Community relations and the competitive edge

February 01, 1993

Edmund Burke, director of the Center for Corporate Community Relations at Boston College, USA, was recently in the UK where he spoke to the newly formed Research Forum.

Community relations used to be perceived as marginal to the company’s business objectives – the “balloons and T-shirts” era. Donations were made to local charities, usually determined by the Chief Executive. However, changes in society, politics and the economy during the 1980s forced a re-think. Government cuts spurred charities to appeal to companies and the requests for involvement came not only from traditional non-profits, but from agencies such as local government.

So companies increased their budgets and looked for new ways to organise their efforts. The emphasis was on developing a well-managed programme, with a strategy and focused approach. Companies developed a social vision, an understanding that the needs of the community and its expectations must be taken into account in achieving the company’s business goals.

Into the 1990s

However, a social vision will not be enough to ensure success in the 1990s as we enter a globally competitive age. To succeed, companies will need to achieve three goals:

to be an employer of choice: recruiting, training and retaining qualified and loyal employees;

to be a supplier of choice: influencing the choices of suppliers and vendors;

to be an investment of choice: addressing the concerns of the social responsible investor.

Recent studies have shown that the company’s community programmes can help in achieving each of these three goals. For example, a positive correlation between staff morale and community involvement was found by David Lewin at the University of California. A survey by Grey Advertising shows consumers increasingly interested in corporate responsibility as well as value, accountability and trust.

The Chicago-based Covenant Investment Management found that companies with a record of strong corporate responsibility also posted superior long-term stock market performance. The 200 companies out of the one thousand largest US corporations which demonstrated most responsibility in meeting the needs of eight constituencies – communities, competitors, customers, employees, environment, shareholders, social issues and suppliers – consistently outperformed the others in terms of total return to shareholders.

Competitive edge

As more companies adopt the notion that community affairs can be a way to gain competitive edge, four significant changes will take place:

first, companies will have to adopt a social vision as the mission of community relations;

second, community relations will cease to be isolated and unrelated to other functions of the company, such as marketing, finance and human resources;

third, community relations will be integrated with ethics, government relations and donations to become part of total corporate citizenship;

fourth, community relations and corporate citizenship will be internalised into the company’s culture, with training programmes on corporate citizenship for all managers.

Then, community relations will not just enhance the image of the company, but become an essential ingredient to competitive edge.

The Center publishes a newsletter ten times a year. Available price 6130 from The Center for Corporate Community Relations, Boston College, Chestnut Hill MA 02167-3835, USA. Phone 010 1 617 552 4545

Corporate Citizenship Briefing, issue no: 8 – February, 1993