assessment and self-assessment of corporate social ... - Mihajlo Pupin

JOURNAL OF ENGINEERING MANAGEMENT AND COMPETITIVENESS (JEMC)Vol. 3, No. 1, 2013, 11-16ASSESSMENT AND SELF-ASSESSMENT OF CORPORATE SOCIALRESPONSIBILITY: PROBLEMS AND DECISIONSLarisa NIKITINAVoronezh State University, Universitetskaya pl., 1, Voronezh, Russia, 394006. E-mail: lanikitina@yandex.ruAccepted 20 November, 2012Currently, the requirements for the social side of the enterprise are increasingly growing. It appliesto businesses of all types of ownership, size, organizational and legal forms, regardless of theirgeographical location, type of activity, cultural and national traditions. In Russia, after extensivediscussion of CSR essence in the last decade, the situation has been stabilized. Further extension ofCSR is largely hindered by the lack of clear and accessible teaching approaches to organizing andimplementing social activities in the enterprises of the region, based on certain rules andrequirements. One of the attributes of socially responsible behavior of companies is to followcertain standards, since they are the main tool to assess the stakeholders and also allows thecompany to objectively present their own level to achieve socially important parameters ofdevelopment. In 2011, the author participated in the development of the "Standard of CorporateSocial Responsibility of Enterprises of Voronezh Region", which laid the evaluation indicators ofthe regional specificity. In this paper, the technique of self-assessment of corporate socialresponsibility based on the construction of the results matrix in the spheres of responsibility andstakeholder engagement is represented.Keywords: Corporate Social Responsibility, Indicator, Social Accountability, Results Matrix, Standard.INTRODUCTIONIn Russia, for the moment the number of companiesthat systematically carries out activities in all areasof CSR is very small. Even fewer companies areable to formalize the management of CSR and socialreporting which are provided on a regular basis. Webelieve that this is a manifestation of suchinstitutional feature of Russian society as dominanceof the informal part organization, which in turn hasled to some skepticism of Russian businessmen onthe need for formal documents, regulating the socialand economic activities. Therefore, one of the majorproblems faced by researchers and practitioners isthe measurement of corporate social performanceand interpretation of results obtained in accordanceto the values of society and companies.Large Russian companies which actively cooperatewith foreign companies commonly use internationalstandards. However, for the evaluation of most smalland medium-sized enterprises these standards arenot suitable enough precisely because of theorientation of the transnational and large nationalbusinesses. In addition, the appreciation of thesestandards is very limited: the results of the regionalempirical studies showed that only a few of therespondents are familiar in general terms withinternational accounting standards in the field ofCSR, knowing the details of these standards was notamong the respondents (Nikitina, 2009). Tables1,2,3 present data on the use of social reporting inthe formation of CSR.As one can see, social reports are compiled by only6-10% of Voronezh enterprises. In the period offavourable business conditions, 23.3% of managersplanned to start the process, but during theworsening economic situation only 2% ofrespondents kept the desire. In other words, Russianmanagers do not consider the CSR reports asimportant statements of their economic well-being.It should be noted that the surveyed managers didnot make separate social reports. In 2007, 100% ofthe respondents indicated the appendix to the annualreport as a form of social reporting, in 2009 a thirdof managers made statements in the media.ISSN 2217-8147©2013 University of Novi Sad, Technical faculty “Mihajlo Pupin” in Zrenjanin, Republic of SerbiaAvailable online at http://www.tfzr.uns.ac.rs/jemc

12 NikitinaTable 1: The annual social reports preparation (% оf respondents)Compilation of reports of socialYears2007 2009Yes 10,0 6,0No, but plan 23.3 2,0No 66,7 92,0Table 2: Forms of social reporting (% оf companies that make up social reports)The form of social reportingYears2007 2009A separate report in accordance with international non-standard 0,0 0,0Appendix to the Annual Report 100,0 66.7Report to the board 0,0 0,0Speech in the Media 0,0 33.3Other 0,0 0,0Table 3: Reasons for not making social reports (% оf companies that do not make up social reports)ReasonsYears2007 2009Other tasks 48.1 29.8The company is not ready for dialogue with the public 14.8 4.3Lack of financial resources 11.1 10.6Necessity absence 26.0 46.8Other 0,0 2.1Do not call the cause of 0,0 6.4In 2007 “other tasks” and “the absence of thenecessity” were named as the most importantreasons for not drawing on the CSR reports. In 2009the same reasons were named, but their rankings arereversed. It is noteworthy that only 26.0% ofmanagers saw no need for social reporting in 2007and in 2009 there were 46.8%. We can assume thatthe worsening economic situation in the countryaffected the views of managers. But in general, thissituation is because the level of businessesmanagement relationship to corporate socialresponsibility is very unstable. Socially responsiblebehavior is seen as an attribute of a good life, whichcan be neglected for the deterioration of thesituation. That indicates that the level ofunderstanding of CSR as a strategy is not achieved.In this regard Russian federal and regionalgovernment authorities are taking steps to enhancesocially responsible behavior of Russian enterprises.METHOD OF "STANDARD OF CORPORATESOCIAL RESPONSIBILITY OFENTERPRISES OF VORONEZH REGION"It should be noted that at the present time in Russiathe unified social standard does not exist. Socompanies could not make up standardized andcomparable reporting. All national standards forcorporate social responsibility are developed basedon the documents of authoritative internationalorganizations: OECD Guidelines for MultinationalEnterprises (OECD, 2000); UN Human RightsNorms for Business; Global Compact; ILOConventions; Global Sullivan Principles. At theirbase the separate documents, which are advisory innature, and the fulfillment of their demands isvoluntary were formed: Standard "Socialresponsibility of the organization. Requirements"-CSR/2008 developed by Russian Organization forQuality (ROQ, 2007); Standard "Social reporting byenterprises and organizations registered in theRussian Federation. Guidelines", proposed byRussian Chamber of Commerce; "Basicperformance indicators. Recommendations for use inthe practice of management and corporate nonfinancialreporting", prepared by Russian Union ofIndustrialists and Entrepreneurs in order to promotethe ideas of the Social Charter of Russian Business(2005).The lack of clear quantitative indicators of CSR andmethodological basis for the interpretation of theresults are the main problems of the majority ofstandards. The use of the standards GRI and "Basicperformance indicators. Recommendations for use inthe practice of management and corporate nonfinancialreporting" (Russian adaptation of the GRI)can help to overcome these problems (Prokopov andFeoktistova, 2008). But first of all they do not allow

JOURNAL OF ENGINEERING MANAGEMENT AND COMPETITIVENESS (JEMC) 13evaluation of results of social activity without theinvolvement of experts, as they do not have specificguidelines for the indicators. Secondly, thecomposition of the proposed indicators of activityfits only to a large industrial enterprise. And thirdly,they give rise to only a formalization of the reportingprocess in the management of CSR. Also, thegeneral purpose of each standard is not reduced tothe common goal: one can assess the quality of thepreparation of social reports, while others aredesigned to improve the quality of reporting onsustainable development, the third are made forstakeholders.In the last 2-3 years in the Russian regions somesteps to enhance socially responsible behavior ofregional companies have been taken. This processwas developed by such tools as organization of thevarious competitions, building a rating of sociallyresponsible businesses, and developing their ownCSR standards and codes. In the Voronezh regionthe initiative in the introduction and development ofCSR has also been taken. We have developed"Standard of corporate social responsibility ofenterprises of Voronezh Region". It covers thegeneral theoretical position associated with theterminology, goals, principles of corporate socialresponsibility, and includes minimum requiredindicators to assess the level of social responsibility.The standard can be used by organizations of allsizes and types, regardless of affiliation to aparticular industry, the level of knowledge of therequirements of international standards for selfassessmentand provided information to keystakeholders (public authorities and managementbodies of local self-government, communityorganizations, made available to the public throughmedia, etc.).The Standard provides the use of both quantitativeand qualitative indicators. The use of quantitativevariables ensures comparability of data. Theprincipal feature of this standard is that the CSRindicators are grouped in three spheres ofresponsibility - technical-technological,organizational-economic and non-productive. Thisallows description of three areas of socio-economicrelations:− State of the productive forces, from which allother components of socially responsiblebehavior of the enterprise depend on;− The degree of organizational and economicrelations, which mediate the productive forces;− The nature and intensity of interaction ofcompanies with governments, local governments,civil society organizations in decision of a widerange of socially significant issues of nonproductiveactivities.For example, composition of the indicators in theorganizational-economic sphere is presented inTable 4.The structure of the indicators in the Standard showsnot only content elements of the specific areas ofCSR, but also evaluates the level of achievement inthis area.INTERPRETATION OF THE RESULTS OFCORPORATE SOCIAL RESPONSIBILITYFOR THE COMPANY AND ITSSTAKEHOLDERSStandard’s indicators rank the activities of thecompany's corporate social responsibility at threelevels. Ranking done on the basis of theimplementation obligations of socially responsibleactivities: mandatory and voluntary. The minimumvalue of the indicator sets a limit of mandatory level.Failure to comply with mandatory actionsautomatically precludes the company from a numberof responsible, no matter what voluntary sociallyimportant transactions it may produce. In thepresence of at least one indicator with a value of"zero", the enterprise cannot be considered sociallyresponsible. This is due to the fact that in prescribingregulations the values that society considersunconditional are reflected. The company may notshare this value system, but has no right (either legalor moral) to consider their own values moresignificant than that prescribed by society. This doesnot exclude the possibility to initiate the introductionof changes to regulations aimed at improving thesocial responsibility of all society that can beconsidered as an element of socially responsiblebehavior on a higher - voluntary level.The Standard takes into account that the conditionsin which businesses operate are specific to eachregion. Achievement of at least average levelindicates that the enterprise-specific parameter of itsactivities is working "better than others." Therefore,the averages over sphere of activity in Voronezhregion were taken as the first level of CSR.The first level is primary. It represents thecompany's activities aimed at the assimilation of theCSR provisions which are already developed,obtaining a sufficiently common for companies inthe region results and the adaptation to the generatedrules. So it can be treated as a voluntary adaptive.

14 NikitinaTable 4: Indicators of corporate social responsibility in the organizational-economic sphereThe minimum value of The minimum value ofthe indicator not the indicatorreached (0 points)(1 point)(2 points)№ Name of indicator1 Collective agreement2345678Average monthly wage(rubles per 1 employee)The minimum wage in theorganization (rubles permonth)The coefficient of wagedifferentiation in theorganization (the ratio ofaverage wages 10% of thehighest paid and the averagewage of 10% of the lowest paidemployees (how many times))Payment and adjustment ofwagesThe coefficient of staffturnover (%)Number of employees, passedvocational training, retrainingand advanced training at theexpense of the employer duringthe year (% of average numberof employees)Saving workplaces (% ofworkplaces at the beginningof the year)9 Violations of tax laws1011Violations of Charter andcontractual obligations tosuppliers of material andfinancial resources (includingowners)Cases of unreasonableoverpricingThe collectiveagreement is notconcludedBelow the averagevalue in the region byactivityBelow the living-wageestablished in theregionThe collectiveagreement is concludedAverage value in theregion by activity andhigherThe living-wageestablished in theregion and higherThe recommendedvalue of the indicatorThe collective agreementis tailored to a tripartiteagreement between theGovernment of theVoronezh region, tradeunions and employers'associationsAverage value inRussia by activity andhigherDouble living-wageestablished in theregion and higher>10 5 – 10 < 5With arrears of wageduring the yearReduction(more than 5%)Without arrears ofwagesIndexation of wages inaccordance with theconsumer price index inthe region> 20 10–20 < 10< 10 10- 20 > 20Tax penalties have beenappliedViolations were notresolved or resolved inthe courtsCases of unreasonableoverpricing wereofficially registeredOn last year's level (+ /- 5%)Tax payments are paid infull value at the request ofthe tax authority withinthe period when the dutyon the application ofpenalties by the taxauthority has not yetbegunViolations resolved outof courtNo violationsIncrease(more than 5%)Tax payments madepromptly and in fullvalueNo violationsSocially orientedpricing policy(discounts, benefits fordisadvantaged groups,etc.)The second level of CSR in the standard isrecognized not only voluntary, but the initiative inits distribution. Therefore, companies’ owninitiatives and results in the field of CSR, whichmark out a particular company of their totalpopulation, are especially highlighted. The excess of