A Win-Win Game in CSR

How a small company manages to attain high customer retention and good profits through CSR

By China Business Knowledge @ CUHK

Richform Holdings Ltd. distributes healthy drinking water and water purification systems to commercial and residential users. CUHK alumnus and CEO of the company Dr. Jimmy Lau shares with us the how the company gives back to the society through CSR.

With more than 27 years of management experience in both public and private sectors, Lau has been earned the title of Professional Manager by the Hong Kong Management Association and is currently a member of the Customer Liaison Group, SMEs appointed by the Government of the HKSAR. In 2009, he received a Certificate of Commendation from the Secretary for Home Affairs for his outstanding contribution in voluntary work.

Richform is the master distributor for the U.S. brand, Everpure Drinking Water System, in Hong Kong and Macau, supplying healthy drinking water systems and related products such as water dispensers and outdoor water fountains. It provides sales and after-sales services, including delivery, installation and maintenance.

The company introduced its corporate social responsibility (CSR) programs in 2006 to improve the life of its associates and to contribute to society and the environment. Since 2007, the company has received many awards, including the Caring Company – Total Caring Award, HSBC Living Business Gold Award for Community Engagement, Green Achievement and People Caring, Family-Friendly Employers Award, Hong Kong Outstanding Corporate Citizenship Award, the Top Ranking Company in The Hong Kong SME Business Sustainability Index, the HR Excellence Award by the Hong Kong Institute of Human Resource Management.

With a desire to give back to society, Richform started off by doing volunteer work and making donations to non-profit organizations in its early days. At that time, the concept of CSR was unheard of. When Jimmy Lau became CEO of the company in 2006, he turned CSR into a core element of its corporate culture.

“We believe that happy ‘associates’ — a term he calls his employees — will translate into happy and loyal customers. Providing ‘perks’ to make them satisfied in life has thus taken on a strategic importance in the way he runs his business,” says Lau.

The ‘perks’ that Lau offers to his associates take many forms. For examples, an extension of lunch hour by 30 minutes to allow for siesta or personal errands, flexi working hours, paternity, emergency, wedding and birthday leaves, gratitude allowances for parents, daily fruit basket, in-house massages, free herbal tea and TCM consultations, training allowances, summer job opportunities for staff children and relatives, paid compensation leave for voluntary community service work organized by the company and more.

Besides caring for the staff and the community, the company also sticks to environmentally friendly principles and maintain a charity donation of five percent of its gross profits.

“Many would think that such generous acts would cut into the company’s productivity and profits. However, productivity actually increases when employees are relaxed. You don’t need to spend a lot for CSR but it is highly effective in improving our associates’ morale and service quality. It also helps retain talents. The results can be great,” he says.

Lau is happy that their programs have seen measurable returns on investment, including:

• Business revenue grew by 22 per cent in 2012 with an average of 15 percent sustained growth rate over the past five years
• Cartridge replacement rate has been over 90 percent (vs. 60 percent average in the market)
• Repeated business, with customer referral rate rising 20 percent for the past three years
• Power consumption fell by 7 percent and paper consumption fell by 10 percent from 2011 to 2012
• Staff turnover rate was 5 percent in 2012

Lau believes for a company to succeed in CSR, good planning is required.

“Limited resources doesn’t mean you can’t engage in CSR. It may not be easy to find suppliers who share the same principles but they do exist. And it doesn’t matter how little you do, the effects are accumulative,” he says.

“It is also important to explore customers’ needs proactively to provide high-quality service — and a satisfied and happy ‘associate’ is more likely to do that.”