Corporate Social Responsibility: Ithaca College Spring · PDF fileRunning head: CSR Google & Wegmans 3 Corporate Social Responsibility: A Case Study of Wegmans and Google Introduction

Running head: CSR Google & Wegmans 1

Corporate Social Responsibility:

A Case Comparison of Wegmans’ and Googles’ Strategies

STCM 31100-01 Government and Stakeholder Relations Class1

Ithaca College

Spring 2011

1 Adams, Samuel C.; Antman, Daniel T.; Costello, Jodi L.; Dong, Jacqueline A.; Duchovnay, Hillary E.; Ewing, Kirsty S.; Fetty, Jeanna M.; Gaskill, Katherine G.; Greenberg, Seth A.; Inanc, Kayla N.; Ingmundson, Kirstie R.; Lee, Jane; Levenson, Anna R.; Lim, Cherin; Maresco, Meredith; McCullough, Brandon A.; Montano, Anthony K.; Mueller, Heather E.; Patel, Zena P. ; Saunders, Shayna A.; Sheldon, Sabrina A.; Torrez, Yeimmy; Vanstrom, Kristen N.; Wicks, Kelly M.


Abstract

This chapter examines government and stakeholder relations specifically within Google and

Wegmans. The chapter will focus on corporate social responsibility (CSR) and the strategic CSR

practices within each company. We will discuss each company regarding its structure of

corporate government and Board of Directors, and how each integrates CSR through internal and

external stakeholders. Throughout the chapter, you as the reader will see how Google and

Wegmans differ in their CSR practices as well as how they are similar, and how that affects

relations with stakeholders.


Corporate Social Responsibility: A Case Study of Wegmans and Google

Introduction

The current reading from Waddock (2006), in the custom designed textbook for

Introduction to Strategic Communication, emphasizes both the primary and secondary

stakeholders and the importance of managing these relationships.

Key Question (to be defined): How is government and stakeholder relations connected to

strategic communication?

Will be answered by: Strategic communication is collaborative

Strategic communication is collaborative: Stakeholder relationships

Adam Smith, the father of modern economics and capitalism, believed in the power of

“connections and dependencies in promoting the better good” (Waddock, 2006, p. 134). In no

sphere is this more prevalent than corporate social responsibility, where collaboration is essential

for success. Today, companies need to collaboratively manage their relationships with the

government and stakeholders, and respect the dignity and worth of each party, rather than trying

to control them. Organizations would not be able to effectively create responsible policies

without feedback from the government and stakeholders. Collaboration lends legitimacy and

builds a reservoir of goodwill among the various stakeholders of the organization. Corporate

social responsibility should be born of a genuine desire to help others, and grow through constant

communication with both internal and external stakeholders.

Technological innovation has strengthened communication channels around the world,

disintegrating national borders, and creating a world that is constantly connected through the

Internet. With Internet access that spans the globe, and a 24-hour news cycle, American


businesses face increased visibility as well as heightened expectations for responsible practices.

Furthermore, the Internet allows secondary stakeholders to contribute to the conversation

through Twitter, Facebook, and blogs. If organizations do not respond to the needs of their

consumers they will greatly suffer. This chapter is a case study of the stakeholder management

for both Google and Wegmans. These are two greatly diverse companies that provide good

examples from both the private and public sectors. Members of different industries, they prove

that size or specialization do not have to limit corporate social responsibility initiatives.

Google and Wegmans appear to have vast differences, but are much more alike than one

would assume. Google is a huge corporation focusing on the newest technology and innovation

on the web, known as the search engine king, but continues to focus on giving their stakeholders

what they want and making a difference. Wegmans has a reputation as a local business and is

part of the food industry, but has the ability to provide the best products and service to their

employees, stakeholders, and shareholders.

Corporate Social Responsibility is the way in which a corporation acts within society.

Corporations who value corporate social responsibility consider any possible negative

externalities their decisions have on the people and places that are affected by their actions. CSR

is an important way for a company to distinguish themselves from their competitors, without

compromising their competitive advantage. The goals for this chapter are to: highlight the direct

correlation between an effective CSR strategy and the success of Google and Wegmans over

their competitors and articulate the link between internal and external stakeholders and CSR.

Government: What is Corporate Governance?

A corporation has three distinct features that make it a desirable form of business. It has

an unlimited life, limited liability for its owners, and a divisibility of ownership that permits the


transfer of ownership interests in such a way that does not disrupt the organization, or the way in

which the organization is run (Colley, Doyle, Logan, & Stettinius, 2005).

Governance is the act or process of governing. A corporation operates as a form of

representative government (Colley et al, 2005). The CEO and Board of Directors represent the

needs and desires of the shareholders of the corporation. Taken together, corporate governance is

the way in which a corporation runs itself. It is a system of checks and balances, meant to keep in

mind the needs of the shareholders, those who own part of the corporation, and the needs of key

stakeholders, which include customers, employees, suppliers, distributors, creditors, and the

communities in which the corporations operate (Colley et al, 2005). Corporate governance,

therefore, is the act of governing a corporation in a way that will ensure that the corporation

remains profitable in the long run.

Corporate financial scandals, such as Enron, have caused society in general to distrust

large corporations. This distrust has led to higher scrutiny from consumers and the media, and an

increase in the need for companies to be transparent in their day-to-day operations (Oliver,

2004).

Transparency

Transparency, letting the truth be available for others to see if they choose, is a top

priority for a corporation that wishes to be conceived as socially responsible, and cooperating

with the rules and laws of corporate governance (Oliver, 2004). The board of directors is

responsible for creating this transparency, which has become necessary with the creation of the

Sarbanes Oxley Act

Sarbanes Oxley (SOX) is a federal law which set new and improved standards for all

U.S. public companies, boards, management, and public accounting firms. The bill was passed in


the wake of a string of corporate scandals such as Enron, Tyco, and Arthur Anderson that left

investors doubting the integrity of America’s financial industry. Passed in 2002, President

George W. Bush noted that SOX is, “the most far-reaching reforms of American business

practices since the time of Franklin D. Roosevelt.” SOX contains a multi-faceted set of rules and

regulations designed to increase corporate accountability. Among other pieces of the bill, the

most notable pieces include the employee whistle-blower protection, oversight board and

regulation, audit committees, and more.

Board of Directors

A board of directors is a group of elected individuals that administer the actions of a

corporation. When a board of directors makes decisions, it speaks on behalf of the organization

as a whole. Although all business’ board of director’s function differently, the multiple

responsibilities the board practices are delegated throughout. In Google and Wegmans, the

boards of directors show vast differences in their practices.

Google, Inc

The board of directors for Google strives to satisfy stakeholders by accomplishing the

corporation’s objectives. The board of directors establishes a set of guidelines, which are used to

provide a basis for how the corporation is managed. These are mere suggestions that should be

followed so that adjustments can be made when necessary.

There are nine members on the board of directors including Chief Executive Officer,

Larry Page who took Eric Schmidt’s position in April 2011. Previous to his position as Chief

Executive Officer, he was President of products and was able to gain enough experience to rise

to his current position. As founder of the company 13 years before, he has now taken the reigns

as CEO.


Google has adopted a Code of Conduct, which is followed by all board members. It

provides a strategy for the ethical conduct of their directors, officers, and employees. In this

Code of Conduct, Google applies a unique trend called “Don’t be evil.” Google incorporates

CSR through this motto by allowing access to information to all users in a fair manner.

Essentially, “It's built around the recognition that everything we do in connection with our work

at Google will be, and should be, measured against the highest possible standards of ethical

business conduct” (Code of Conduct, para. 2). Another form of CSR Google practices is depicted

in the Ten things we know to be true, found in its philosophy. The ten things are:

1. Focus on the user and all else will follow.

2. It’s best to do one thing really, really well.

3. Fast is better than slow.

4. Democracy on the web works.

5. You don’t need to be at your desk to need an answer.

6. You can make money without doing evil.

7. There’s always more information out there.

8. The need for information crosses all borders.

9. You can be serious without a suit.

10. Great just isn’t good enough.

Each section has its own description, but Google’s honesty is evident when analyzing the

sixth “thing.” It states that Google believes in advertising, but only when necessary. If

advertising is not essential to what the customer is searching for, the search will show up without

advertisements. Based on trust, Google solely provides effective, relevant advertising to users.

Google’s board of directors has established Corporate Governance Guidelines solely to


benefit stockholders. Similarly to the Google Code of Conduct, these guidelines are flexible, but

are taken seriously.

“Transparency and accountability have become the watchwords of effective corporate

governance, which has also become a vital aspect of effective CSR” (Werther & Chandler, 2005,

p.139). An organization must show that it can adhere to current legal requirements and anticipate

future legal expectations. Google has shown their understanding of transparency, accountability,

and the importance of corporate social responsibility in their acts of corporate governance.

“More than two-thirds of the directors on Google's board are independent, as defined by

the Sarbanes-Oxley Act of 2002, the rules and regulations of the Securities and Exchange

Commission, and the NASDAQ Stock Market” (Investor Relations). The Board of Directors

have their own Corporate Governance Guidelines that allows for clear communication between

Google and the public, minimizing any doubts stakeholders—and shareholders—may have.

One way in which Google expressed their understanding of corporate governance came at

a time when experts worried the CEO and co-founders of Google, Eric Schmidt, Larry Page, and

Sergey Brin, respectively, had too much voting power, thanks to their dual-class stock structure.

The Google CEO and co-founders voluntarily took on a $1 salary in the second quarter of 2004.

Usually, companies do this when they are not performing well, but in Google’s case, it was done

to keep corporate governance experts appeased.

Wegmans

Wegmans, a family-owned business, does not use the BOD structure to manage its

company. Instead, Wegmans is administered by the Wegman family. Danny Wegman is the

CEO, while Colleen Wegman, Danny Wegman’s daughter, is the president. Following its

common goal, Wegmans values the importance of family, both internally and externally. It has a


family friendly brand image and genuinely cares about each customer. Wegmans commitment is

shown through its slogan stating: “Every Day You Get Our Best”.

Wegmans is authentically concerned with the welfare of its customers and is aware of the

needs of its employees. It cares about the overall career development of the people it hires. It

does not believe its employees are irreplaceable; moreover, Wegmans is not just looking for

warm bodies to fill its positions. It has a sincere concern for the future of its employees.

Wegmans believes in conducting business-to-business transactions with suppliers that are

in the customer’s best interests. Wegmans’ top concern is its stakeholder relations. For example,

if it is conducting business with a supplier that has a poor brand reputation in the eye of a typical

Wegmans shopper, Wegmans will terminate that relationship and form another with a supplier

that its customers support, even if this means spending more money in the future. This is a

positive practice to maintain stakeholders in future business.

Types of stakeholders

There are a variety of stakeholders within every organization. According to R.E

Freeman, a stakeholder is defined as “Any group or individual who can affect or is affected by

the achievement of the firm’s objectives” (1984: 26). Due to the vast relationships a company

must consider when engaging in social and ethical business practices, stakeholders are divided

up between primary and secondary stakeholders.

Primary stakeholders have a strong relationship with the company. They are directly

impacted by the practices of a business both positively and negatively. Primary stakeholders

include a company’s owners, board of directors, employees, shareholders, customers and

suppliers. Secondary stakeholders are affected indirectly by the company’s actions. However, a

company’s relationship with secondary stakeholders is important to consider in business policies


and practices. Secondary stakeholders include the community, the government, trade

organizations, the media and activists. Secondary stakeholders can have a strong impact on a

business.

Stakeholders now have even more of an impact on corporations due to corporate social

responsibility. Financial scandals in the early 2000s’ forced companies to consider the impact

their practices have on their primary and secondary stakeholders. The government stepped in to

regulate corporate governance and the responsibility owners held to other primary stakeholders,

not just shareholders in a company. Corporate social responsibility practice began to expand to

secondary stakeholders. CSR practices need to mutually benefit the company and its

stakeholders and cannot act as marketing tactics. Businesses have begun to realize how much

affect a company’s stakeholders can have on their success. Stakeholders force companies to act

in an ethical and socially responsible manner.

What is Corporate Social Responsibility?

Corporate social responsibility is now becoming a necessity in business strategies.

Companies now understand the value that CSR offers. The question is no longer do we need

CSR; but rather how do we incorporate CSR into everyday business practices? The biggest

concern a decision maker faces with CSR is how their firm will best benefit financially. There

are countless benefits to having a respectable CSR strategy in a company, which includes

enhancing a company’s brand image, creating loyalty from the employees and customers,

impacting society and the environment in a positive light, and most importantly establishing its

reputation for the future.

CSR is how a corporation acts in the marketplace and its corporate citizenship.

Corporations are subject to the same laws as an individual person; CSR is similar to an unwritten


moral code that many humans abide by. While there are few rules guiding their behavior in

society, corporations must realize the effects of their actions and how their decisions affect

society. A key goal of CSR is to positively impact all of the company’s internal and external

stakeholders. Responding to stakeholder needs and being proactive in sustaining the environment

do this. Effective CSR is achieved when a corporation is able to achieve a balance between doing

well and doing good. These corporations must also appease all stakeholders, specifically

shareholders, when making decisions (Werther & Chandler, 2011).

Corporate social responsibility consists of everything that affects the economic success of

a business, including the legal, ethical, and economic actions (Werther & Chandler, p. 10). CSR

is a way for society to ensure a business has obligations they follow regarding environment and

society impacts and to provide the basic ways of how they can successfully meet these needs. It

is essential for businesses to incorporate CSR into their strategic plan to ensure that they are

being implemented into their daily practices. Five driving forces of CSR, which assist

companies, are listed below:

1. Growing affluence - CSR tends to gain a foothold in societies that are more affluent.

People who worry about CSR are those who can afford to.

2. Ecological sustainability- Growing concern for the environment.

3. Globalization - The idea that globalization depersonalizes relations. Businesses can

lose self-regulation because it reduces sense of immediate community.

4. Communications technologies - Free flow of information. This empowers consumers

and NGOs, enhances power of media and is a new kind of activism.

5. Brands- Benefits of CSR to brands: positive brand building, brand insurance, and

improved crisis management (Werther & Chandler, 2011).


Corporate social responsibility can be seen in all businesses, but ones that have been successful

are Google and Wegmans. These two companies factor CSR into all of their business practices

and share the same vision as their stakeholders.

Strategic CSR: Integration and Implementation

Strategic corporate social responsibility (CSR), articulated by Werther & Chandler

(2011), is twofold, in both societal and operational contexts. The societal context involves CSR

and the operational context involves the strategy. The intersection of these two factors creates

Strategic CSR. There are three kinds of restraints that affect strategy and tactics and in turn affect

the vision and mission of the firm: resources, internal policies, and environmental factors. A

firm acts on its accessibility to available resources including human, social, and financial capital,

which determine what the firm is able to do. The internal policies of a firm shape the culture of

the organization. Lastly, the environmental factors are created by the conflicts caused by the

interaction of socio-cultural, legal and stakeholder factors, which the markets also influence.

These constraints shape how companies can implement tactics and strategies to reach its vision,

mission, etc. All of these strategies and tactics must be evaluated with a CSR filter. The CSR

filter is how a firm’s strategies and tactics affect all of their stakeholders beyond just profit goals.

This chapter focuses on insights as to what a firm must do to integrate strategic CSR into

its culture, strategy and operations. It discusses the when, where, why and how of the CSR

process. In order to understand the importance of this policy, one must value the significance of

cultural diversity, and realize that because of this, each CSR program will bring a different

perspective. The chapter discusses how a company can become more socially responsible and

when they should implement this program. These decisions are imperative to the organization’s

success. There are two different approaches to CSR: offensive and defensive. While the


offensive approach acts as an opportunity to maximize company value, the defensive approach

stands in as brand insurance. In the first mentioned approach, the company simply wants to

better its community, but in the second approach, the company wants to ensure its own internal

success. The defensive strategy helps the brand avoid criticism and avoid external attacks.

Overall, CSR policy improves a firm’s internal and external relations, no matter which approach

is taken. CSR is an upfront investment that promises great return if implemented correctly

(Werther & Chandler, 2011).

Unfortunately, some skeptics see CSR as a public relations exercise; they believe that

corporations are only implementing these programs to better their brand image, and not because

they actually care about the well being of the community they are involved with. However, once

a crisis occurs, many of these skeptics rush to implement a CSR policy, but at this point, it is too

late. After a crisis, implementation of CSR makes the company seem like they are only doing

this as a desperate reaction. The CSR threshold is referred to as the point of no return. If you do

not implement a CSR policy and an internal or external crisis does occur, you will run the risk of

crossing this threshold, or “tipping point,” and never being able to return to the side of positive

external relations.

Google, Inc: Stakeholders and Strategies for CSR

According to the company website, Google is a global company that first started out in

1996 as a research project run by two students from Stanford University. Today it is the biggest

search engine in the U.S. and continues to expand globally. Google frequently ranks as one of

the best companies to work for, according to Fortune magazine, due to their superior employee

recognition. Google practices corporate social responsibility in all of its sectors and contributes

greatly to the world of technology. Google’s mission is, “to organize the world’s information and


make it universally accessible and useful.”

In 2010, Google was also ranked fourth out of the Top 100 companies to work for,

according to Fortune Magazine, and provides its employees with unparalleled benefits. It is

recognized as an innovative and fun place to work and is constantly shedding light on creativity

and bringing new technological developments to the world. Through its success it has been able

to reach its potential by helping others breaking into the technological world and creating

awareness on environmental issues.

Google is a company that also caters to its internal stakeholders. Google has created a

human resources team that uses innovative ways of attracting new people to hire and has found

ways to develop its employees as well as reward them. It has gone above and beyond in its

human resources department, which is now known as People Operations to give its employees

what they desire. Google is known for its uncommon culture in the workplace, which is a

commitment shared by all employees determined to preserve this culture.

Internal Stakeholders: Employees

Google designs unique benefits packages for all their employees so that they can balance

their lives of work and leisure and allows them to focus on things they enjoy doing. The wide

variety of programs that the Google Benefits Team has created meets the needs of all different

individuals so that no one is overlooked. Some of the programs include a children’s center,

which is a family-focused center that integrates play-based philosophies into the curriculum, a

wellness center, fitness centers, and massage services. On site at Google, employees are also

provided gourmet meals with countless cafeterias, a laundry service and a car wash. In addition

to the countless perks are the top-tier health plans and a 401(k) matching program. However,

employees have found fault with the countless benefits saying:


“A common problem is that it’s easy to become spoiled by all the perks. Several

offices have developed distinct cultures of entitlement, and people whine about

the quality of the fudge on the free brownies. It’s embarrassing to be around

people who’ve become like spoiled children” (Schroeder, 2010, p.1).

While employees are one of the most important stakeholders, customers are a crucial part in

contributing to the success of Google.

External Stakeholders: Customers

Google’s concern for its customers is a top priority of its corporate social responsibility.

Google has implemented a privacy policy to protect users of the search engine. The privacy

policy’s main focuses are transparency, informing users on all the information they are choosing

to present to the public. They have outlined five key principles to follow to honor user privacy.

There is also a link to additional privacy guidelines on how information is collected and used on

Google. To take it a step further, there is also a family safe center with advice on how to keep

kids safe online, which is a growing issue in society. They have been proactive in this area and

have provided steps to keep everyone protected at all times. Google also has videos to go along

with each privacy aspect along with testimonials from parents at Google.

Google has also created a privacy center that provides customers with basic information

about its various services and policies in an effort to allow customers to make more informed

decisions about which products they should use.

Strategies of Corporate Social Responsibility (CSR)

Google is an example of a corporation that has a variety of socially responsible practices.

The founders of Google created a new kind of philanthropy and provided it with $1 billion in

seed money. Google’s charity, unlike most, is a for-profit called Google.org, which is a


completely separate site from Google.com. Google.org is dedicated to Technology-Driven

Philanthropy and uses Google’s strengths in information and technology to build products and

advocate for policies that address global challenges:

We focus our efforts on activities that are uniquely suited to Google’s engineering

teams, global infrastructure and user-driven approach, taking advantage of our

ability to innovate and scale. Our products and projects include, Google Flu

Trends, Google Powermeter, RE<C, Google Earth Engine, and Google Crisis

Response (Google.org).

To date, Google.org has given over $100 million in grants to non-profits and investments in

companies with breakthrough technologies.

Because Google.org is a for-profit project, it has drawn some criticism. However, Google

will have to pay taxes if company shares are sold at a profit, or if corporate earnings are used to

finance Google.org. Despite the critics, Google’s founders are behind Google.org 100%. They

are pleased with the flexibility that the for-profit status gives their new organization. For

example, Google could form a company to sell its newly converted cars, finance the company

with venture capitalists, and hire a lobbyist to pressure Congress to pass legislation to grant a tax

credit to consumers who buy the cars.

Google realizes its power in the industry and embraces it by giving back to society. It

strives towards a better future through its investments and helps other tech savvy individuals

become successful. Google’s philanthropic practices donate money and invest in the future on a

much broader scale. To date, Google has invested over $100 million in researching clean energy.

Google.org has made investments in innovative clean technology companies, spanning a range of

technologies. Google.org also has a team of research and development engineers through the


RE<C initiative aimed at creating utility-scale renewable electricity that is cheaper than coal in

years, not decades. More recently, Google made project investments offering a solid return on

investment and a potentially transformational impact on this business segment.

Google also supports non-profits. In 2010, charitable giving at Google exceeded $145

million in funding to non-profits and academic institutions, and more than $184 million in total

giving when including Google Grants, Google.org Technology Projects, and product support for

non-profits. In addition, Google chooses many organizations dedicated to preserving the

environment by providing free tools to raise awareness, reach and engage supporters, and

improve operations. Google Earth Outreach gives nonprofits and public benefit organizations,

like Defenders of Wildlife, the knowledge and resources they need to visualize their causes and

tell their stories in Google Earth and Maps.

Google is always looking for ways to further reduce its carbon footprint. Google states

that data centers are at the heart of nearly everything the company does. Running these centers is

one of its biggest opportunities to reduce its environmental impact. A typical data center operates

at 100% overhead. This means that for every unit of energy that powers the servers, another one

is used for cooling the lighting and the building. However, Google has found a way to halve its

data center energy use with a combination of innovation and good old-fashioned practical

thinking.

Google recycles as much as possible, including its data centers. Each piece of electronic

equipment is recycled, and in some data centers, Google even recycles the water that cools the

100% recyclable equipment. It is the little details such as these, that make Google’s data centers

some of the most sustainable on earth.

Google has also established its promotion, “Google Promotes Biking to Work.” Google


encourages its employees to ride their bikes to work in an effort to create a greener environment

and healthier employees. It launched an annual “Bay Area Bike to Work Day” at the Google

headquarters in Northern California. Other Google offices across the nation participated in the

US National Bike to Work Day. In the Bay Area alone, 1,020 employees rode their bikes to

work.

Despite all of Google’s success, it has still faced its share of challenges. For many years,

upper management of Google obeyed China’s strict censoring laws that prohibited many Chinese

people to freely search for results on Google. However in 2010, Google stopped censoring search

results, which significantly angered the Chinese government. Google hacked into Google.cn,

which is hosted inside of China, and allowed it to operate as an unfiltered search engine. Even

though Chinese authorities tried to stop the attack with internal firewalls, they were unsuccessful.

It is unlikely that the Chinese government will change its policies to accommodate Google.

Google is violating the terms of conduct in China by ending its censorship, and therefore, may

have to end its relationship with China. After two years of threatening to leave, Google

eventually shut down its server in China and began directing users in that country to its

uncensored search engine in Hong Kong. This made the Chinese government even angrier, but

Google management still felt it was the right decision. Since Google’s business in China did not

profit as much as other countries and management wanted to focus on being ethical, not wealthy,

this was the unfortunate outcome.

In 2011, Google has promised to help 50 million people in various ways in multiple

continents. They will provide online tools for 1,500,000 aid organizations, 50,000,000 children

vaccinated against polio, $20 million to various charities, better schools for 15,000 children in

India, and environmental education for 40,000 U.S. students.


Google employees also give back by donating their time to Google’s All for Good

Program, in which they get the day off from work to volunteer. For example, 500 employees

worked to repair and upgrade different centers in the Bay Area at a company called InnVision.

Aside from painting and building, Google employees provided a clothing donation where the

public could donate with all financial costs provided by Google.

Wegmans: Stakeholders and Strategies for CSR

Wegmans is another business that puts a lot of emphasis on meeting all of their

stakeholders needs, including their employees, customers, and suppliers. Wegmans is a privately

held, family owned company, founded in 1916 by the Wegman family. CEO Danny Wegman

embraces the family values and incorporates them into the business on a daily basis in everything

they set out to do. As a business, it is both a leader and innovator in the industry. Wegmans has a

strong relationship with both its customers and its employees. This is described in their mission

statement, “At Wegmans, we believe that good people, working toward a common goal, can

accomplish anything they set out to do. In this spirit, we set our goal to be the very best at

serving the needs of our customers. Every action we take should be made with this in mind. We

also believe that we can achieve our goal only if we fulfill the needs of our own people.”

Internal Stakeholders: Employees

Stakeholders are individuals and groups in a firm that contribute to business operation

activities. Organizational stakeholders consist of both internal and external stakeholders.

Wegmans is a prime example of a business successfully catering to all of its internal and

external stakeholders needs. It understands the importance of meeting all of their expectations for

the continuing success and growth of the company.

Wegmans puts its employees first. Its operating margin is double that of similar grocery


chains, and its employee turnover is below that of similar grocery chains (Finamore, Saunders, &

Marks, 2005). The practice of putting employees first began in the 1950s with the president of

the company, Robert Wegman, who realized his employees were no different than him. Wegman

shared a host of benefits with his employees, to show this feeling and to keep his employees

happy.

Danny Wegman, current CEO, continues the practices his father put in place. He believes

that “taking care of the customers starts with taking care of employees,” and that entails

providing employees with “high-end salaries” and focusing on employee development

(Finamore, Saunders, & Marks, 2005). In addition, the Wegmans hiring process screens out

employees who don’t have the right passion and attitude for the job (Finamore, Saunders, &

Marks, 2005).

Wegman says that new employees have to understand the Wegmans values, and how

those values are utilized in day-to-day operations. Two important values, Wegman explains, are

caring and trust. When hiring, Wegman looks for people who seem like they would care for both

the Wegmans customers, as well as their fellow employees. They must all spend time together,

Wegman says, and learn to trust each other (A higher level of learning, 2005).

Danny Wegman believes that employee knowledge increases customer satisfaction (A

higher level of learning, 2005). He believes that the knowledge of products the employees'

possess allows for a greater level of interaction among employees and customers. Wegman

believes that when sales are growing, the training program is effective. His belief is that

knowledge of products, rather than price, drives sales. Price alone is not enough, he says, if

customers don’t buy something because they don’t know how to take it home and use it (A

higher level of learning, 2005).


Wegmans believes in the following:

1. We care about the well-being and success of every person.

2. High standards are a way of life. We pursue excellence in everything we do.

3. We make a difference in every community we serve.

4. We respect and listen to our people.

5. We empower our people to make decisions that improve their work and benefit our

customers and our company (emphasis added).

Employees are arguably the most important stakeholders. Corporate culture can influence

the steps necessary for a successful corporate social responsible strategy. If an organization has a

strong corporate culture this will transcend into business practices and it will have a strong basis

for their corporate social responsibility and their values. As part of CSR, it is a business’

obligation to treat employees with respect, provide them with benefits, and do everything in their

power to make sure their employees are happy with the organization.

The Wegmans motto is “Employees first, Customers second.” This is a motto that is truly

taken into account in all of its practices, helping employees in every way possible. In fact,

“Wegmans has never had a layoff in its 94-year history. More than 4,000 employees, 11% of the

workforce, have been here more than 15 years” (Fortune Magazine). Additionally, according to

Boyle (2005), Wegmans “annual turnover rate for full-time employees is just 6%, a fraction of

the 19% figure for grocery chains with a similar number of stores, according to the Food

Marketing Institute” (para. 12).

At Wegmans, employees are the number one priority. The organization follows a number

of practices to show its appreciation. Employees receive countless benefits ranging from

discounts on skiing, movie tickets, gym memberships, sports and amusement park tickets,


competitive pay, flexibility in their schedule, paid time off, life insurance, health coverage, and

more. They also receive career development and growth opportunities flexibility in scheduling a

fast-paced, fun environment, and competitive pay.

Management has created an employee scholarship program for both part-time and full-

time employees who work for Wegmans and also attend school. This shows that Wegmans wants

to help its employees be successful in life and that it concerns itself with the future of its

employees, by providing financial assistance to 19,000 employees and awarding more than $59

million in scholarships. The Wegmans Scholarship Program encourages all employees to pursue

educational goals and promotes upward career mobility. Part-time employees can receive up to

$1,500 a year for four years and full-time employees can receive up to $2,200 a year for four

years. In order to be eligible, employees have to work a minimum number of hours over a

specified time, must have good grades in school, and have a good quality work record. This

program promotes community goodwill, retains employees, and increases Wegman’s reputation

as an “employer of first choice for all people.”

The recruitment and employee development department at Wegmans completed research

about their employees. Gerard Q. Pierce, senior vice president of human resources said, out of

the 37, 000 employees surveyed, 33, 000 responded with overwhelming positivity (Owens, 2009,

p.1).

CEO Danny Wegman summarizes why: "We look at our business as how do we serve

our customers best, and the way we believe we can serve our customers best is by just being the

very best place to work that we can be. And if we do those two things, then we'll make a profit

at the end." “From recruitment through to retirement, “Wegmans takes whom it hires and how

they are trained, recognized and rewarded very seriously” (emphasis added; Wheeler, 2009).


Wegmans grocery store began as a “mom and pop” store and now ranks as the #3

business to work for, according to Fortune. The correlation between employee satisfaction and

good corporate social responsibility is not a coincidence. This shows what CSR can do for a

business by taking all of its stakeholder considerations into account.

External Stakeholders: Customers

The workforce at Wegmans includes people of many different educational, ethnic, and

demographic backgrounds. They have competitive salaries and benefits for all positions.

Wegmans wants to empower employees and wants the employee to have the knowledge and the

desire to promote the products to its customers. The HR department researches and records

thousands of employee testimonials and feedback to improve its system.

To serve the customer needs, Wegmans conducted research with 1,000 customers asking

what the top 5 challenges of getting dinner ready were. It found that these were staying within

the family food budget, figuring out what to serve, keeping meals varied and interesting, having

little time to prepare meals, and serving healthy meals.

Through this research Wegmans could give the customers what they wanted. It took on

this challenge of creating a better, easier, lifestyle for its customers through the received data. It

created recipes, meal ideas, and videos to post on its website for customers to use while cooking

at home. This expanded prepared food offerings and came up with meal ideas to keep on hand in

the pantry or freezer.

Wegmans “Eat Well. Live Well. Challenge” is an 8-week challenge promoting

consumers to eat more fruits and vegetables. This annual program was first introduced in 2003

and has since grown continuously. The participants have to walk at least 10, 000 steps every day

and then enter their statistics on the website, which is supervised by nutritionists at Wegmans. It


has gotten the community and local businesses involved as well as the employees of Wegmans.

Wegmans also has innovative kick-off events every year and offers free health screenings to

consumers (Johnsen, 2010).

Other programs that Wegmans offers include: “Food for the Hungry, Healthy Eating and

Activity, Neighborhoods, Young People, and the United Way.” Wegmans teaches about healthy

eating to customers as well as getting food to the needy. It will donate to not-for-profit

organizations that support these causes.

Strategies for Corporate Social Responsibility (CSR)

Sustainability

Wegmans has made a promise to be aware and responsible in all of its actions, taking

steps to protect the world from future generations. It is through fulfilling this promise that has

made Wegmans a leading company in corporate social responsibility. In acting on its promise,

Wegmans has encouraged the use of reusable grocery bags to reduce waste and offer bins to

recycle old plastic grocery bags. The reusable bags, which come in a variety of designs, are made

of 95% recycled material that is much sturdier than a plastic bag. Reusable thermal bags are also

available, allowing customers to keep foods at their proper temperature with its layers of

insulation. Since 2005, Wegmans has been partnering with local farmers to bring innovative,

organically grown fruits and vegetables to customers and to reduce its carbon footprint. Through

this practice Wegmans has shortened the distance from farm to store by using local agriculture.

High efficiency light bulbs are used throughout the Wegmans stores and refrigeration systems

are improving in efficiency. Wegmans has also implemented a strong recycling program and

packaging standards. Food that can no longer be sold, but can still be eaten is donated,

composted, or given to livestock farmers. Wegmans has even changed fish fry containers from


Styrofoam to natural fibers, and in 2007 plastic salad containers were reduced in plastic weight

by 25%. The pharmacy section decreased paper use in 2009, saving an estimated 9.5 million

pieces of paper. All Wegmans stores recycle approximately 64% of all waste, and are actively

working to increase that percentage.

However, sustainability is not the only factor of CSR Wegmans focuses on. In fact,

Wegmans has resisted the globalization movement by being a part of each and every community

it operates in. Instead of reducing the sense of community, Wegmans increases it. Wegmans has

been successful in this aspect by focusing on areas of the community in which they feel they can

be the most effective. It has implemented various programs to give back to these areas. Some of

these programs include Food for the Hungry, in which Wegmans has given over 16 million

pounds of food to food banks in 2010, and Healthy Eating and Activity, promoting regular

exercise and consumption of five cups of fruits and vegetables daily. Wegmans also works with

the United Way for efficient funding of programs that make a difference.

To help enrich the communities served by its stores, Wegmans offers low-income senior

shopping shuttles, donates and sponsors all kinds of area-wide and neighborhood community

events, and works with Habitat for Humanity. One of the Wegmans’ greatest contributions is

offering employee scholarships for college. To honor and recognize how much Wegmans

appreciates its employees twenty-five years ago, Wegmans established a scholarship program to

help employees meet college expenses. For the 2008-2009 academic year 1,332 employees were

awarded a total of $5.6 million in scholarships.

Wegmans also works with the youth of the communities to assist them in becoming

healthy, productive, independent adults by helping them reach their goals. Wegmans has worked

with Boy Scouts of America to conduct a food drive. The company also hosts the New York


State ProStart Culinary Competition for high school students.

Giving Back

Wegmans states, “What sets us apart is that we live our values every day: making a

difference; empowerment; respect, caring and high standards. It’s all about what we do, not

about what we say” (Community giving stories: Neighborhoods). Giving back to society is a

significant part of CSR. Customers are what drive an organization. If the customer’s are unhappy

with a business’ CSR policy, they will take their business elsewhere. Wegmans and Google give

back in different ways, but both conduct respectable CSR policies. Since Wegmans operates on a

much smaller local scale than Google, it focuses on giving back to the communities in which the

stores are located, while Google donates large sums to a number of different charities across the

globe. While they still help the community, Wegmans and its employees give more volunteer

time rather than money. As a regional business it does not have the capacity to work on an

extreme global scale like Google.

Wegmans focuses on a few key aspects when helping in the community. Wegmans

employees carry out Wegmans CSR even when they are not working. Wegmans makes it a

priority to give back to the neighborhoods in which its stores are located through a variety of

ways. Wegmans states, “We strive to make a difference in every community we serve. We’re

committed to improving the lives of our customers and employees in every way we can. Being

part of community life and setting an example of leadership giving is central to our heritage and

operating philosophy”. One hundred and fifty Syracuse Wegmans employees volunteered at

Salvation Army assisting in activities for children and seniors, as well as helping with painting,

cleaning, repairs and food-service projects, proving that “Wegmans has given back to every

neighborhood where we do business” since 1916. Other community projects include Racing For


a Cure, Extreme Makeover Home Edition, and Habitat for Humanity.

Since 1993, Wegmans has raised nearly 14 million dollars for local food banks through

the Check Out Hunger campaign. The campaign allows customers and employees to contribute

to local food banks by scanning a coupon at checkout that adds a specific dollar amount to their

order. One hundred percent of the donation goes directly to the local food bank.

For the last 25 years, Wegmans has also catered to the elderly community. Wegmans

sends Medical Motors buses with wheelchair access to 70 senior-subsidized housing complexes

and transports residents to a nearby Wegmans store in the Rochester and Syracuse areas. This

program has been beneficial to 1,500 seniors and has made their lives easier, allowing them to do

their grocery shopping once a week. The program is 100% funded by Wegmans, costing

$350,000 every year.

Summary: Why Should We Care?

While Wegmans and Google are both large corporations, both with growing sales and

profits, each company approaches corporate governance in a different way. Wegmans focuses on

their employees when it comes to corporate governance. Its philosophy is that passionate, caring,

and knowledgeable employees are the key to sales growth. Without employees who care, and

who want to interact with customers, low prices mean nothing in the long run. Google focuses on

the role the CEO and top management play in influencing other employees to follow good

corporate governance practices. The importance of corporate social responsibility starts at the

top, and works its way down. Employees cannot be expected to be socially responsible, or to

operate in accordance with corporate governance, if those above them do not take responsibility

and set an example.

Two completely different approaches to corporate governance, and both approaches work


for their respected companies. Corporations can run their organizations in whatever way best fits

their financial goals and business style. They can have their own values, and mold their business

style to accommodate their vision and mission. What it comes down to is corporate governance,

and making sure to keep in mind the needs and desires of all Shareholders and Stakeholders

involved. It is impossible to please everyone, but one can try.

Corporate social responsibility has become commonplace among businesses in today’s

information-driven economy. Armies of consultants, websites, full-time staff, and professional

associations monitor trends, advocate policies, and help companies become better corporate

citizens. In a few short years, CSR has become a key talking point of many public relations

departments and an over-arching requirement from customers. CSR has even become a pillar of

even the richest board rooms.

CSR is the deliberate inclusion of public interest into corporate decision-making. While

relatively few rules exist in guiding their behavior and social impact, corporations are beginning

to realize the power of their actions and how it affects social and natural ecosystems.

Fortune 500 executive boards are playing a major role in experimenting with and

implementing CSR practices. The role of the board of directors is to act in the best interests of

the shareholder and ensure good revenues for a tidy return on investment. But shareholders and

investors reflect only a fraction of all stakeholders a company must consider while making

decisions. Stakeholders were previously composed of employees, customers and shareholders.

The culmination of Web 2.0 and post-Enron corporate accountability forever empowered all

citizens to hold corporate entities accountable for negative externalities.

Stakeholders now include local communities, other vendors, environmentalist groups,

and consumers. Corporations have attempted CSR plans but failed to be effective and at great


opportunity costs. CSR is nothing more than a public relations talking point if companies do not

a balance between doing well and doing good.

But how? CSR is hard to define, it’s not written in black or white. Companies must

charter through vague definitions and lofty requests from society to find the most effective CSR

practices that integrate with a company’s brand and business operations. Good CSR practices

require an integration of business objectives and community relations. Companies must maintain

this balance but there is no right or wrong way to achieve it.

Wegmans and Google achieved unique statuses for emphasizing CSR. But why these

two? The two are fundamentally different entities. One is a regional supermarket chain and the

other is the world’s most popular search engine. But while their differences appear to outweigh

their similarities, the two companies have much in common; the two have enthusiastic and loyal

customers and each is a leader in their respective industries. They both generate billions in

annual profit by emphasizing responsible long-term investment in place of short-term profits.

Corporate citizenship carries weight with both consumers and boardroom members

around the world. It is now almost a prerequisite for companies of today to have some sort of

CSR program in place, however, as we have just shown, what that program entails varies greatly.

Does CSR matter? This is not an easy question to answer. Companies must make money

to survive and while many consumers would like to support only those with the highest moral

standards, they too must consider their finances and even their time. In the end there are no set

rules for companies or consumers in regards to the right level of CSR. Companies must find a

balance between their financial success and best practices just as consumers must determine how

far they are willing to go to support CSR.

How does CSR fit into this course? Communications is paramount for practicing good


CSR. Public relations distribute stories reflecting the corporation’s positive image. PR and

marketing departments also often integrate CSR practices in advertising campaigns. These

campaigns are often intended for consumers but many campaigns also target businesses and

trades. Integrated marketing campaigns to promote CSR are intended to generate brand

awareness and call-to action.

PR departments must also remain within legal guidelines when distributing information,

as transparency is an essential part of practicing good CSR. CSR also teaches how to remain

open with your stakeholders and maintain a positive and beneficial business relationship.


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Corporate Social Responsibility: Ithaca College Spring · PDF fileRunning head: CSR Google & Wegmans 3 Corporate Social Responsibility: A Case Study of Wegmans and Google Introduction