EOI IMSD - dtruran ebbf - CSR in SMEs part 1 of 3

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an introduction to old and new definitions of SMEs and their drivers and opportunities to create responsible positive impact:
YOU CAN VIEW HERE THE VIDEO of this class: http://www.eoi.es/mediateca/video/2125
. introducing SMEs, new kinds of SMEs, specific traits of SMEs 
and their new “local/global” environment
. what is and what can be the impact of SMEs (positive and negative)
. what drives SMEs to be responsible (passive and active drivers)
. introducing the “love brand” and new purchasing patterns - advocacy
. three examples of CSR application, specially useful in times of crisis
(Warby Parker, Young Italian Industrialist pen cases, Giada Dall’O)
. role play and other examples of stakeholder dialogue in an SME

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EOI IMSD - dtruran ebbf - CSR in SMEs part 1 of 3

  1. 1. www.eoi.es CSR in SMEs - an Introduction IMSD / CSR in SMEs PROFESSOR daniel truran - @dtruran - daniel.truran@ebbf.org
  2. 2. ebbf.org / Daniel Truran www.eoi.es Your assignment by Wednesday 23rd April 20% of marking EOI blog post one or more short blog posts about one or more areas of CSR in SMEs that struck you / that you felt are important 
 70% of marking a short document on CSR in SMEs 2 A4 pages maximum - 3 min presentation - website links - Identify an SME that has applied CSR (world coverage) - describe the driver that pushed that company to CSR - identify stakeholders it positively influenced - describe success it brought about: IMPORTANT quantify success email to : daniel.truran@ebbf.org ! 10% of marking attention and “intelligent” active participation in the class IMSD / CSR in SMEs
  3. 3. ebbf.org / Daniel Truran www.eoi.es what can you expect from this course? (Today)
 Traditional and new definitions of SMEs and its key success drivers 
 (Friday 4th April) 
 Creating and measuring values alignment in SMEs New Leadership styles enabling CSR in SMEs 
 
 (Wednesday 23rd April)
 What works and what doesn’t applying CSR in SMEs
 Our personal area of influence in creating change in SMEs IMSD / CSR in SMEs
  4. 4. ebbf.org / Daniel Truran www.eoi.es Definition of SME ? Medium-sized enterprises: - Have fewer than 250 employees. - Their annual turnover should not exceed EUR 40 million - Or their annual balance-sheet total should be less than EUR 27 million. 
 Small enterprises: - have between 10 and 49 employees. - They should have an annual turnover not exceeding EUR 7 million - or an annual balance-sheet total not exceeding EUR 5 million. 
 Micro-enterprises: 
 are enterprises which have fewer than 10 employees ! (According to Commission Recommendation (96/280/EC) of 3 April 1996 ) IMSD / CSR in SMEs
  5. 5. ebbf.org / Daniel Truran www.eoi.es new definitions ... •Campalyst is one of the 'micro-multinationals' that have emerged over the past few years. •Enabled by communication technologies, they can set up shop anywhere. "Small is an asset, it means you're able to respond to consumer needs very quickly. You can be agile without the bureaucracy." •"For us, opening an office in another country would mean one of us flying there, finding a co-working space and setting up a desk” •"We're really fast, so if we see that there is, for example, a huge market for us in Brazil, we'll be there in a week.” •Today's start-ups will never grow into conglomerates with a staff of 100,000 that traditional path is over. It's ineffective." IMSD / CSR in SMEs http://www.lisboncouncil.net//index.php?option=com_downloads&id=639
  6. 6. ebbf.org / Daniel Truran www.eoi.es IMSD / CSR in SMEs how many employees does a company serving 1.11 billion people using their site each month
 (as of May 2013) have ? WhatsApp bought for $19 billion it enjoys 420 million monthly users number of employees ? 55 3,500
  7. 7. ebbf.org / Daniel Truran www.eoi.es What are the characteristics of an SME? They usually have extensive local knowledge of resources, supply patterns and purchasing trends. IMSD / CSR in SMEs SMEs also represent an important source of innovation. They tend to occupy specialized market “niches” and follow competitive strategies that set them apart from other companies. They are highly adaptable and fast changers They draw upon the community for their workforce and rely on it to do business. They are an important source of employment. They provide goods and services tailored to local needs and at costs affordable to local people.
  8. 8. ebbf.org / Daniel Truran www.eoi.es “local” market of SMEs IMSD / CSR in SMEs suppliers customers shareholders employees
  9. 9. ebbf.org / Daniel Truran www.eoi.es new definitions ... http://www.cnbcmagazine.com/story/rise-of-the-roaming-empires/1558/3/ Being spread across 18 time zones poses challenges. Most of the staff have monthly Skype meetings; managers have a bi-weekly substitute for the traditional chat around the water cooler. The company uses Google+ hangouts and shared desktops, and Dropbox for sharing documents. "Most large companies cannot compete on this level” IMSD / CSR in SMEs Avego operates in China, Europe and the US, yet its head office is in Kinsale, southern coast of Ireland. ! "The idea of a headquarters is really a foreign concept,”
  10. 10. ebbf.org / Daniel Truran www.eoi.es Impact of SMEs In OECD (*) economies SMEs and microenterprises account for: over 95% of firms, 60-70% employment, 55% of GDP 
 In developing countries, more than 90% of all firms outside the agricultural sector are SMEs and microenterprises. SMEs and Microenterprises also create 80% of pollution IMSD / CSR in SMEs (*) Most OECD members are high-income economies with a "very high" Human Development Index (HDI) and are regarded as developed countries.
  11. 11. ebbf.org / Daniel Truran www.eoi.es common good local community government environment shareholders suppliers employees management clients organization IMSD / CSR in SMEs Impact of SMEs
  12. 12. ebbf.org / Daniel Truran www.eoi.es IMSD / CSR in SMEs "Profit for a company is like oxygen for a person, if you don’t have enough of it, you’re out of the game but if you think your life is only about breathing as if their purpose is breathing, you’re really missing something” ! Peter Drucker
  13. 13. ebbf.org / Daniel Truran www.eoi.es yet another definition of CSR? IMSD / CSR in SMEs they can be negative impacts unemployment, noise/pollution, exclusion, congestion, product misuse .... or positive impacts jobs, support social enterprise, education skills and training, community investment, local amenities ... “the sum of your activities is the social and economic impact of business in a locality” 
 BitC - Business in the Community (UK)
  14. 14. ebbf.org / Daniel Truran www.eoi.es What decisions affect? where you locate and manage your operations [site location and management] implications: getting to work ... ! who you hire [employment] ! what and from whom you purchase [supply chain and procurement] ! how and what you produce and sell [product and service deliver] ! what and how you give back [community and social investment] .... IMSD / CSR in SMEs
  15. 15. ebbf.org / Daniel Truran www.eoi.es common good local community government environment shareholders suppliers employees management clients organization IMSD / CSR in SMEs examples from your companies what positive or negative effects ?
  16. 16. ebbf.org / Daniel Truran www.eoi.es Collective impact ! Collectively SMEs have considerable environmental impact. However, given the various challenges with which they are confronted, and the perception that their individual impact is not significant, it is unlikely that environmental concerns will figure high on their business agendas. IMSD / CSR in SMEs do you agree? What - drives - SMEs to be “responsible”? are you ok with this?
  17. 17. ebbf.org / Daniel Truran www.eoi.es Collective impact ! Collectively SMEs have considerable environmental impact. However, given the various challenges with which they are confronted, and the perception that their individual impact is not significant, it is unlikely that environmental concerns will figure high on their business agendas. ! the good corporations can do By engaging with SMEs, assisting them with capacity building, and aiding them with compliance, particularly with environmental standards, large corporations can help SMEs integrate sustainable development thinking into their production processes and operations. IMSD / CSR in SMEs What - drives - SMEs to be “responsible”?
  18. 18. ebbf.org / Daniel Truran www.eoi.es What drives an SME’s efforts in CSR? corporate supply chain http://www.sustainabilityconsulting.com/walmart-services/ IMSD / CSR in SMEs Walmart Supplier Sustainability Assessment
  19. 19. ebbf.org / Daniel Truran www.eoi.es using a scorecard to your advantage Another challenge for some suppliers is figuring out how to translate the scorecard's answers into strategic management plans. ! The scorecard's 15 questions are grouped into four categories: energy and climate; material efficiency; natural resources; and people and community ! so it's easy to see which sustainability category need to be addressed with short term tactics. ! What's more difficult is building the right internal team and developing a more strategic approach, because most manufacturers don't organize their management teams and business units around sustainability categories. http://www.fivewinds.com/english/news-and-events/patterns-newsletter/how-to-use-walmart-s-supplier-scorecard-to-your-advantage.htm
  20. 20. ebbf.org / Daniel Truran www.eoi.es What drives an SME’s efforts in CSR? ! - Large corporation's supply chain requirements - Government regulation - constraints concerning environment social contracts and legislation - Increased demand from customers/society ! - Personal wish to be responsible, to do the right thing - Eco-efficiency driven innovation - .... IMSD / CSR in SMEs
  21. 21. ebbf.org / Daniel Truran www.eoi.es Difference between these two groupings? ! - Large corporation's supply chain requirements - Government regulation - constraints concerning environment social contracts and legislation - Increased demand from customers/society ! ! - Personal wish to be responsible, to do the right thing - Eco-efficiency driven innovation - ... PASSIVE v ACTIVE v IMSD / CSR in SMEs creating the love brand ... (or the “like” brand)
  22. 22. ebbf.org / Daniel Truran www.eoi.es Love Brand
 Emotional Engagement with your stakeholders IMSD / CSR in SMEs
  23. 23. ebbf.org / Daniel Truran www.eoi.es Love Brand Stakeholders “in love” ! Not only buy ! But actively promote IMSD / CSR in SMEs
  24. 24. ebbf.org / Daniel Truran www.eoi.es evolving purchasing patterns purchase IMSD / CSR in SMEs awareness we recognize a need (say, a new sweater), consideration search for information about various stores and options preference develop a list of criteria
  25. 25. ebbf.org / Daniel Truran www.eoi.es OLD purchasing patterns: aiming to create loyalty awareness preference consideration purchase loyalty IMSD / CSR in SMEs
  26. 26. ebbf.org / Daniel Truran www.eoi.es NEW purchasing pattern: the key is now creating - positive advocacy - awareness preference consideration purchase advocacy loyalty IMSD / CSR in SMEs have you used the powerful opportunity to “advocate” recently?
  27. 27. ebbf.org / Daniel Truran www.eoi.es getting that advocacy advocacy making the promise delivering the promise creating emotional engagement IMSD / CSR in SMEs
  28. 28. ebbf.org / Daniel Truran www.eoi.es Love Brand Are you in “love” with any brand because of its sustainability / responsibility? ! what is your emotional engagement? IMSD / CSR in SMEs
  29. 29. ebbf.org / Daniel Truran www.eoi.es Principle behind successful SMEs “having a healthy business should go hand in hand with creating a healthy community” IMSD / CSR in SMEs
  30. 30. ebbf.org / Daniel Truran www.eoi.es EnterpriseEnterpriseEnterprise Shareholders Employees Custom ers Environm ent Communities Suppliers the enterprise eco system: 
 the stakeholder concept IMSD / CSR in SMEs Who are the “stakeholders” involved in the following three examples?
  31. 31. ebbf.org / Daniel Truran www.eoi.es Who are the “stakeholders” involved in these three examples? Why? What was their driver? Who made CSR happen in these SMEs? IMSD / CSR in SMEs
  32. 32. ebbf.org / Daniel Truran www.eoi.es
  33. 33. ebbf.org / Daniel Truran www.eoi.es Warby Parker - doing good doing well http://youtu.be/DarG-uI319c
  34. 34. ebbf.org / Daniel Truran www.eoi.es Sure ... but in times of crisis, when the pressure is on? IMSD / CSR in SMEs
  35. 35. ebbf.org / Daniel Truran www.eoi.es Closer to local community IMSD / CSR in SMEs
  36. 36. ebbf.org / Daniel Truran www.eoi.es "my first and current job is to create contracts with hotels, restaurants and all stakeholders present in the tourism sector. From my first day at work I always tried to be honest and transparent with my suppliers whilst of course always trying to achieve the financial goals of my company. Even though combining the two was sometimes a challenge, in the end I was rewarded in both areas! ! This happened not so long ago when the manager of a large Italian hotel chain decided to confirm a big contract with us, taking away share from our competitors, he justified his decision by saying: trust in times of crisis Giada Dall’O “in times of economic crisis such as the ones we are living now, knowing that you can trust the people that you work with is fundamental” IMSD / CSR in SMEs
  37. 37. ebbf.org / Daniel Truran www.eoi.es EnterpriseEnterpriseEnterprise Shareholders Employees Custom ers Environm ent Communities Suppliers IMSD / CSR in SMEs Who are the “stakeholders” involved in those three examples? Who made CSR happen in these SMEs? Why? What was their driver?
  38. 38. ebbf.org / Daniel Truran www.eoi.es What are some direct consequences / drivers of SME’s efforts in CSR ? http://www.bi.no/CenterFiles/Centre%20for%20Corporate%20Responsibility/SME_Innovation_CSR.pdf Active (not passive) CSR Innovation Culture Integrity Courage wins public approval (love - emotional engagement) differentiates your business minimizes risks reduces costs IMSD / CSR in SMEs
  39. 39. ebbf.org / Daniel Truran www.eoi.es pick a stakeholder 
 and be socially responsible EnterpriseEnterpriseEnterprise Shareholders Employees Custom ers Environm ent CommunitiesSuppliers IMSD / CSR in SMEs
  40. 40. ebbf.org / Daniel Truran www.eoi.es IMSD / CSR in SMEs
  41. 41. ebbf.org / Daniel Truran www.eoi.es IMSD / CSR in SMEs
  42. 42. ebbf.org / Daniel Truran www.eoi.es Identify Stakeholders outcome of dialogue with stakeholders www.ebbf.org Build Impact Measurement WITH stakeholders IMSD / CSR in SMEs Dialogue as a source of information and understanding Suppliers to IVECO example Source of innovation
  43. 43. ebbf.org / Daniel Truran www.eoi.es Examples of stakeholder conversations CEO closing the entire factory down for one day to set 10 year strategy including the toilet cleaner - FULL engagement IMSD / CSR in SMEs
  44. 44. ebbf.org / Daniel Truran www.eoi.es “…significantly boost our company’s performance during the next five years. How? Foremost, we look to inspire our employees’ hope in the future, to fill them with a sense of progress and advancement in their careers as well as their personal lives. How we treat and teach our employees and the sense of respect and fairness our company projects, will instill the loyalty, motivation and positive thinking our team needs to accomplish our goals.”
 
 Fasha Mahjoor - CEO of Phenomenex IMSD / CSR in SMEs
  45. 45. ebbf.org / Daniel Truran www.eoi.es which is the first stakeholder to involve in a CSR initiative? EnterpriseEnterpriseEnterprise Shareholders Employees Custom ers Environm ent CommunitiesSuppliers IMSD / CSR in SMEs
  46. 46. ebbf.org / Daniel Truran www.eoi.es why do you think that employees should be the first focus point of 
 CSR in SMEs ? EnterpriseEnterpriseEnterprise Shareholders Employees Custom ers Environm entCommunities Suppliers IMSD / CSR in SMEs
  47. 47. ebbf.org / Daniel Truran www.eoi.es Your assignment by Wednesday 23rd April 20% of marking EOI blog post one or more short blog posts about one or more areas of CSR in SMEs that struck you / that you felt are important 
 70% of marking a short document on CSR in SMEs 2 A4 pages maximum - 3 min presentation - website links - Identify an SME that has applied CSR (world coverage) - describe the driver that pushed that company to CSR - identify stakeholders it positively influenced - describe success it brought about: IMPORTANT quantify success email to : daniel.truran@ebbf.org ! 10% of marking attention and “intelligent” active participation in the class IMSD / CSR in SMEs
  48. 48. ebbf.org / Daniel Truran www.eoi.es IMSD / CSR in SMEs
  49. 49. ebbf.org / Daniel Truran www.eoi.es EXTRA “BONUS” CONTENT
  50. 50. ebbf.org / Daniel Truran www.eoi.es new definitions ... Campalyst is one of the 'micro-multinationals' that have emerged over the past few years. With global aspirations from the get-go, enabled by communication technologies, they can set up shop anywhere. "Small is an asset, it means you're able to respond to consumer needs very quickly. You can be agile without the bureaucracy." Today's start-ups will never grow into conglomerates with a staff of 100,000 that traditional path is over. It's ineffective." ! "For us, opening an office in another country would mean one of us flying there, finding a co-working space and setting up a desk, or just hiring another person there. This is totally our decision," he says. "We're really fast, so if we see that there is, for example, a huge market for us in Brazil, we'll be there in a week." IMSD / CSR in SMEs http://www.lisboncouncil.net//index.php?option=com_downloads&id=639
  51. 51. ebbf.org / Daniel Truran www.eoi.es new definitions ... http://www.cnbcmagazine.com/story/rise-of-the-roaming-empires/1558/3/ Being spread across 18 time zones poses challenges. Most of the staff have monthly Skype meetings; managers have a bi-weekly substitute for the traditional chat around the water cooler. The company uses Google+ hangouts and shared desktops, and Dropbox for sharing documents. "Most large companies cannot compete on this level” IMSD / CSR in SMEs ... his company Avego operates in China, Europe and the US, yet its head office is in Kinsale, near Cork on the southern coast of Ireland. "The idea of a headquarters is really a foreign concept," he says. The nature of its products meant ... opening up offices for sales and support in Washington DC and Silicon Valley, as well as a manufacturing facility for its hardware and a support office in Dalian, China. Around 30 of its staff are in Ireland, with 15 in China and eight in the US.
  52. 52. ebbf.org / Daniel Truran www.eoi.es What are other drivers of CSR in SMEs? China PeopleIndia IMSD / CSR in SMEs
  53. 53. ebbf.org / Daniel Truran www.eoi.es Adapting to different environments The Indian example The Gandhian principle of trusteeship (GandhiM.K. Harijan, 1927) expresses the inherent duties of the business enterprises to its consumers, workers,community and the mutual responsibilities of these to one another. IMSD / CSR in SMEs
  54. 54. ebbf.org / Daniel Truran www.eoi.es Adapting to different environments The Indian example ! India has 638,596 villages. The rural population is 72.2% The private sector plays a critical part in the growth of rural India: 1. bridge the gap left by the government
 2. increase their markets. 
 If you help build a road in rural India it benefits the community and your company. Examples: work in the rural areas for agriculture, animal husbandry, water conservation, village institution building, capacity building and amenities to fishermen, rural development programs which touches the lives of people in remote villages medical services to the communities. http://www.scribd.com/doc/51283801/4th-Wheel-March-2011-Newsletter IMSD / CSR in SMEs focus on relevant area to make an impact
  55. 55. ebbf.org / Daniel Truran www.eoi.es Principle behind successful SMEs “having a healthy business should go hand in hand with creating a healthy community” IMSD / CSR in SMEs
  56. 56. ebbf.org / Daniel Truran www.eoi.es Adapting to different environments IMSD / CSR in SMEs http://www.chinacsrproject.org/
  57. 57. ebbf.org / Daniel Truran www.eoi.es Adapting to different environments The Chinese example 
 Hebei Huatong Wires & Cables Co. Ltd (working with GIZ) ! . particularly important for export companies . high rate of employee turnover . poor product quality points IMSD / CSR in SMEs http://www.chinacsrproject.org/
  58. 58. ebbf.org / Daniel Truran www.eoi.es What drives an SME’s efforts in CSR? (In China) Employee Care Scheme: ! minimum of two hours of technical or managerial training every week. ! Operators on the production line would take a minimum of 20 hours of in-house training and a minimum of 50 hours of on-site training every year ! All employees would take a minimum of one hour of safety education training every month. ! Selected employees would visit peer companies once every six months ! Employees encouraged to receive advanced vocational training. The training fee would always be fully reimbursed in the case of cable related operations. Other types of training would also be partially subsidized. ! Improving working conditions: ! A workplace safety fund was established. Huatong decided to allocate RMB 100,000 (USD 14,754) per year to the fund. ! RMB 100,000 (USD 14,754) per year also allocated for Personal Protection Equipments (PPEs) to the workshop in the area of production. ! Medical check-up for all employees twice a year.
 ! Medical box was equipped on site in all workshops. IMSD / CSR in SMEs
  59. 59. ebbf.org / Daniel Truran www.eoi.es What drives an SME’s efforts in CSR? (In China) Employee Care Scheme: ! RMB 150,000 (USD 221,302) was invested to install solar bathing systems at all employee dormitories. ! RMB 40,000 (USD 5,905) was invested to build a sports room and a basketball court. ! Two tourism-related activities would be organized every year in spring and summer for the employees, to be defined by Huatong’s management system. ! An entertainment activity would be organized for all employees every three months. ! A birthday party would be organized every month for those employees whose birthdays fall in that month. IMSD / CSR in SMEs
  60. 60. ebbf.org / Daniel Truran www.eoi.es What drives an SME’s efforts in CSR? (In China) The Employee Care Scheme brought about encouraging results in 2009. ! The employee turnover rate was reduced from 5.7% to 2.8% (from end of 2008 to end of 2009). ! This led to the following unintended benefits to Huatong compared to a year earlier: ! The costs of recruitment and training were effectively reduced by RMB 13,000, (USD 1,917), 47.6% lower than the year before. ! The product First Pass Rate increased from 97.1% to 99.2%. ! The customer satisfaction rate in services increased from 74.6% to 86.3%. ! The overall savings achieved due to the upgrading of skills were over RMB 5 Million (USD 737,676) IMSD / CSR in SMEs
  61. 61. ebbf.org / Daniel Truran www.eoi.es GIZ in China IMSD / CSR in SMEs http://www.chinacsrproject.org/

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