New Balance: Developing And Integrated Csr Strategy

Case Study
New Balance: Developing and Integrated CSR Strategy
Responsible Corporate Leadership / OL-690-X3063
Southern New Hampshire University
Elisa-Ruth Nelson

Introduction
New Balance is an American athletic shoe and apparel company founded in 1906. Initially, New Balance started out peddling arch supports to law enforcement officers and waitpersons/servers in restaurants. Now the company boasts a collection of men and women sport shoes – running, cross training, basketball, tennis, hiking, and golf. Additionally, New Balance has an impressive men/women apparel and accessories division, along with a kid’s section as well. What I found interesting and unique, New Balance offers a custom made option for customers to
design their very own New Balance shoe complete with embroidery personalization. Under the New Balance umbrella, six brands exist: Aravon, Brine, Cobb Hill, Dunham, PF Flyers and Warrior Sports. Currently the CEO is Robert DeMartini and CFO is John K. Withee; and their workforce is at approximately 4,000 employees. At the end of fiscal year 2013, New Balance had earned $2.73 billion in sales.
New Balance’s website pops with incredible visuals, navigationally friendly and organized impeccably. Spending time in the INSIDE NB section I was introduced to information in the following categories: Company Overview, Made in USA product material, Responsible Leadership, Careers, Idea Submission and their Affiliate Program. Of course I was drawn to the Responsible Leadership page and I found New Balance’s vision/mission inspiring along with quickly understanding what their focus is in regards to Corporate Social Responsibility (CSR) activities: environmental initiatives, social responsibility, philanthropy and community. The Responsible Leadership Report released in 2012 (their first attempt to publicly share their CSR activities) provided rich and substantial information on New Balance’s history and what the direction they are heading in their CSR efforts.
Reviewing the case study of New Balance provided me many insights of the trials, tribulations and successes in aligning CSR strategy to the Responsible Leadership Steering Committee and senior leadership (Veleva, 2010). Social responsibility has always been at the center of New Balance’s purpose and mission according to the case study and in their Responsible Leadership Report. However like many other companies, New Balance struggled to align the CSR efforts to their internal business practices, processes and strategies – especially as global expansion occurs. For years, footwear and apparel industries have been linked to sweatshops and unreasonable manufacturing processes (Wong, 2013). “Doing what’s right” has been New Balance’s battle cry since the late 1990’s and this case study illustrates the approach/methodology from the owners, senior leaders and social responsibility manager to support that tagline as the company evolves.
Strengths and Weaknesses Boston College Center for Corporate Citizenship (BCCCC) developed the Corporate Citizenship Management Framework (CCMF). According to the Center’s website, its framework looks at corporate citizenship with a business lens that evaluates the “risks, opportunities and value creation that drives business strategy” (Arias, 2010). There are four categories:
Corporate Values, Mission, Principles, Policies – Integration and Accountability
Community Engagement – Addressing Social Challenges
Operations – Responsible Business Practices
Product and Services – Market Strategy
Let’s take a look a closer look at New Balance’s strengths and weaknesses in each of these four realms as reported by the BCCCC research team.
Overall Governance STRENGTHS
Strong and positive corporate history
Solid and progressive organizational culture
Established CSR efforts
Top leaders / Management supported and committed to CSR initiatives
WEAKNESSES
Confusion as to what CSR at New Balance represented
No goals, priorities and vision were defined for CSR initiatives
CSR activities were not clearly linked to New Balance’s core business strategies
Lack of communication of how New Balance is a responsible social company
Accountability and monitoring differed between footwear and apparel divisions
Products and Services STRENGTHS
Proactively reduced their carbon footprint (eliminated PVC from footwear)
Developed/implemented eco-scorecard to help monitor environmental efforts and initiatives
Eco-Friendly retail stores
WEAKNESSES
Apparel division lacked focused sustainability efforts
Assessment of life-cycle impacts was absent
Operations
STRENGTHS
CSR integration
Partnerships with environmentally sound suppliers
Emphasis on energy efficiency in domestic facilities
High commitment to the workforce (reduced on-the-job injuries)
WEAKNESSES
Significant gap between domestic and abroad production
Apparel posed operational risks to the company
Community Support STRENGTHS
Philanthropist attitude
Empowered employees to give back / volunteer
Strong workplace culture in supporting “community support” programs (for example, Susan Komen Breast Cancer initiative)
Successfully developed a Return on Investment measurement tool WEAKNESSES
CSR efforts were mainly concentrated domestically
Inadequate communication of CSR initiatives (internally and externally)
Not all support programs resonated with the consumers and employees of New Balance
Analysis
When I analyze and review New Balance’s strengths and weaknesses, I see the company in a great position to improve their CSR program – I tend to be a “glass half full” individual instead of a “glass half empty” so my position may be biased! At the time this case study was published, New Balance had been utilizing social responsible practices (in some cases ahead of their competitors) yet, how they managed and executed their CSR activities – it was a bit fragmented.
Their mission statement absolutely encompasses their purpose for being, who their products are for (athletes), and a hint of how they (through responsible leadership) will build their brand. An enduring statement that can keep the company motivated and inspired. So from there, I believe that New Balance needs to create and align an integrated CSR framework into the entire organization. The mission statement has that specific element included; New Balance just needs to embed it correctly enterprise wide.
One suggestion I would propose, establish a CSR department with the senior leader reporting directly to the CEO.
Why? If New Balance wants complete integration from the top to the bottom and vice versa, standing up a CSR division sends a strong message that leadership is serious about CSR initiatives and being successful. Additionally, having the senior leader of the CSR division report to the CEO will align him/her with the other prominent divisions (manufacturing, commercial operations, etc.) and provide an opportunity to work in total concert fulfilling CSR efforts from a collaborative standpoint. This proposition is considered a change initiative and senior leadership must launch this in a meticulous and smart approach. There will be a financial impact (salaries and benefits) associated with this move, therefore it is imperative that it is communicated to all employees in a fashion that shows it is in alignment with the overall values, vision and the mission of New Balance, if not it will likely die a slow and painful death (Myatt,
2012).
Another suggestion I would like to bring to New Balance – improve their internal and external communications, especially with their CSR program. Once New Balance defines what CSR looks like, updates their guidelines and policies, and determines how their CSR initiatives align with the company’s goals, objectives and mission – a sound communication strategy needs to be put in place. The findings from the BCCC indicate that New Balance failed to communicate their initiatives internally and externally. So many successful CSR activities were taking place, yet employees and loyal customers were not aware of these accomplishments. One idea New Balance can institute, consistent communications of green initiatives published to all employees, like a newsletter or set up a blog. Any change initiative must be supported by regular communications because that is it will take to keep people engaged and interested (Abudi, 2012).
There are many more recommendations that I can put forth, such as making sure solid CSR goals are set and that employees are involved in the process; consider Non-Governmental Organizations partnerships, provide in-depth training on CSR to all employees, develop a performance analysis tool to measure CSR efforts.
However, before anything is started, leadership must take the time to plan and decide on the approach to improving their CSR program. Building a proper foundation is key, and there is no room for impatience and taking short cuts. There are many change management models one can consider to pursue the realization of their vision, my suggestion is John Kotter’s eight-step
process.
Implementing CSR Just as there are many methods in executing change management initiatives, the same goes for how a company could approach implementing CSR into their business model/strategy. I was able to locate an article that resonated (with a couple of tweaks) with me, because it addressed the issues I observed from the New Balance case study. Here are the recommendations (Hirai, 2013):
Define what CSR means to your company
Define the messaging
Involve your stakeholders, employees AND customers
Keep scorecard current
Utilize social media
Partner with a non-profit organization
Seek publicity
Repurpose your CSR reports
In my humble opinion, embedding CSR within an organization rests with how it is communicated. Whether it is the CSR plan, the activities, and analysis/measurement – communication is key to keeping the CSR program alive, accountable and successful.
Conclusion
Integrating CSR initiatives throughout New Balance’s business model will definitely place the company above their competitors and make them an “employers choice” when talented individuals seek employment in this specific industry. Furthermore, New Balance benefits in each area of the Corporate Citizenship Management Framework (CCMF) when aligning CSR efforts with their vision, mission and value statements. Focusing on those four key areas of the CCMF will in the end boost PRIDE (from their employees and consumers) and enhance RESPONSIBLE LEADERSHIP (taken from their current mission statement) practices. How?
Under Governance: if New Balance decided to add a dedicated CSR division; their organizational structure would be updated and CSR initiatives would receive proper focus and attention
Under Products and Services: Keeping the scorecard current, and monitoring successes and challenges will keep New Balance forward thinking and victorious in all CSR activities
Under Operations: Applying consistent standards will ensure enhanced morale and productivity, and a sterling reputation
Under Community Support: Expanding their outreach programs and building relationships with consumers (through social media tools) will increase brand loyalty
New Balance has been the sustainability champion of their industry for quite some time. They have a many CSR success stories already – all they need to do is to develop and refine their sustainability strategy and plan that works seamlessly with their business and for their stakeholders, employees, consumers and execute it to the highest standard (Davis, n.d.). This quote from Hermann Gmeiner (1919-1986) social pedagogist and founder of the SOS children’s villages comes to mind when I think about successful CSR initiatives – “Everything great in our world only happens because someone is doing more than they are required to do.” New Balance founders and leadership demonstrates this outlook currently, they need to cultivate a more collaborative effort to ensure widespread permeation and support throughout the company.

References
Abudi, G. (2012, August 21). The Importance of Communicating Your Change
Initiatives. Retrieved March 8, 2015, from http://www.ginaabudi.com/the-importance-of-communicating-your-change-initiatives/

Arias, A. (2010, July 25). CSR Managers Can Benefit from Corporate Citizenship
Management Framework. Retrieved March 7, 2015, from http://www.justmeans.com/blogs/csr-managers-can-benefit-from-corporate-citizenship-management-framework

Davis, Z. (n.d.). How to implement CSR in your company? Retrieved March 8, 2015, from http://www.emg-csr.com/en/sustainability-strategy.php?id_service=3

Hirai, A. (2013, January 9). 7 Steps to Effective Corporate Social Responsibility.
Retrieved March 8, 2015, from http://www.caycon.com/blog/2013/01/7-steps-to-effective-corporate-social-responsibility/

Myatt, M. (2012, February 7). How To Lead Change: 3 Simple Steps. Retrieved March 8,
2015, from http://www.forbes.com/sites/mikemyatt/2012/02/07/how-to-lead-change-3-simple-steps/
Veleva, V. (2010). New Balance: Developing an integrated CSR strategy. Harvard Business Publishing [online].
Wong, A. (2013, May 1). Two Faces of Economic Development: The Ethical
Controversy Surrounding U.S.-Related Sweatshops in Developing Asian Countries. Retrieved March 7, 2015, from http://www.globalethicsnetwork.org/profiles/blogs/two-faces-of-economic-development-the-ethical-controversy