Challenges Faced by Organizations While Incorporating CSR - Coursework Example

Contemporary Issues in business and management Introduction Companies around the world are striving to meet the newly setstandards of practice, including those on environmental protection, as an effort to guarantee that they do not affect the environment, among other valuable resources negatively. The pressure comes in the forms of the calls made to companies to assume responsibility, for the effects of business practices on the natural environment and society (Porter and Kramer, 2006). Corporations are also yielding to the pressure exerted by governments, among other agencies, to employ the principles of sustainable business, during and throughout the administration of everyday business. Sustainability refers to the voluntary activities of the company, which show that it is committed to environmental and social concerns, according to the ways it administers its operations and in its dealings with its stakeholders (Van Marrewjk & Verre, 2003). This paper will discuss the challenges encountered by the leaders of the organization, in their attempts to incorporate CSR, and particularly that related to the impacts of their business activities, in the light of the models, theory and the analytical tools related to CSR, change and innovation management and leadership. Further, the paper will evaluate the ways in which companies are going green, giving some examples. Context building and background of study The era for applauding the economic prosperity of corporations as a stand-alone area has ended, as corporations, societies, governments and agencies are questioning the impacts of corporate activities and actions (Orlitzky, Schmidt and Rynes, 2003). This change of outlook requires firms to redirect and split their attention towards increasing its economic performance, while at the same time filling the position of good corporate citizen. Filling these positions requires companies to keep in touch with global trends on maintaining commitment to the two major goal areas; meeting private and public needs (Henderson, 2007). These new demands have forced corporations to review their rules, frameworks, and business models. Among the most responsible companies, it is a daily practice to review short and long-term plans, so as to stay safe and at the front line in the rapidly changing world. There has been a change in the way that companies consider their place, paying reference to local and global stakeholders (Holcomb, Upchurch and Okumus, 2007). There has also been a change in the management of the relationships maintained between companies and its stakeholders, particularly with customers, suppliers, investors, activists, public and government officers and communities; relationships have become a core area in shaping corporate success. These changes and transformations compel organizations to administer their business, while paying attention to sustainable development, and organizational and individual leadership takes a central role in actualizing the change (Atakan and Eker, 2007). Local and global companies have developed various strategies for addressing the convergence of societal needs, environmental demands and corresponding business needs. Corporations are also ranked on the ways in which they work towards the development, paying attention to the ways in which they are integrating social responsibility into daily operations and business strategies globally (Jacobs, Singhal and Subramanian, 2010). From one end of the rating continuum, there are the companies that do not take responsibility for their impacts on the environment and society. On the opposite end of the continuum, there are those that consider their operations as impacting, and reliant on the society at the ecological, economic, and the social levels. The acceptance of social responsibility bestows on companies, a sense of responsibility beyond the conventional corporate boundaries (Quinn, 2008). Many companies fall in between the two extremes; their competition and others force many assume CSR due to outside pressure (Roberts, 2007). A). The challenges encountered by the leaders of companies The first challenge is that leaders are faced with and needed to incorporate many metrics, all of them supposed to show the company’s level of sustainability into their practice; that makes the administration of CSR very confusing. This is a major area of challenge, noting that sustainability initiatives are in many cases hard to measure, mainly because they affect society and people at a macro level, and their implications on the companies are in many cases not clear. This challenge is worsened by the fact that the impacts of irresponsible business activities are not obvious immediately and that they are also dependent and reflective of the person implementing CSR and the approach used (Maak, 2007). Many metric suites, including the Global Reporting Initiative (GRI), life-cycle assessment and ecological footprint have been established to lessen the impact of this challenging area. More importantly, during the usage and the application of the different sustainability metrics, leaders are faced by the challenge of judging the ones that are most pertinent and appropriate for its needs. In many cases, many leaders do not understand the metrics that are most meaningful to their business, which makes it impossible to integrate changes and innovations into their traditional business practices and metrics (Afiya, 2005). The second challenge encountered by corporate leaders is that consumers, in most cases, do not factor in sustainability into their buying behaviors. This challenge makes it difficult for corporate leaders to understand the ways in which customers value the sustainability of business practices and the product itself, when comparing it with other product characteristics. For that reason, it becomes difficult for leaders to develop products that meet the sustainability demands set by governments and companies, while at the same time factoring in the needs of customers. One model that meets this case is the new standards set for the fuel economy of newly produced cars, which is requiring that all cars meet the average fuel economy of 54.5 miles for a gallon of fuel (Vlasic, 2012). The new standards have raised questions among consumers and consumer friendly representatives; the Romney campaign has expressed the sentiments that the new rules are extreme and that they will limit the choice of consumers (Vlasic, 2012, p. 1). Despite the mounting pressure to adopt sustainability initiatives, corporate leaders face the challenge of lacking the knowledge of the best ways they can use to motivate their employees to support more initiatives on sustainability (Harrison et al., 201). In particular, sustainability managers lack information about the employee incentives that they can use to attract employees that are highly in support of environmental protection and to retain them in the long term. Further, after recruiting the right talent into the organization, it becomes difficult to figure out the best ways of incorporating sustainability performance when incentivizing employees. This lack of information keeps many organizations at the borders of adopting more CSR and environmental protection initiatives (Lev, Petrovits and Radhakrishnan, 2010). The third challenge facing the leaders of corporations is that sustainability does not fit business objectives well. This is evident from the fact that everyday decision-making does not capture the importance and the value of sustainability-related expenditure (Maak, 2007). Many of such investments are usually made, without tangible rewards in the short and the long-term, while the same resources could be channeled towards areas that affect the bottom-line in the short term. This challenge is much worse, taking into account that the market has been slow, since the last financial crisis, which compels leaders to pursue profitability at all cost (Choi and Parsa, 2006). The fourth challenge is that organizations lack the guidelines needed to engage various stakeholder groups, including local communities (Balmer, Fukukawa and Gray, 2007). For example, it has been noted that many local communities will gauge a company’s operations within their territories from not only the economic, environmental and social sides, but also the cultural dimension of business and corporate activities (Harrison et al., 2010). This makes it difficult for leaders to incorporate sustainability into business at different communities, which makes sustainability decision-making difficult (Grant and Sonnentag, 2010). B). Companies going green One company that has demonstrated that going green extends beyond the activities and the business of the company is the Toyota motors company (ToyotaGreen, 2013). Toyota’s green initiatives have included the development of more than seven hybrid vehicle models, including the Prius sedan, which demonstrated the company’s initiative to promote environmental protection throughout its supply chain (Ireland, Hoskisson and Hitt, 2011). However, the company has employed further measures aimed at fostering environmental protection, outside the company, through the engagement of local people and students. Towards doing that, the company has started the Toyota Green initiative (TGI) movement, which is educating people on simple and smart ideas to reduce the environmental impact of the community (ToyotaGreen, 2013). One of the groups targeted by the initiative was the students of black universities and colleges, community members and alumni in charting a better environmental track record (Clark, 2006). The second company that has set a record of going green is US airways the company has started green movement initiatives in its fuel usage, reduction of wastage and recycling of all recyclable materials; exploring alternative fuel options and the construction of green buildings (U.S Airways, 2014). Some of the initiatives started by the company to reduce its environmental impact and that of its supply chain include those of protecting against wastage, the reduction of its carbon emissions by more than 60 percent and the exploration of alternative fuels, including biodiesel (Scott, 2013). Other initiatives adopted by the company include the building of a green headquarters building, which has set a record for minimal energy and water consumption; the elimination of paper usage at its offices and the introduction of fully, recyclable paper and materials for flying customers (U.S Airways, 2014). Conclusion Companies around the world are struggling to meet the new standards of corporate social responsibility and environmental protection, both as an initiative and also due to the pressure exerted by pro-environment companies and governments. The past decades have witnessed a change from the business outlook of emphasizing profits only, to another, where the impact of the business on the environment and society is of major importance. The challenges encountered by leaders in leading environmental protection initiatives include the lack of clarity about the metrics to use, the unpredictability of consumer behaviors, the lack of information on engaging employees in CSR and the misfit between business objectives and CSR. Some of the companies that have emerged as industry leaders in their respective industries for green records include Toyota Motors, which developed hybrid vehicles and US airways, which has set a record in green business operations. Reference List Afiya, A., 2005. 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