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Archive for March, 2013

When Hurricane Sandy smashed into the northeastern US in late 2012, it left behind an estimated $50 billion in damage. But Sandy’s floods were followed by only a trickle of relief from federal sources: Congress delayed voting on a large aid package, and by January 2013 only $9.7 billion in relief had been approved, angering victims, state lawmakers, and the general public. Many corporations were eager to fill the gap, quickly dedicating resources to Sandy relief as part of their CSR efforts. American Express, Citigroup, and other banks, for example, donated millions.

 

But not all CSR initiatives are created equally when it comes to impact—both for the beneficiary groups (e.g., Sandy victims) and for the reputations of the businesses behind the efforts. While donating money can be an important component of aid, deeper, more thoughtful responsibility efforts often generate larger and more sustained reputational benefits. Take the example of Walmart’s swift and comprehensive relief efforts in the wake of Hurricane Katrina in 2005, detailed in Reputation Rules. By understanding the problem and delivering what victims needed (e.g., water, non-perishable food) even faster than the government did, Walmart scored major goodwill with the public while serving an important cause.

 

In the case of Hurricane Sandy, Sears launched a similar, albeit smaller-scale, effort to help by partnering with a housing organization to rebuild New Jersey’s Little Ferry Hook & Ladder Company No. 1 firehouse, which had taken in three feet of water and had to be gutted. Strategic CSR initiatives like those of Sears and Walmart tend to resonate more deeply with the public and generate more goodwill because they follow several unwritten rules of corporate citizenship. In the context of natural disasters like hurricanes, the public views the company more as a community member than profit-seeker, and expects the business to behave out of altruism rather than self-interest. That means acting authentically (rather than appearing motivated by profits) and competently (sending the right kinds of relief packages), along with communicating in a non-self-serving way. A relief effort that meets these criteria can be much more valuable than financial donations of any size; failing to meet them, no matter how genuine the intention, can do the business’s reputation more harm than good.

 

In short, when it comes to CSR in the aftermath of a natural disaster, it’s never just the thought that counts. I explore this idea in a recent research paper in a greater depth. The paper is summarized in the following Kellogg Insight article related to a March 2012 conference sponsored by the Kellogg School of Management and the Aspen Institute on shareholder value and the purpose of the corporation.

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