Running head: CORPORATE SOCIAL RESPONSIBILITY 1

Stone Cellar, LLC – Corporate Social Responsibility

Donald W. Jacobs

Southern New Hampshire University

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Abstract
This paper describes a small, but growing company that specializes in real estate acquisitions,
improvements, and sales. The intention to serve the community and particularly those in need,
has always been the underlying nature of the company. There has never been a void of good
intention, but there has long been a vacancy or inability to articulate the company’s ethics and
motives in a plan, or at least a plan for business growth. Accordingly, the company, Stone Cellar
LLC, has been grappling with maintaining a course true to its mission statement, without leaving
too much money on the table when selling properties, and thereby acting to its own detriment. In
other words, “Give me that which I want, and you shall have this which you want” [CITATION
Smi76 \l 1033 ]. As the concept of formal and relatable corporate social responsibility is
discovered and begins to be interwoven with the mission, the company will understand better the
nature of its impact on, and draw from the community. A corporate social responsibility plan
may give Stone Cellar a more well-founded ability, and compelling reasoning, to stay the course
with its current mission. It may also aid in focusing the company’s presentation to perspective
stakeholders. “It is not from the benevolence of the butcher the brewer, or the baker that we
expect our dinner, but from their regard to their own interest” [CITATION Smi76 \l 1033 ].
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Company Description
Stone Cellar LLC is a small real estate rehabilitation and development company in the

Lehigh Valley of Pennsylvania. The company’s mission statement reads: Stone Cellar will

develop quality homes with designs and amenities exceeding expectations for the offer price,

welcoming overlooked consumers to elevated living standards without elevating their cost of

living. Historically, the company has produced rehabilitated homes for sale to lower income

(sometimes impoverished) families, at prices below the competition. Stone cellar does not want

people to be stuck in the endless cycle of renting. Rather, Stone Cellar has sold almost all of its

properties, to buyers in need. “The problem of poverty must force us to innovate, not claim rights

to impose our solutions” [ CITATION Pra06 \l 1033 ]. The company prefers to sell to families in

need for less, rather than to rental property investors and the like, for more. Stone Cellar recently

added a new product line – new houses. The company is nearing completion of its first-ever new

construction home. While the price will be substantially above the rehab housing market price, it

will still be marketed (priced) and sold for less, to an individual or family looking to move up,

rather than to the typical well-qualified and higher-bidding buyer. Real estate agents have such

buyers visiting the job site already.

Stone Cellar consists of three company members. They are the project development

manager who also serves as the general contractor (GC), the financial manager, and the business

manager. The GC is an independent professional with a bachelor’s degree in business

administration and roughly fifteen (15) years of progressive experience finding practical

properties, rehabilitating them, and marketing them through select real estate agents. The finance

manager has an MBA from USC and has been both a senior commercial lender and a CFO with

governance and responsibility for annual budgets and planning greater than five billion (USD).

This author is the business manager, and a technology executive for thirty-one (31) years, along
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with thirty-seven (37) serving the community as a volunteer and (former) elected official. The

financial manager and business manager are married to one another. The three company

members are also the sole investors, with varying and independent levels of investment for any

given project.

On at least a monthly basis, the members meeting to review current and potential projects

as presented by the GC. The members also review feedback from the real estate agents. Stone

Cellar uses only three specific real agents – who understand the unique business model and seek

sincere buyers who are reaching up. Many contract professionals are retained for each project but

are not part of the constant employment carriage of the organization.

The tightly knit nature of the company allows for consistent direction and focus on the

mission statement. The intention of the mission statement is to guide leadership consistently “as

to which market opportunities to pursue and which fall outside the firm’s strategic domain. A

clearly stated mission can help instill a shared sense of direction, relevance, and achievement”

[CITATION Mul13 \p 42 \l 1033 ]. This has been particularly valuable as the company moves

into new construction, where financial commitments and returns are much higher.

Target Stakeholders
R. Edward Freeman presents that the socially aware and responsible organization “can

revitalize the concept of managerial capitalism by replacing the notion that managers have a duty

to stockholders with the concept that managers bear a fiduciary relationship to stakeholders”

[CITATION Wei14 \p 3.1 \l 1033 ]. In the routine sense, the stakeholders in Stone Cellar are the

three members, the property sellers, the contractors, the suppliers, the buyers, the real estate

agents, and, reaching just bit, the lenders. Using the Stakeholder Management Approach, the

socially responsible organization reaches past the generic, for:

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Mapping who the stakeholders are, identifying their stakes, interests, and power sources,

showing who the members of coalitions are or may become, showing what each

stakeholder’s ethics are (and should be), and developing collaborative strategies and

dialogue from a “higher ground” perspective to move plans and interactions to the

desired closure for all parties [CITATION Wei14 \l 1033 ].

In such a perspective, the stakeholders now include many others. The immediate

neighborhood, adjacent neighborhoods, the local government, civic and religious institutions,

schools, environmental concerns such as soil and traffic, area merchants, and of recent note,

groups focusing on equality, opportunity, financial and physical assistance, and other advocacy

concerns. In broadening the awareness of stakeholders, the impact awareness grows bi-

directionally. Not only is Stone Cellar more cognizant of the impact on the other stakeholders,

but it compels Stone Cellar to be more aware and better prepared for the impact from those

stakeholders. Everyone, it would seem, wants to do right. “Survey after survey shows that

upwards of 70 per cent of us would prefer not to invest in an ethical vacuum, yet less than one

per cent does anything about it” [ CITATION Res17 \l 1033 ]. Choices matter. “Where we invest

today determines what kind of world we live in tomorrow” [ CITATION Res17 \l 1033 ].

Trends
Business Environment

A common definition of a business environment is “[t]he combination of internal and

external factors that influence a company’s operating situation” [ CITATION Bus17 \l 1033 ].

As with any organization, an analysis of Stone Cellar’s business environment can be far-reaching

and must be prioritized, using a Pareto chart approach, for importance and impact.

The internal factors revolve around the company (LLC) members. Since there are only

three members, and all of the non-administrative or non-managerial work is conducted by

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subcontractors, the members could easily be misconstrued as the full and complete extent of

internal factors. But each of the three members bring influence and capacity in varying measure,

on every interest and function. Internal factors include individual and collective investment

capacities, leadership styles, management styles, the rotating leader-member positions and

exchanges (based on functions and subject matter expertise), interpersonal skills and styles, clear

and open respect, communications and communications styles, talent sets and strengths, talent

deficits, strategic vision capacities, individual and collective long-range goals, work settings,

outside employment (external but affecting internal), adopted technologies, and the mission of

the company.

The general contractor (GC) is a member of the company. The GC (“Member One”) is

also a minority investor and preliminary property reviewer. Member One currently has complete

control over the types and locations of properties brought to full membership for voting. Prior to

the aggregation of the three members, Member One was a one-person operation with the primary

incentive of making significant money through flipping houses. Member One was almost always

successful in that objective. Member One is an extremely good “people person” and is getting

used to working with an internal team, sharing success and money, and having a vote.

The majority investor (“Member Two”) is this author’s wife. Member Two has an MBA

with thirty-three years of executive banking and CFO experience, and has been in charge of

budgets exceeding $5.1 Billion. Member Two comes from a family history of successful private

investment real estate ownership and management. Member Two critiques all properties and

performs the financial analysis to challenge (and improve accuracy of) the initial projections.

Additionally, Member Two was appointed by a Pennsylvania governor to a strategic

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management position and retained that position when the governor’s office changed parties –

which is extremely rare. Member Two has political awareness and a growing capacity therein.

The median investor and de facto leader of the company is this author. The median

investor (“Member Three”) has thirty-one years of professional experience in technology,

including twenty years in leadership and executive management. Member Three interrogates all

aspects of the company for improvement, and looks for the perfect record of worthy buyers and

year-over-year revenue increases. Member Three is openly regarded by the other investors as the

process simplifier, rational decision maker, cheerleader, and prodder. Member Three has

previously held municipal elected office and has local, statewide, and (limited) national political

affiliations in both major parties.

The external factors include everything else the company does, and everyone else the

company touches. Some external factors seem to be within the control of the company, but in

reality all external factors are outside of the company’s span of control. External factors include

the customers, the real estate market locally and as a whole, government (zoning/use approvals,

inspections, schools, municipal utilities, and policies), neighborhoods, NGO’s such as the soil

and water conservation districts and volunteer fire company (and associated capacities),

engineers, architects, suppliers, legal parameters and requirements (lawyers, insurance, titles, and

contracts), unions, technology, real estate agents, customers (renters and buyers), and the buyers’

lending institutions. It should be noted that the company does not rely on, or accept outside

financing (institutional lenders) for its operations, property acquisition, or development.

Therefore, all of the company’s money is “zero-cost” money.

The internal factors are the strongest factors. If the members remain happy with the way

the company and its income generation are progressing, the company will continue. Since it is an
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LLC, if a member wants to exit the company, then the LLC must either begin dissolution, or

revert to the contingency buy-out plan(s). The three members have absolute control over the

company and operate the organization with a diligence.

The external factors are listed (above) in a general lifecycle representation. That is also

the general order of importance and influence that the external factors have on the company. As

with every organization that produces something, the customers exert the greatest influence. That

said, there are always customers of one type or another. If the real estate market is in a buyer’s

market (typically due to high inventory and/or high interest rates) then Stone Cellar develops,

holds, and rents its properties. If real estate is in seller’s market, then the company acquires

properties on which to build or rehabilitate homes, and turns them as quickly as practical for sale.

Either way, for a cash solvent organization with zero-cost money, that can “ride out” tough

markets, there is almost no such thing as a bad real estate market. Everyone has to live

somewhere.

With regards to the government involvement and offerings, and with the choices of

neighborhoods, this comes down to knowing the right locations and building to suit the

audiences. The company typically shops for underdeveloped properties in areas of rising interest

and commerce. People want to live where jobs are plentiful – especially in the company’s target

audience of wage earners versus career professionals. The remaining external factors are largely

transportable and scalable from location to location within the small boundaries of the

company’s footprint – the Lehigh Valley of Pennsylvania.

Description

There are a number of trends impacting real estate within the arenas of corporate social

responsibility, sustainability, and business ethics. Stone Cellar was founded and maintains focus
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on providing lower-cost homeownership opportunities for people who otherwise may never get

to own their own home. That alone is a significant provision and demonstration of social

responsibility, and typically unmatched in the industry with the exception of Habitat for

Humanity. An additional measure of practical implementation is building or remodeling with

increased attention to lowering the total cost of ownership. “When building owners adopt more

efficient, sustainable practices, they reduce their operating costs. … The logic is simple enough.

But efficiency upgrades can be expensive, which means owners often need help getting over the

hump of upfront costs” [ CITATION Com15 \l 1033 ]. Offsetting cost considerations are

discussed in the Impact section. Further, it is not just the cost to the property owner that is

affected, it is the environment. “The built environment generates more environmental damage

than any other part of our economy, and so if we can lower energy consumption in … buildings,

that brings a significant benefit to the environment” [ CITATION Com15 \l 1033 ].

Sustainability invokes many connotations, and business operatives and imperatives.

“Sustainability means operating a business in a way that acknowledges the needs and interests of

other parties … and that does not fray but rather reinforces the network of relationships that ties

them together” [CITATION Wei14 \p 8.5 \t \l 1033 ]. In the 21st century, the sustainability of

business and the sustainability of the environment are interdependent. One such area of

sustainability and environmental conscience is the rehabilitation of distressed properties versus

demolition and subsequent construction of new homes. While the inventory of practical, rehab-

practical houses continues to decrease locally, Stone Cellar’s primary property acquisition

resource is existing homes for rehabilitation. Rehabilitation can consume dramatically less

energy and money than demolition and reconstruction. “Determining the value of rehabilitation,

maintenance costs, and overall energy benefits requires a process that provides a comprehensive
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appraisal of the building. A formula is required to quantify the known and unknown conditions

particular to a building’s embodied energy” [ CITATION Pfa08 \l 1033 ]. In most cases, the

acquisition and final sale prices are also lower than new construction, making them a better

choice for first-time buyers. Other areas of consideration are to adopt recommendations by local

government for construction [ CITATION StM09 \l 1033 ], access, and utility pathways,

wherever practical. The local officials usually know what works and sells best in their areas.

Impact

The impact of these trends is not overburdening, but rather a production aid, and can

position Stone Cellar to be a more relevant player in the local real estate market. To that point,

when surveyed the majority of companies “understood which sustainability issues were most

relevant to achieving their business goals” [ CITATION CNW09 \l 1033 ]. Additionally, “92%

of senior finance executives felt that it was important to communicate sustainability performance

to senior management and the Board” [ CITATION CNW09 \l 1033 ]. When it came to an

effective plan for handling these issues, however, “only half of respondents reported that they

had one in place” [ CITATION CNW09 \l 1033 ].

Continued green, ethical, and sustainable construction education will be an area of

emphasis. One of the two local community colleges include these topics in the construction

management curriculum. [ CITATION Con17 \l 1033 ]. Choices and impact can be as simple as

enduring the complete yet easily overlooked sealing of windows and doors. Active choices

impacting the company already are the installation of efficient light fixtures, ceiling fans with

full management wall switches, auto-off light switches, solar powered lighting and charging

outlets, and low-flow water products. An area of significant impact (education and process) is the

potential placement of tankless (“demand”) water heaters.

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For homes that use 41 gallons or less of hot water daily, demand water heaters can be

24%–34% more energy efficient than conventional storage tank water heaters. They can be 8%–

14% more energy efficient for homes that use a lot of hot water -- around 86 gallons per day.

You can achieve even greater energy savings of 27%–50% if you install a demand water heater

at each hot water outlet” [ CITATION Ene17 \l 1033 ].

The purchase, installation, and maintenance costs must be carefully weighed

against both the total cost of ownership, and the buyer’s ability to purchase the home in the first

place. If the costs (and sale price) of going green get to high, the underserved buyer will be

priced out. The impact must be carefully weighed.

Ethics
Issues

Before presenting and describing some of the business ethics issues, it helps to confine

that spectrum to a concise definition. Ethics is about the “differences between right and wrong

thinking and actions, and using principled decision making to choose actions that do not hurt

others” [CITATION Wei14 \p 1.2 \t \l 1033 ]. In the business world, an issue can be described

as “a problem, contention, or argument that concerns both an organization and one or more of its

stakeholders and/or stockholders” [CITATION Wei14 \p 3.7 \t \l 1033 ].

One of the first business ethics topics to be tackled involves political adjustments in

Washington, D.C., and the potential variation of regulations that could affect supplies, suppliers,

banking regulations, and others services. These are not specific to real estate development /

redevelopment but clearly an impact component. In the last eight to twelve years “corporate

social responsibility evolved from a nice-to-have silo to a fundamental strategic priority for

businesses” [ CITATION McP17 \l 1033 ]. The question now is whether CSR will remain

prominent or fade. The expectation of many corporate leaders, and the members of Stone Cellar
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is that “companies won’t just uphold their commitments to sustainability – they will be at the

forefront of global progress like never before” [ CITATION McP17 \l 1033 ]. In reality, the

times and consensus have changed. “[C]ompanies are committed to reporting on their

environmental and social impacts and continuously improving their performance. This will not

change because it is now engrained in company reputation and brand” [ CITATION McP17 \l

1033 ]. Clean energy and flexible energy choices (ex. furnaces), rather than simply the cheapest

units will be deployed by Stone Cellar. The company will explore grants for residential solar

power, which could also create a modest income stream for the new homeowners. Believe it or

not, the choice of plumbing pipe material (PEX versus copper) and solvents are even an ethical

choice. The use of higher cost, taxpaying contract workers has always been a readily available

choice, and will also remain a high priority, regardless of labor and immigration laws.

Alignment

“A stakeholder management, values-based approach is central to organizing and aligning

internal systems to respond to all stakeholders” [CITATION Wei14 \p "Chapter 6 Summary"

\t \l 1033 ]. It was clear that when Stone Cellar’s select, few real estate listing agents came to

understand the mission and business model, they already understood the need and the people that

Stone Cellar sought to serve. The agents tell the company story to colleagues and clients, and it

helps find deserving buyers. That is one form of alignment. “The world’s most respected

companies focus not only on doing meaningful, measurable work in their communities, but also

on telling compelling, multidimensional stories about who they are and why Social Impact is

core to their identity” [ CITATION McP17 \l 1033 ]. Stone Cellar’s strategy, brand development,

and decision-making processes are bound to the mission statement. When there are choices to be

made, the members live by two slogans or challenges, in addition to the mission statement. The
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first is, would we do this if mom was watching? The second is, never do anything today that we

do not want to read about in the newspaper tomorrow. The mission keeps the strategy and

decisions in focus. The challenge slogans keep the members true to the mission.

Sustainability

The company’s sustainability is growing, and can be perpetually optimizing through the

alignment of corporate strategy, brand and product improvements, and decision-making practices

focused on business ethics, and regulatory concerns and influences described previously. Any

product that is stagnant will decline. The article “Who Killed Tony the Tiger” presented that a

static product or strategy will be swept under if the market is not monitored for trends and needs.

“For almost a century, Kellogg defined the American breakfast” [ CITATION Leo151 \l 1033 ].

Now people are eating anything but cold cereal for breakfast, if they eat breakfast at all. Unlike

cereal, people will always need a place to live. The choices they make, however, in what is

usually the largest purchase (or purchase class) of their lives need to be examined and exploited

for both critical and casual updates. This information has to be incorporated in the planning and

development cycle (process) of Stone Cellar’s business. This is not a program that is completed

once and set aside. This is a process and is in perpetual motion. Taking the eye off of the ball

will result is a strike out.

Decision Making
Decisions

There are choices to be made at nearly every turn in the practice of home rehabilitation

and new home construction. Choices include site demolition versus rehabilitation, waste removal

and disposition, supply choices, labor choices, and so on. The choices are almost endless. As an

example, in the demolition waste removal area alone, some vendors are happy to haul away the

full collection of rubble (old lumber, plaster, plastics, asbestos, etc.) and offer it as acceptable fill
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for other sites. This is usually done to avoid inspections and paying “tipping fees” at the

legitimate waste and reclamation facilities. Even properly licensed haulers contemplate cutting

costs by cutting corners. Hiring an unethical hauler could exact a high cost for others when the

improper waste used as fill decomposes and collapses (land subsidence) or adversely affects the

ground and water composition. “According to ethicist John Rawls, ‘Justice requires that we hand

over to our immediate successors a world that is not in worse condition than the one we received

from our ancestors’ ” [CITATION Wei14 \p 5.5 \t \l 1033 ]. That is just one area where an

unexplored, unchecked choice of the lowest cost can have an impact. Ethically and

economically, Stone Cellar has to keep a close eye on who the subcontractors are and what they

are doing. The wrong name and reputation on a truck at a job site could draw adverse attention

and action, even if that subcontractor was acting appropriately.

Focusing on the single example above, Stone Cellar must to continue to review

contractors with the Better Business Bureau(s), and could even add the county, state, and federal

consumer protection offices and agencies for compliance checks. Conversations with the drivers

have always been a dead give-away tool, as well. Active monitoring and open dialogue will

remain a key. This may even go as far as requiring a copy of the tipping fee receipts within a

certain amount of time after collection.

Another tool in the decision-making process is the maintenance of a progressive, written

agenda with open and direct dialogue in Stone Cellar’s monthly member meetings and in the real

estate agent’s input meetings. No topic can ever be off the table and all manner of ethical support

and challenge has to remain in force. Conversations will always be appropriate on topics like

updated environmental risk analyses relative to the mission and strategy, Stone Cellar’s capacity

to cover liabilities if we detect wrong-doing by ourselves or our subcontractors, are we

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marketing a truly net-green product or accommodating the underserved while pandering to

greenthusiasts? “[S]trict adherence to environmental safeguarding and sustainability

requirements are a fundamental tenet of company policy” [CITATION Wei14 \p 5.5 \t \l 1033 ].

If people take it personally, the members will know to reconsider those business relationships.

Small, perpetual corrective course adjustments product and maintain open knowledge and a

straight path. In other words, caveto emptor et autem curam venditor, which is (one) loose

translation meaning, let the buyer beware and the seller take care.

Culture

“IBM's latest human capital management study reveals that 75 percent of global business

leaders are worried about the ability to build globally aware leaders” [CITATION Wei14 \p 8.1 \t

\l 1033 ]. The following is certainly a part of that reasoning. “The strongest global executives …

will possess four key attributes: A deep understanding of local and global markets; Solid

business fundamentals; Ability to attract and retain talent; and Ability to champion new world

thinking” [CITATION Wei15 \p 424 \l 1033 ]

The decisions and processes adopted by Stone Cellar will impact business sustainability

and at least portions the company’s culture. Stone Cellar has a quiet presence of corporate

citizenship and philanthropy, in that the company exists to create and sell practical and

affordable housing to the less fortunate. There are opportunities for enhanced community

involvement which have not been explored, such as developing (or contributing to) nearby

playgrounds, committing land to water retention ponds (a.k.a. rain gardens), and donating to

local charities. All of which must be considered diligently and conducted with due recognition.

Beyond that, the cross-cultural composition of Stone Cellar’s members helps drive it

towards a greater outreach and inclusivity. While two of the members are from the Unites States,
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one is from the eastern U.S. and the other is from California, their varied upbringings give mildly

diverse perspectives. The third member is from Lebanon. The interests, languages, and

perspectives within the company spawn interesting construction and audience concepts. This also

provides for sharing of enlighten ethical insights. As an example, one culture is grappling the

perceived luxury of universal healthcare. Is that right, when it is nearly an insult which is not in

such a position? Lebanon is trying to figure out the basics like what to do with the piles of

garbage and illegal dumping, and how to get society to adjust to allow for “children” who want

to move out of the house before they are thirty-five. Regardless, the culture of Stone Cellar will

continue to evolve to reach and incorporate the needs of its stakeholders. That is a societal

imperative. “As of 2006, one in three people in this country is a person of color … The minority

population in the U.S. is larger than the total population of all but 11 countries” [CITATION

Wei15 \p 351 \t \l 1033 ]. Whether dealing with the culture of a flattening world, or the influx of

new cultures to the local U.S. communities, cultural awareness is not just a matter of business, it

is a mandate of life even from ancient times. When in Rome…

Stakeholders

“According to ethicist John Rawls, ‘Justice requires that we hand over to our immediate

successors a world that is not in worse condition than the one we received from our ancestors’ ”

[CITATION Wei14 \p 5.5 \t \l 1033 ]. Taking a run-down house and rehabilitating should make

most neighbors happy. There is every possibility, however, that stakeholders will be alienated by

Stone Cellar as it begins to grow in its community involvement and cultural incorporation.

Several times, the lower sale prices offered by Stone Cellar attract clientele of a new culture or

race, and on a few occasions, alternative sexual preferences. Stone Cellar was never made aware

of potential relationship issues with existing residents and it would not be a legal or ethical issue
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for Stone Cellar to consider, anyway. Adam Smith’s “invisible hand” has always been there

guiding the (housing) market. If neighbors or other stakeholders become concerned with

potential outcomes, they can always pool their money, buy, fix, and sell it themselves – thus

controlling the outcome. Yes, almost certainly, Stone Cellar has created some level of angst with

some of the property rehabilitations and sales. Any concerns have never risen to a level of open

dialogue from the neighbors, but Stone Cellar must be prepared. “The stakeholder management

approach, including frameworks for analyzing and evaluating a corporation’s relationships

(present and potential) with external groups, aims ideally at reaching ‘win–win’ collaborative

outcomes” ([CITATION Wei14 \p 3.1 \t \l 1033 ].

While Stone Cellar is a local company, it now deals with clientele from U.S territories

and other nations – often with limited resources – looking to stake a claim on a new or better life.

Much like working in another country and being prepared for those customs and social practices,

this means that Stone Cellar must be open and flexible to these cultures as they arrive in the

Lehigh Valley – without overindulging the audience, of course. Too much of a good thing can be

insulting to members of the audience you wish to please. Stone Cellar must also be “aware of

verbal and nonverbal differences in communication, aware that management practices developed

in one culture may not be easily transferred to another, aware of the cultural influences on

behavior, adaptive, loyal, honest, and ethical” [CITATION Wei14 \p 8.2 \t \l 1033 ]. There is

little difference in expectation between traveling to a foreign culture, and having that culture

move here. When Rome comes home…

Impact
Community

“Water, everywhere over the earth, flows to join together. A single natural law controls it.

Each human is a member of a community and should work within it” [ CITATION Chi17 \l 1033
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]. In the late 1980’s, this author wrote a letter to the editor regarding a property developer with a

winner-take-all attitude, and apparent disregard for the communities in which he developed large

housing complexes. The company was just beginning to build substantial townhouse

development and the municipality was powerless to stop or even slow him because everything fit

the zoning and other regulations. The local volunteer fire service (for one) was very concerned

because it was not equipped to handle the impact. That was the topic of the letter. Likely there

were many other and more powerful factors and pressures already at work on the builder, but

within weeks the builder announced a $150,000 donation to the fire station to be used towards a

new engine. Whatever influences were in play, the builder realized that success included a happy

community.

That development was just a very small part of the nationwide real estate financial

collapse of the late 1980’s and early 1990’s. This lends credence to another socially responsible

component in real estate development, proper appraisals. “In the absence of a credible real estate

appraisal method, investors are prone to experience swings in property values and suffer as a

result” [ CITATION Kir17 \l 1033 ]. While that was written for appraisal issues in another

county, it has universal applicability. In most (U.S.) states, appraisers do not have to be certified

if they make appraisals for non-federally regulated institutions. “All states require appraisers to

be state licensed or certified in order to provide appraisals to federally regulated lenders. Some

states require appraisers to be licensed or certified to provide appraisals for other parties as well”

[ CITATION The171 \l 1033 ]. According to the Commonwealth of Pennsylvania, appraisers

must pass a state police background check and complete “30 hours of basic appraisal principles,

30 hours of basic appraisal procedures, 15 hours of national USPAP or equivalent, and 4 hours of

field training under an approved supervisor” [ CITATION Sta171 \l 1033 ]. Where Stone Cellar
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has input, it will leverage institutions that contract only with state certified appraisers, and will

list sale prices through agents congruent with responsible appraisals.

“Structured dialogue … is a major focus in these collaborative communications. The aim

in using the stakeholder approach as communication strategy is to change perceptions and ‘rules

of engagement’ to create win–win outcomes” [CITATION Wei14 \p 3.1 \t \l 1033 ]. When

opening conversations with municipalities and ultimately with the hosting neighborhoods, Stone

Cellar needs to have a CSR in place to help people understand what Stone Cellar is all about, and

the positive impacts that the company wishes to bring. The construction sites of speculation

houses usually include an information box near the street where potential buyers and all of the

neighbors retrieve flyers from which to read about what is to come. Stone Cellar will explore

inclusion of a brief CSR narrative on the back side of these flyers. Imagine reading that the new

house on the block will contribute a specific dollar amount to the nearby playground, fire station,

or school, upon the sale of the property. While not as common, this practice of using an

information box (and new CSR briefing) should also be used for property rehabilitations as well.

Open dialogue in community (municipal board) approval meetings, and flyers presenting

on the use of solely responsibly and sustainable products and partners could invite positive

participation by the community. At the very least, it can assuage concerns. Working closely with

the local officials on their needs and knowledge of suppliers and services has already benefitted

Stone Cellar in small ways. Rather taking a policing stance, building officials in one municipality

have extended themselves and assisted Stone Cellar in finding a proper way to subdivide a lot

and get approvals for a second building. The officials gave Stone Cellar unsolicited assistance in

2016 and 2017, largely due to Stone Cellar’s open request for what types of buildings and uses

the city wanted to see, versus Stone Cellar deciding in advance and demanding a specific type.
CORPORATE SOCIAL RESPONSIBILITY 20

That saves everyone time and money, and the city is interested in the company’s continued

development at other potential sites. Stone Cellar needs to be cautious in the dissemination of

planning information, however. If word had gotten out about the interest to subdivide the lot,

adjacent property values, or asking prices could have increased. Stone Cellar has interest in

buying the adjacent properties, so a proper measure and timing of information in a written plan is

vital. The company wants to be candid and complimentary to the community, but not at its own

injury.

Global Environment

Leveraging ethical, certified appraisers, products, and other partners, is more important

than ever. “Soon, financial institutions and investors will use new valuation methodologies to

quantify important green building factors like productivity and long-term life cycle costs when

determining real estate values” [ CITATION Loc06 \l 1033 ]. Stone Cellar is actively reviewing

opportunities to reduce the impact of its construction efforts on the local and global environment.

Obtaining residential LEED certifications may be an option. It may also be a distractor for

potential buyers if they are aware of what comes with residential LEED certification.

“Residential LEED-certified projects are considered ‘public’ projects, and thereby included in

USGBC’s public LEED project directory. A listing in this directory allows the general public

and members of the media to look up your project listing and its related details” [ CITATION

USG17 \l 1033 ]. Certification includes several inspections during both the site excavations and

construction phases, as well as a final inspection after completion. Given the potential for buyer

concerns with excess public information and attention, Stone Cellar is reviewing requirements to

determine if pre-certification can be acquired, which would allow the buyer to complete the final

inspection and certification, if interested. Additionally, Stone Cellar can pursue construction
CORPORATE SOCIAL RESPONSIBILITY 21

practices that are compliant with LEED certifications without any inspections, thus allowing the

property to be honestly and ethically advertised as LEED compliant.

Outcomes
“Happiness cannot be pursued; it must ensue, as a result of a life of meaning and

purpose” [CITATION Fra59 \p 162 \l 1033 ].

Efforts

Stone Cellar is, itself, a culturally, gender, and age diverse organization. There are three

members in the LLC. Two are male and one is female. All three share of the same general faith.

Two were born in the U.S. One was born, and soon will be married, in Lebanon. All three are

U.S. citizens. All three have college degrees or higher. Two members are Baby Boomers. One

member is a Millennial. This means that the company is composed of people who, according to

Weiss [CITATION Wei14 \n \t \l 1033 ] are collectively expressing and looking for job

security, recognition, status, travel, work-life balances, community involvement, technology-

oriented, ambitious, motivated, generally impatient, and demanding. Additionally, “Millennials

are particularly more positive about growth and development opportunities” [CITATION

Wei14 \p 7.1 \t \l 1033 ]. That is quite a blend and when well-managed produces exceptional

results, because “Engagement for Millennials … and Baby Boomers is connected to having a

strong sense of what their organization stands for” [CITATION Wei14 \p 7.1 \t \l 1033 ].

The cultural awareness of Stone Cellar is demonstrated by the company composition

which is present on all job sites, and in the applicability of the home development locations and

types, amenities, and target audiences. Stone Cellar has had limited civic engagement, and is

looking to develop a true, integrated external engagement. “[E]xternal engagement means the

efforts a company makes to manage its relationship with the external world” [ CITATION Bro13

\l 1033 ]. The extent of involvement to-date has been simply the outreach to any home buyer in
CORPORATE SOCIAL RESPONSIBILITY 22

need. Stone Cellar will begin evaluating proactive and sustained opportunities to put the

company name and homes in the minds of the communities in which development occurs or may

occur. With such a small company, Stone Cellar has one specific advantage – all members are on

the ground working in one capacity or another, at least once at each job site. “Managers on the

ground have a much better understanding of the local context, who really matters, and what can

be delivered” [ CITATION Bro13 \l 1033 ]. Even with that, conceptual ideas will likely flow

from the Boomer members and reality will take shape and meaning via the Millennium member,

with plenty of public engagement relating the involvement(s) and purpose(s) to clear societal

benefits.

Trucks will occasionally have a sign on the back that says how much that vehicle paid in

road taxes in the previous year. Leveraging that concept, Stone Cellar will explore posting signs

on rehabilitated property sites indicating the estimated costs to the community for the property in

the previous year(s) and the estimated benefits in restored and heightened real estate taxes and

local spending that a new wage earner(s) will bring. Granted, that will not be a core competency

because any builder will be able to make the same claim, but the net difference from cost to

community in “Year -1” to contribution to community in “Year +1” will be a positive and

community-inviting post. This will be described mathematically in the Impact section, which

follows later. Once demonstrated, the contribution and impact will help define the business to the

members and to all stakeholders, which is a key element in CSR success. (Browne & Nuttall,

2013). It will help set the foundation for external credibility and internal focus.

“[E]ffective external engagement relies on a detailed knowledge of the preferences and

resources of stakeholders. That means learning (about them) on an individual and institutional

level” [ CITATION Bro13 \l 1033 ]. A major aid in moving forward with new construction and
CORPORATE SOCIAL RESPONSIBILITY 23

minimal interference from the local government officials has been achieved by inviting the

officials into the internal company conversations during the initial planning stages. These

officials know what their communities need, and legally require, and how to get it done. Why

take an adversarial approach when there is so much positive capacity to be leveraged from

honest dialog? Rather than treating the officials as obstacles and developing ways to work

around them, Stone Cellar invites their guidance and builds to it, instead of around it. Whether it

is with neighboring homeowners or the legal authorities behind them, this “approach may seem

expensive and even dangerous, but it is essential, and far cheaper than misunderstanding social

issues, making mistakes, and being driven out by local resistance, government decree, or

international pressure. To act in ignorance is to take a huge risk” [ CITATION Bro13 \l 1033 ].

Alignment

These efforts align to the company mission, vision, and values extremely well. The goal

of Stone Cellar is to enable people to purchase homes when they would otherwise likely rent for

life. It will serve the buyers well to make a home in a community that welcomes them, rather

than resents them. There have been a number of multifamily high-density developments in the

Lehigh Valley that were legal, and were built, but were not welcome. Similarly, there have been

a number of high income, spacious developments, and average income tract developments that

were legal but also not welcome. When farm after farm sells-out for development, the

communities take notice and get concerned. In Pennsylvania there is a large fund set aside for

buying the development rights to farms. This lets the farmers maintain the farms and open

spaces, and enjoy the funding as if they had developed the land. (The county governments use

the funds to buy and retain perpetual development rights and the farms are never developed.)

Building single unit homes next to such “Open Spaces” set-asides can be good business. It
CORPORATE SOCIAL RESPONSIBILITY 24

recognized the importance of the open space and compliments the communities for their actions,

and complements the communities in their actions. These areas usually have some type of small

parks as a portion of the preserved spaces as well. Aligning to existing community designs can

be mutually supportive and provide an automatic boost to the property interest.

There is another advantage to keeping a close alignment with the local communities and

other stakeholders. Building officials have taken favor on Stone Cellar by highlighting other

areas for potential development or redevelopment that were not obvious to the general market.

This has led to two more properties being under consideration for purchase and rejuvenation that

would have been missed and ultimately procured by a competitor when they came on the market.

“The closer your relationship with stakeholders, and the greater your expertise, the more likely

you are to spot the trends that seem so obvious in hindsight” [ CITATION Bro13 \l 1033 ].

Whether it is the Open Spaces investments, the cost avoidance and recovery benefit of

blight-zone revitalizations, or other positive financial integration aspects, the potential buyers

and existing communities alike should be made aware of the (sometimes massive) positive

impacts of the investments and sustained cash flows on their new communities. Informing the

host communities in advance of the benefits can further advance the perception and help roll out

the welcome wagon.

Impact

Using the example of a typical abandoned property emerging from rehab, the numbers

could indicate a cost of $1,500-$2,000 in police and related protective, maintenance, and

emergency services in Year -1. Year +1 will yield a contribution of $54,677 in average

household total expenditures within the community and will generate an average house sale price

of $155,500. [ CITATION Leh17 \l 1033 ]. There will also be an annual property tax
CORPORATE SOCIAL RESPONSIBILITY 25

contribution of $2,738, and a one-time two-percent-of-sale price ($3,110) tax revenue upon sale.

[ CITATION Sma17 \l 1033 ]. All of this generates a one-time positive influx of $215,287, and a

sustained annual positive influx of $54,677.

The above does not take into account the ripple-effect of local spending. Using a

generally accepted marginal propensity to consume (MPC) or save of 0.8 and 0.2, respectively,

arrives at a multiplier of five (5) to apply on the above positive influxes. [ CITATION Inv17 \l

1033 ]. The initial MPC impact could be as high as $1,076,435 and the sustained Year +1 impact

could be $273,385. There are few other consumer-level industries that can stake a claim on that

level of positive impact from the sale of one product.

Conclusion
There is more to it than just the incorporation and alignment of the stakeholders for

individual, organizational, environmental, and profitable sustainability. There is a higher

purpose. Purpose, especially a higher purpose, is important for companies and individuals

because “it energies them and allows them to transcend the parochial concerns of individual

stakeholders. When all stakeholders are aligned around a common higher purpose, they are less

likely to care only about their immediate, narrowly defined self-interest” [CITATION Mac03 \p

42 \l 1033 ]. Maturing and mature organizations go further than that. “Higher purpose and shared

core values unify the organization and create a higher degree of shared ethical commitment. …

High-trust organizations are always high-purpose organizations” [CITATION Mac03 \p 222 \l

1033 ]. That corresponds directly with the assertion that “a values-based, stakeholder

management approach views the employer–employee relationship as one grounded on mutual

trust and reciprocal responsibility” [CITATION Wei14 \p 7.3 \t \l 1033 ]. This is an area where

intrinsic value can be found. Hiring the right people for the organization and fitting them to the

best functions within the organization will be crucial, when that time comes, as “mastery,
CORPORATE SOCIAL RESPONSIBILITY 26

purpose, and autonomy – together lead to higher levels of intrinsic motivation, which is key to

creativity, engagement, performance, and satisfaction” [CITATION Mac03 \p 89 \l 1033 ].

To be clear, “[n]o perfect boundary exists between employer and employee rights in a

capitalist market economy” [CITATION Wei14 \p 7.3 \t \l 1033 ]. Employers want higher

production rates and employees want higher wages and benefits, to name a few areas. When the

organization and its supporting associates are closely aligned to a collection of needs and

expectations, the close monitoring of actions is not as important because the end result is the

understood larger objective. In Stone Cellar, no member wonders about the time commitments or

uses of the others. Some days are sixteen-hour work days and some weeks are seven-day work

weeks. Other days are spent golfing with friends at a charity event. In the end, the company

makes a reasonable profit through the responsible actions of its members and other stakeholders.

Yes, there are extrinsic rewards such as a new vehicle or fancy clothes from a decent paycheck.

But that can come from any function where an employee performs well. The intrinsic value with

Stone Cellar, or rather an intrinsic value, is in clearly seeing the positive results of the labors for

the benefit of others without public fanfare. That can be a highly motivating force in taking the

stakeholders and the company forward.

CORPORATE SOCIAL RESPONSIBILITY 27

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