Managing social responsibility in times of change

Finance and business leaders should consider how changes affect all their stakeholders, not just the bottom line  

All finance and business leaders know that shifting market dynamics, new technologies, chang-ing customer needs and other factors require them to embrace change as a constant. That is what creates the value that sustains their organisations.

However, change is a complex and delicate process. It can mean closing sites, making redun-dancies, or restructuring operations. During times of change, it is essential for companies to carefully consider their social impact.

Corporate programs and initiatives that drive positive societal outcomes underscore an organi-sation’s dedication to sustainability, philanthropy, inclusion, ethical sourcing, and more. The demand for them is stakeholder-driven, from customers, regulators, to investors, so companies must ensure that they truly commit to supporting the social element of ESG. 

To ensure their organisation meets its social responsibilities while managing change, finance and business leaders must focus on three key areas: 

• Consider and mitigate reputational risk, 

• Communicate effectively with employees, and 

• Evaluate the impact on their existing and future customers.  

Mitigate risk and enhance the company’s reputation 

Consumers, employees, and shareholders are increasingly conscious of social and environmen-tal issues. If changes are perceived as counterproductive to an organisation’s social responsibil-ity, it can significantly impact its reputation. 

Finance and business leaders should consider how changes affect all their stakeholders, not just the bottom line. They also need to identify and address potential reputational risks before they become significant problems. 

It is important to highlight the positive impact the changes could have. For example, if a print publication goes digital, the organisation reduces paper and ink usage and the impacts of dis-semination of the physical material, hence minimising its negative environmental impact. If the organisation is working to localise its supply chain, that could result in a reduced carbon foot-print by not shipping materials from overseas and make a positive social impact by providing employment and a living to the society around the production site. 

Finance and business leaders should continuously monitor and assess the effects of changes on their organisation’s reputation, allowing for the flexibility to adapt strategies as needed.

Engage employees and communicate effectively

 Change can be met with resistance from employees, so employee engagement and effective communication need to be shared goals of the leadership team. Finance and business leaders must be transparent about the reasons for change and the measures the company takes to min-imise the impact on employees and communities.

Employee-driven organisations that focus on fair compensation and provide critical benefits must support employees who are being made redundant by organisational changes. For exam-ple, if the organisation invests heavily in technology to improve efficiency and reduce its envi-ronmental impact, some roles become redundant.

Finance and business leaders should ensure that employees are a critical part of the change management process. This can include involving employees in decision-making and providing them with the resources and support they need to adjust to new ways of working. 

If redundancies are needed, finance and business leaders should look at how they can best sup-port affected employees to transition to new employment, including offering opportunities for training, reskilling, and upskilling to enable them to switch careers.

Evaluate the impact on customers 

When an organisation goes through change, customers may have concerns about how it will affect them.  Whether the change is a digital transformation or a merger, organisations should highlight pos-itive outcomes, such as a reduced carbon footprint, increased efficiency leading to customer savings, and improved products and services. By providing clear and concise information, or-ganisations can mitigate negative perceptions and maintain customer trust. To truly understand the impact on customer behaviour and brand perception, finance and business leaders should closely monitor these elements through focus groups and surveys

In a globalised, uncertain – and sometimes chaotic – business world, organisations must be adaptable to succeed. Stakeholders expect more from organisations than they ever did before, and that is why organisations cannot ignore the “S” in ESG. It should not be an afterthought of an organisation’s strategy but must be woven into its strategy so that it can continue to adapt, develop, and evolve, navigating disruption while preserving its functioning, competitive stance, and sustainable growth. As society’s expectations of business continue to rapidly change, com-panies that behave in a fair way will be the ones that succeed in the long run and become the game changers of the future.

(The writer holds an FCMA, CGMA, and is CIMA President and Co-Chair of the Association of International Certified Professional Accountants, representing AICPA and CIMA.)