Paper Presentation

SPECS Framework

Gaurav Madaan

Nirav Soni

Narsee Monjee Institute of Management Studies, Hyderabad

January 2013

Abstract

Corporate Social Responsibility (CSR) is the way by which corporations tend to manage their

business processes to produce a long lasting impression on the mind of its stakeholders. The

importance of CSR for any corporations gained momentum in the late 1960s and early 1970s

when these corporations started using the term “Stakeholder”. These are the people on

whom all the activities performed by the corporations have an impact. These corporations

started looking for Value Proposition beyond the limits of the shareholders and found out

that the modern day business demands a corporation to design its policies around its

stakeholders who have a higher impact of the working of the corporation. As time went on,

the importance of CSR saw a widespread increase when the corporations started making

note of the fact that in order to sustain itself in the society, it has to give back something to

the society itself as well as to the people who are working inside the corporation so as to

maintain a high level of commitment from them. This research paper aims at finding the

various reasons which made a corporation realise the need to conduct CSR activities, the

various factors that can have an effect on the conduction of those activities, the benefits

which a corporation gains from doing such an activity and finally a look at a comprehensive

solution to achieve sustainability through the use of the SPECS model which takes into

account the reason of less engagement of employees in Corporate Social Responsibility

activities. Moreover it highlights the flawed structural thinking behind CSR initiatives

SPECS Framework

Gaurav Madaan

Nirav Soni

Narsee Monjee Institute of Management Studies, Hyderabad

1. Introduction

In the fast track world of hyper-competition where all the corporations were only

focussed on its rise, CSR came up as an activity through which they tried to ensure not only

their rise but it was also a commitment wherein they tried to improve the quality of life of

its employees which ensured continuous engagement to contribute to the economic

development of their corporation as well as improving the quality of life of the society that

has a major impact on the various activities conducted by a corporation.

But in the early 1970s when CSR was basically a new terminology, Milton Friedman

said that most of the corporations conduct their business in accordance with their

shareholders that will be able to make as much money as possible. The corporation will also

abide by the basic rules of the society where it is based both in terms of law as well as

ethical customs to achieve profits. But then this perspective of Milton Freidman on CSR is

viewed as very controversial in terms of today’s modern business. Some people agree with

the philosophy while others don’t. To say whether Friedman was right or wrong actually

depends on the different situations in which a corporation is running its business. Profit is

the main focus of every corporation in the world as they would not be in business without it,

but the main thing in terms of CSR is how the corporation uses the profits to conduct

activities which will be beneficial to all of its stakeholders which can eventually lead to

sustainability of the corporation. But being an economist, Friedman’s Theory does support

the above fact in a way that the more the corporation achieves profits, the more the rise in

the economy and eventually an increase in the benefits which is provided to the society. On

the other hand, Friedman also believed that CSR is an activity which cannot be forced on the

corporations. But to say that social responsibility is only done on the willingness of the

corporation is wrong since the corporation still use many different techniques to undertake

CSR activities while maintaining their target or vision which they have set. A prime example

of this would be when a corporation makes a product as per the needs of the consumers and

ensures that the product will be safer to use.

It is in lines that it can be said that the definitions of CSR changes from corporation to

corporation as well as countries to countries. Whereas CSR can be viewed as an activity of

capacity building for sustainable livelihoods for all the stakeholders in one country, it can be

viewed as a business which thinks of giving something back to its society in the other.

Traditionally in countries like USA, CSR is viewed as a “Philanthropic Model” where in after

removing the taxes from the profits, the corporation donates a certain share of it to conduct

CSR activities. The model followed in Europe is one where in the corporation operates its

business in a socially responsible way wherein they combine the social and environmental

issues in their business operations and also get regular insides from its stakeholders. The

also put in a huge part of money in communities that gives the core of the business a solid

sustainability. Through this CSR becomes an important part of the way through which the

corporation tries and achieves its profits. Through which we can say that with any process

that a corporation follows, there is none which can fit the bill of all the countries. CSR is

conducted in different ways with different priorities in different countries and so as such it

still depends on the corporation to conduct its CSR activities in the way it desires.

It was widely assumed that the early CSR models were based on philanthropy where

in as mentioned above, the corporation was only focusing of giving some part of their profit

to conduct social activities for the society it was based in. In due course of time, the

corporations initiated a process where in they would make their products in a socially

responsible way that would be accepted to the society. This process still had the flaw where

in the corporations still didn’t take any inputs from the society to build their products. But

now in today’s hyper competition market, it has become essential for the corporates to align

CSR with their vision and mission so that every person who is a part of the corporation, be it

the stake holder or the employees has an idea about the CSR activities which the

organization aims to conduct. They can gradually aligned their efforts towards achieving the

goals.

But still there are many alternative perspective to Milton Friedman’s theory. Through

the SPECS model, we would try and figure out an alternative perspective to Friedman’s

theory will can lead to the sustainability of the corporation. The crux of this theory still lies

with the fact that to achieve sustainability, no matter what the corporations do, it still comes

down majorly to the following two factors:

1) The activities which the corporation carries out should ensure maximum and cent

percent engagement of its employees so that they work passionately to achieve the

goals of the corporation.

2) The corporation should also make sure that it should align its vision and mission with

its CSR activities so that all of its stakeholders can contribute to that program.

2. The SPECS Model:

Spectacles (SPECS) are used to get a clear vision of people with poor eyesight. In a similar

fashion the SPECS model brings out the reason of less engagement of employees in

Corporate Social Responsibility activities. Moreover it highlights the flawed structural

thinking behind CSR initiatives. The model consists of five circles pivoted in a stacked Venn

manner. Each circle represents a distinctive dimension of CSR. It also enables us to connect

and to know that the sustainability of a corporation is achieved through CSR if it takes into

account all the things that are mentioned in the SPECS model. And if a corporation doesn’t

fit into the SPECS model, it doesn’t mean that its sustainability is not there or whether their

CSR activity is not up to the mark, but it’s just that these corporates don’t engage in making

relationships with their stakeholders at an optimum level. We have further highlighted these

facts with the help of the examples mentioned below.

Social Landscape: - The outermost circle stands for Social landscape, with the amendment of

Companies Act 2011 it is mandatory for companies to invest some part of their profit into

CSR. So they have to think about giving back to the society anyhow. So for any CSR activity

companies think of society first as to how it should do something for the society. What

means should it opt for either open an NGO or join hands with some NGO?

Corporations: - The second thing which companies wish to do is maximize the shareholder

value. In other words increase the benefit for the corporation, could be either monetary or

non-monetary. As Friedman has rightly said that corporation is a business entity and

businesses always work for profits.

Employees: - The third circle represents employees. Any CSR initiative though planned by

the corporation or the board has to be driven by the employees, so they form an important

part of the whole CSR process. For any CSR initiative to be successful, high employee

engagement is required.

People: - The fourth circle represents the people (customers), who should be involved in the

activity to benefit them and also at the same time increasing the shareholder value.

Social Landscape

Corporations

Employees

People

Sustainability

P

R

E

S

E

N

T

T

R

E

N

D

T

O

B

E

T

R

E

N

D

Sustainability: - The innermost circle represents sustainability which should be thought

about in order to align the task with the vision of the corporation. Also there should be a

window open for Disruptive innovation. This way corporations will be able to win latitude as

well as longitudinally.

Corporations Present Approach: - As of today the corporation or the shareholders have an

outside in approach wherein they think about the outermost circle which is the biggest and

the most visible i.e. society. They think of ways to get the benefit for the corporation or

themselves and not actually do the CSR. Then they look at the employees, the middle circle.

They think of driving the whole process through this medium and that too without giving

any incentives. If they have actually thought up to this extent then they think of people or

their customers, which very less corporations have done till date. After surpassing all these

levels comes the sustainability which the corporates are hardly concerned about. They are

just using NGO’s and other CSR activities to gain the employer branding or a customer

emotional attachment to society as a touch point. This is the reality, a sad irrationality.

Corporations Ideal Approach: - The Corporation’s ideal approach should be inside out

wherein they start thinking from the inner circle towards the outer circle. If they follow this

model, profitability can also be achieved with sustainability.

Examples Supporting the Model: -

1. Microsoft Corporate Citizenship: - One of the most successful corporation for CSR

activities around the globe is Microsoft. They have achieved it through their

corporate citizenship program wherein they have actually followed an inside out

approach. Now let’s analyse the program on the basis of the model.

a) People/Customers: - Microsoft has simply given back to the people by providing

them with the new technologies at a cheaper cost to enable them to excel in

their respective fields. We can clearly see that the customers are incentivised

from this model. They have a vision of making people achieve their full potential

with the help of technology. They are also launching Microsoft Youth Spark which

aims at connecting hundreds of millions of young people to opportunities for

education, employment and entrepreneurship.

b) Employees: - The engagement was encouraged by a role called volunteer

manager wherein the employees get an opportunity to manage the activities,

build networks and a sense of satisfaction. More than 10,000 employees signed

up for the role. They also made the most significant investment in overall

employee compensation in corporation history.

c) Corporations/Shareholders: - They have been rated the best corporation for

their CSR activities. It has led to employer branding, corporation’s branding and a

lot more. They have been able to touch the customer touch points by connecting

to them emotionally.

d) Social Landscape: - They have been able to identify the need of the society and

also successfully give it back. They have di=one it in almost all sectors like

education, employment, health care (particularly AIDS) so on and so forth.

e) Sustainability: - If we see the final outcome of all the efforts made by the

corporation, it has been able to successfully implement and sustain the activities

with a healthy employee engagement, keeping stakeholders happy at the same

time.

2. BMW Intercultural Dialogue: - This is one of the many activities that BMW as a

corporation do for CSR. In this area they support initiatives and individuals working

for a better understanding between different social, cultural and religious

backgrounds. They also work to build safe roads around the country through social

initiatives. In Munich they improved 39 million school bus routes.

a) People/Customers: - With the help of social organisations BMW has been

consistently improving roads condition. This way the group is doing a lot for the

people or their customers.

b) Employees: - Through intercultural dialogue the corporation is giving exposure to

its employees to work with different groups which is helping its employees to

better themselves. It also help to lessen multicultural institutes in the country.

c) Corporations/Shareholders: - The shareholders have been getting benefit

through these activities, the group has social affinity. It has helped them to gain a

number 4 place in the world rankings for best CSR activities. They have a strong

brand equity, goo employer branding and a strong position in the industry.

d) Social Landscape: - Again there area of building roads shows that the corporation

has been able to identify the right need of the society and they have catered it

well. They have used the social landscape in the right way.

e) Sustainability: - All these activities, wherein they have included all aspects of the

SPECS model proves its sustainability. Moreover they have a strong brand name

and they have achieved a healthy market share.

3. Reliance Industries Limited (RIL): On the biggest example of the success of CSR in

India has to be the activities which are carried out at Reliance Industries Limited, one

of the biggest conglomerates of the world. RIL has always been ranked in the top few

positions of corporates in Asia where CSR has been a success. If we look at RIL from

the perspective of the SPECS Model, we can cite the examples of the following

things.

a) People: RIL has always been unequivocally committed to all of its customers. It

has trained all of its employee’s in a way where they know that the customers is

of foremost importance. It has a very professional set of Sales and Marketing

Executives along with a highly trained technical service team that offers solutions

and performance upgrades by suggesting and working alongside its customer’s

production units.

b) Employees: RIL conducts a lot of activities to improve the engagement of its

employees. One of the prime examples will be the state of the art Occupational

Health Centres (OHC) at all of its manufacturing divisions and major offices

through which it focuses on achieving excellence in occupational and personal

health of its employees across locations. It conducts Health Promotional activities

on a regularly basis for not only its employees but also for their families so that

lifestyle diseases like Heart Problems, Hypertensions etc. are avoided.

Another thing where in Reliance engages its employees is that it never frowns

upon the mistakes made by its employees. The Craft Centre at Jamnagar is of the

biggest in the world where in around 150000 workmen are trained cumulatively.

It was a mistake converted into learning that created this centre.

c) Corporation and Social Landscape: RIL, being on the largest corporation in India

conducts a lot of activities on the CSR front. It ensures that all its subsidiaries are

involved in CSR activities. Further it ensures that all the places where its

corporations are located, people around it get highly benefited from it. This is

ensured by conducting regular health check-up camps, creating employment for

them as well spreading knowledge about other social activities. Mrs Nita Ambani

is one of the frontrunners from RIL leading them in the CSR activities. She is the

wife of Mr Mukesh Ambani who is the CEO of RIL and also the head of Dhirubhai

Ambani Foundation. She took part in the joint partnership of RIL and UNAIDS

which aims towards halting and reversing the HIV epidemic in India. She also

spearheads Project Drishti, a unique initiative by RIL and NAB (National

Association for the Blind), which has a vision to give sight to blind people from

the underprivileged segment at no cost. Under the project, she stated a Hindi

fortnightly newspaper in Braille.

d) Sustainability: These all activities had seen Reliance maintain a good relationship

with all of its stakeholders as well as sustaining itself as of the front running

corporates in India.

4. ITC Limited (ITC): ITC is another conglomerate of India which is very well known for

its CSR activities. One of the CSR initiatives of ITC has also become the subject matter

of a case study at Harvard Business School. The activity that were are talking about is

‘e-Choupal’ an initiative of ITC which enables the Indian Agriculture sector to

significantly enhance its competitiveness by empowering Indian farmers through the

power of the Internet. The initiatives can be further studied through the SPECS

model:

a) People: ITC had an adopted a model through which it makes its customer realise

that a part of their investment in ITC products goes to a social initiative. For every

4 Classmate notebooks, a product of ITC, that are sold the corporation

contributes 1 rupee towards the education of poor children. ITC though

Classmate has also launched a programme called Classmate Ideas for India

Challenge that is a part of the corporation’s centenary initiative. It is a nationwide

programme which invites ideas from youth who have the potential to transform

India. The initiative plans to reach out to around 25 Lakhs students across 30

cities, 500 schools and 200 colleges across India.

b) Employees: ITC improves the employee engagement of its employees but its core

values that supports a process that aligns its employees with a shared vision and

purpose in the belief that every individual brings a different perspective and

capability to the team. The implementation of this policy is ensured by that fact

that Business Plans are shared with employees at all units through a series of

meeting and intranet portals. And this policy is regularly monitored by the unit

head. This ensures high engagement of the employees throughout.

c) Corporation and Society Landscape: As already mentioned, ITC is one of the

leading corporates in India that engages in CSR activities. An example of this

would be ITC Green Centre, a 170000 sq. feet building in Gurgaon, which is the

world’s largest 0% water discharge, non-commercial Green building, and

compared to similar buildings, has a 30% smaller carbon footprint. Coming back

to the biggest CSR initiative of ITC i.e. e-Choupal, it is a portal through which it

creatively leverages IT to set up a meta-market in favour of India’s small and poor

farmers, who would otherwise continue to operate in a un evolved market.

Through this, ITC not only trains local farmers into the usage of computers but

also ensures that it is giving back to the society in a huge way. The indicator of e-

Choupal is that it has reached across 10 states, more that 40lakhs farmers in

about 40000 villages.

d) Sustainability: Thus like RIL, ITC also has ensured sustainability for a long time

through its CSR activities which comes right in accordance with the specs model

that we had proposed earlier.

3. Conclusion

So we have seen that by using SPECS model corporations can check the feasibility of

their existing idea and identify the loop holes in the implementation to make it more sustainable

and get employee engagement. Also they can think on these lines when they are planning to

select asocial medium or a plan for their CSR activities. There is always a space for disruptive

innovation as we have seen through the example of e-Choupal, simple yet so impactful and

successful. The best is the combination of inclined innovation (sustainability) and disruptive

innovation. So by using the model corporations will be able to see the things more clearly and

hence improve their sustainability.

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