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Paul Naysmith

Quality Insider

Does a Corporate Social Responsibility Report Demonstrate Responsibility?

Let us not confuse output for outcome

Published: Tuesday, November 29, 2011 - 14:46

Oh no, it’s happened again! Why do I do this to myself time and again? Do I need to seek help, professional assistance of a psychological nature? I must stop doing this; it’s is as if I don’t have control over myself. It’s a habit. No, it’s not that; it’s something different. It’s worse, a disease like a virus or parasite in my brain: I can’t stop thinking about quality in everything I see or do.

Today my wife found me looking at a document, and although I wasn’t aware I was doing it, I was audibly growling—a literal “grrrrh!”—at the words and pictures on the glossy document in my hands. Sometimes I can’t control my inner quality beast, and when it escapes, bystanders have two options: run fast or improve their process.

“So what has got you sounding like an angry squirrel this time?” my wife said. (Note to self: My inner quality beast must be a small animal.) What had come into my possession was a company annual financial report, along with a corporate social responsibility (CSR) report. Because I was a shareholder, this was the company’s yearly gift to me for investing in my future benefit. In effect I’m betting that this company will perform through time.

What really is the purpose of a CSR report? As a customer, I’ve never asked for one from any supplier or store, but as a shareholder, I get one sent to me with the annual financial report. Therefore I should be happy I have this shiny CSR report in my paws, for the princely sum of free. However, I'm looking at the document and trying to figure out what value I’m supposed to be getting from it, and unconsciously I’m making a beastly noise as a result.

Does this CSR report genuinely reflect the truth about how socially responsible this company really is, and how environmentally conscious its actions make them? Well, the company published it along with the financial report, so therefore it must be honest, right? Or is it sugar-coated propaganda, simply a selection of little golden nuggets portraying how environmentally conscious the company would like to appear?

But here’s what really got me roaring like a squirrel: The company had mixed up “output” with “outcome.”

Long ago, when I was first introduced to this concept by my mentor, I didn’t think there was any difference. I was immature in my quality thinking, and my inner quality squirrel hadn't yet woken from hibernation. “In any process you will have an output, and aren’t output or outcome the same thing, really?” I wondered.

My mentor, who believed in the Socratic method, asked in return, “Well, in a broken process, what would be the output? Is it the same as a desired outcome?” How frustrating for an immature quality professional. There I was, looking for an answer and being posed a new question. I was being coached subtly by a Master Quality Ninja, and I hadn’t yet recognized it.

In a process you can have many inputs that are transformed into an output. This is my textbook definition of a process that I’d throw at Mr. Manager time and again. However, in common-man-speak, my definition is, “How we do things around here, using stuff that our suppliers give us, to provide a product or service to our customer.”

Now if a process is broken, or one of the inputs has so much inherent variation that the process can’t transform it effectively, the result is an output that could be classed as “nonconforming to requirements,” which is an outcome. So I learned a valuable lesson: An output will not be the same as an outcome, and it’s the outcome that we aim for in business, an outcome that can only be produced by our processes and process inputs.

So if I confuse an output (such as the CSR report I was reading) for an outcome (the company is environmentally sound and intertwined with the community), I quickly run into trouble. Please take my word for it: The company’s output and outcome are virtual strangers.

With instant media and Internet sources for information, we can easily see both sides to any tale. I can access the Environmental Protection Agency or government websites that publish prosecutions and fines this company has incurred. I can access social networking websites run by “hate” groups against this company. I can access video files of news reports showing a raging local, aggrieved by the company’s action or inaction to the pollution it has caused.

All these points of information help me get a better understanding of the company’s true nature. I can cross-reference the CSR report and see if any penalties or disgruntled groups pop up. None of which I can find—in fact, I can’t even see the penalties in the financial report. Well done, accountants. You’ve probably delayed these massive payments until next year’s financial report, painting a positive picture to encourage shareholders to invest further.

OK, so I’ve invested my money, and I have to accept that it really is like gambling, hoping to get a return somewhere down the line. As a quality professional, I understand that some companies, which are focused on the short term, do not succeed in the long run. It only took the first recession of this new century to wipe out many of these companies. Looking at the CSR report vs. the information online, I get a clear picture that perhaps the company’s management is focused only on the bottom line rather than long-term sustainability. This helps me make an informed choice: thank you and good-bye.

I’ve had the privilege to hear and work with a great many “systems thinkers,” learning that taking a systems approach can help everyone understand their company better. When taking this approach, perhaps we should consider our stakeholders in a different way. I’ve learned the hard way to recognize who my stakeholders are: They are the people who, when I haven’t involved them in something, come at me holding a stake to drive through my heart.

As for the CSR report, I suspect there were many good intentions behind writing it for the stakeholders. But taking a systems-thinking perspective, who should we really ask to write the report? What would be the impact if perhaps an environmental agency wrote a critique? Or what would be the outcome if a “hate” campaigner was allowed to reply in the report? If companies want to be more transparent, then explaining the things that hurt their reputations, and describing how they are planning to put it right, would be of benefit to me, a stakeholder. Being honest enough to admit a mistake and, most important, taking action to prevent a recurrence, would be one step toward social responsibility. A CSR report will never do this; only management action will.

Returning to my roaring like a small mammal and the reasons why: The company declared how much paper it recycled in one year—thousands of tons of the stuff. But for some reason, the company still chose to print off thousands of copies of the CSR report on paper that never declared if it was recycled. Today I’ll do my part for the environment: The CSR report is now in the process of being turned into toilet paper, a much more value-added item.


About The Author

Paul Naysmith’s picture

Paul Naysmith

Paul Naysmith is the author of Business Management Tips From an Improvement Ninja and Business Management Tips From a Quality Punk. He’s also a Fellow and Chartered Quality Professional with the UK’s Chartered Quality Institute (CQI), and an honorary member of the South African Quality Institute (SAQI). Connect with him at www.paulnaysmith.com, or follow him on twitter @PNaysmith.

Those who have read Paul’s columns might be wondering why they haven’t heard from him in a while. After his stint working in the United States, he moved back to his homeland of Scotland, where he quickly found a new career in the medical-device industry; became a dad to his first child, Florence; and decided to restore a classic car back to its roadworthy glory. With the help of his current employer, he’s also started the first-of-its-kind quality apprenticeship scheme, which he hopes will become a pipeline for future improvement ninjas and quality punks.