A new book may help companies in getting corporate social responsibility right, notes Ajit Balakrishnan.
Corporate India is girding its loins to get involved more directly into the lives of our less fortunate countrymen even though such people are not directly their customers or suppliers: the Companies Act, 2013, mandates that businesses above a certain size spend two per cent of their profits on corporate social responsibility (CSR), things that benefit larger society such as the eradication of hunger, the promotion of education, environmental sustainability, the protection of national heritage and promotion of rural sports.
A PwC/CII report says that this two per cent from some 6,000 companies in India may amount to as much as Rs 20,000 crore (Rs 200 billion) every year.
Companies are supposed to create a committee of their board to oversee such activities and start reporting what they have done as part of their annual report from this year onwards.
As companies scramble to get their CSR act together, they and their independent board members are likely to soon come to the realisation that all the expertise that they have accumulated over the years in making their lives and their companies' life successful may not be directly usable in making their CSR activities successful.
The standard theories of management about succeeding by improving product quality or by adding to product features or by improving customer service or by extending distribution coverage or by investing in R&D may not help much.
Even deciding what the goal of a CSR initiative should be and deciding and measuring what constitutes success, which in the corporate world has been agreed upon universally (market share, return on capital employed and so on), is not that easy to establish in the CSR world.
For example, is it good enough that during the CSR intervention period the overall income of the citizens of a target village or groups of villages increases? Is it necessary that such income increase be distributed equitably? Is it important that such income increases continue even after the intervention period ends?
In other words, in designing CSR intervention, what designs "work" and how do we go about defining the benchmarks of success?
For corporate executives reflecting about such questions, a just published book, Another Development, Participation, Empowerment and Well-being in Rural India, by Professor Runa Sarkar and Professor Anup Sinha of the Indian Institute of Management-Calcutta, though written with the larger development issues in mind, will be of help for thinking about CSR interventions as well.
The authors deep dive by personally visiting and reviewing a large number of interventions that are going on all over India and try and make sense of what works and what doesn't work and why.
The interventions they review and write up as case studies encompass three main types. The first is a set of interventions that are attempting to improve the watershed by things like groundwater recharging.
The second is a group of intervention aimed at empowering individuals to set up entrepreneurial ventures that benefit themselves and others that they employ or serve. Cases in this section include attempts to trigger women entrepreneurs in Himachal Pradesh and Arunachal Pradesh and helping small farmers in Gujarat to embark on horticulture.
The third set of cases describe how success appears when beneficiaries are involved in the design as well as the delivery of a project.
For corporate executives who, in the middle of a CSR, start wondering what has made an area or a set of people so mired in poverty or "underdeveloped" in the first place, the authors have a review of all the theories that the world has seen so far in finding an explanation.
The underdeveloped area, for example, may be in a semi-feudal state where modern capitalist institutions that we in the corporate business world take for granted, the market for land, the market for labour, the credit market or even the market for products may not be working efficiently or even developed.
The authors prod the reader to think of the "Livelihoods" approach to interventions. The core of this concept is that in poor rural areas in India, every individual is engaged in a portfolio of activities and not just one. This portfolio may include some farming, raising livestock or fishing, some on his own account and some as wage labour, or as an organiser of a micro-enterprise employing a handful of people and engaging in non-farm activities.
He (or she) may emphasise some part of this portfolio during some parts of the year and other parts of the portfolio at other parts of the year. Essentially, this portfolio approach is an attempt to de-risk his livelihood in a hazardous economic environment and an environment where no one activity in the portfolio is enough to earn a subsistence wage. A CSR intervention must blend into this portfolio for it to make sense to the beneficiary.
The biggest learning that this book has to offer for us corporate types used to setting goals top down and measurable ones at that and viewing "participation" as the keeping and circulating minutes of meetings and inviting broad-based representation in committees may not be good enough.
In practically all the successful cases that the authors encountered during their research work, the successful projects were the ones where the sponsors worked through the slow and tortuous process of including marginalised people and making them comfortable enough to raise questions on their own.