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Natalie Holder-Winfield Headshot

The Case Against Corporate Responsibility Misses the Point

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Yesterday seemed like a day of zero-sum games for me. When I asked my Legal Aspects of Human Resources class to describe the role of today's HR manager, my students painted HR managers as either a watchdog for the company or an employee advocate. When, I spoke with first-year medical students about the role of cultural competency in medicine, the conversation became a battle of patient autonomy versus physician control. As a Gen Xer, I neatly fit the stereotype of not liking either or, this or that, or mine versus yours scenarios. I want options, particularly those that make everyone a winner.

That's why I was disturbed by Aneel Karnani's "The Case Against Corporate Social Responsibility." As he described CSR as "fundamentally flawed," and opines that where profits and social welfare are in direct opposition, executives will opt for acting in the shareholder's interest. He goes on to say that "doing what's best for society means sacrificing profits."

While I agree that corporations are profit-driven (I always cringe when I hear potential clients describe their sole interest in diversity as being "the right thing to do"), tomorrow's leader understands that CSR initiatives and profits do not have to be a zero-sum game. With all due respect to Karnani, a professor at the University of Michigan's Stephen M. Ross School of Business, he misses the paradigm shift where the pursuit for the social good does not have to equate to sacrificing profits.

Professor Karnani holds the traditional position that leaders should not "pursue their philanthropic goals with shareholder money." Yet, companies such as Target have embarked on CSR campaigns that are in direct contradiction. They have established multimillion dollar grant-giving foundations and scholarships that clearly send the message that they have chosen to reinvest in their consumers' communities.

Last month, thousands of college students used blogs and Twitter as a hammer as they threatened to boycott Nike for not paying Honduran workers who lost their jobs when two Nike subcontractors closed their factories. Although Nike shareholders' bottom line will be missing the $2 million the apparel company agreed to pay in severance to the workers, the company's reputation among their customers, employees, and future employees is salvaged. The glaring microscopic lens that social media has casts over corporate decisions is motivation for every CEO to work through disconnects between social responsibility and profits to find a solution where there are no losers.  

Professor Karnani and I are in agreement, though, when he suggests that leaders that do not take advantage of CSR opportunities are either incompetent or selfish. Let's face it, if McDonald's, a Fortune 500 company whose brand relies on greasy fast-food, could find a way to become a good corporate citizen by adding--and profiting from--salads and smoothies, there is very little excuse for any CEO to throw up his or her hands in frustration with CSR. CEOs that can not find a way to align profits with becoming more socially conscious are not thinking hard enough.

The exasperated CEO may want to attend "The Great Leaders Conference: Corporate Social Responsibility and the Changing Culture of Leadership in a Web 2.0 World" on October 7, 2010 in New York City to get charged with new ideas on the future of leadership. 

Ann Charles, the Great Leader's Conference Founder, promises that the conference will provide examples of sustainability as a primary driver of successful enterprise. "The Great Leaders Conference will spotlight CEOs that integrate CSR directly into their core business culture, all of whom are very successful. Speakers as diverse as Tony Hseih, CEO of Zappos, Jeff Swartz, CEO Timberland, Stephen McDonnell, CEO Applelgate Farms and Euro RSCG Global CEO David Jones, will talk about the changing social, economic, environmental and ethical business conditions of today's world. Mr. Karnani makes the point that executives are hired only to maximize profits, and that they will lose their jobs if they forgo some profit to benefit society. I'm not sure I accept the premise that what's good for society is necessarily bad for business."

Visit http://www.greatleadersconference.com/ to learn more about the conference.