inspiring, challenging and supporting colleagues and customers to be the best they can be”. GreenStones is described as engaging the whole team in defining core values, rejecting those that the company could not demonstrate that it lived up to, and introducing innovative systems for measuring, enhancing and rewarding value-related behaviour and practice. Subsequently Greenstones achieved an Investors in People Gold Award (given to only 1% of IIP businesses), and dramatically improved financial performance. It seems likely that Chaplin will agree with Tom Peters’ 7 Steps to Sustaining Success:
- You take care of the people.
- The people take care of the service.
- The service takes care of the customer.
- The customer takes care of the profit.
- The profit takes care of the re-investment.
- The re-investment takes care of the re-invention.
- The re-invention takes care of the future.