Corporate social responsibility is becoming an increasingly important priority for many CEOs across the world, and HR has a vital part to play, writes Robin Kramar
Corporate social responsibility is becoming an increasingly important priority for many CEOs across the world, and HR has a vital part to play, writes Robin Kramar
Corporate social responsibility (CSR) and sustainable development is gaining increasing prominence in the global business culture, as many businesses attempt to accommodate the CSR agenda. The concept of corporate sustainable development is still the subject of controversy and therefore the indicators used to measure CSR continue to be the topic of debate. However, no matter what indicators are used, the notion of responsibility includes responsibility for people in the collective sense (such as communities) and also for individuals.
An Australian measurement process, the Reputex Social Responsibility Ratings provides a system to measure social responsibility performance and attempts to integrate the expectations of a variety of stakeholders. Two of its four criteria reflect the impact on people and have direct relevance to HR. Four categories of measurement are used: environmental impact; corporate governance; social impact and workplace practices.
The criteria used to measure workplace practices relate specifically to HR practices. The criteria include: employee involvement; fair and reasonable rewards and conditions; a positive commitment to diversity and work-life balance; industrial relations arrangements based on mutual respect; occupational health and safety arrangements; executive remuneration that is fair and reflect the concerns of internal stakeholders; independently verifiable performance measurement and evaluation systems and training and development policies. These criteria indicate that an organisation that is seen as socially responsible creates a culture that is perceived as open, fair and attractive to potential and existing employees.
But is CSR nothing more than “a religion with too many priests, in which there is no need for evidence or theory… driven by top management’s personal beliefs”, as management guru Michael Porter said at the 2004 European Business Forum.
Not according to recent research.
Research demonstrates CSR initiatives have a positive impact on employee morale, motivation, commitment, loyalty, training, recruitment and turnover. Benefits in these areas have been found to improve the bottom line of companies. Three surveys across Europe, the USA and a survey involving 25 countries found employees felt greater loyalty, satisfaction and motivation when their companies were socially responsible.
A recent survey of 257 CEOs by Korn/Ferry shows that 65 per cent of CEOs are taking responsibility for managing company reputation. Almost three-quarters of the CEOs regarded recruitment and retention as the main business objective of corporate reputation and almost the same percentage identified the hiring and retaining of key and talented people as one of the three top objectives of corporate and social responsibility initiatives. These HR concerns were regarded as more important than more commercial and business outcomes.
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Therefore, corporate initiatives can contribute to the branding of organisations in the labour market. These initiatives can make the organisation attractive to employees with similar values and so assist the organisation to become an employer of choice for these potential employees. And, if it lives out the values and initiatives on a daily basis it will assist the retention of desirable employees.
This is supported by the experience at the 2004 Economic Forum in Switzerland. Less than 20 per cent of the 1,500 delegates, most of whom were business leaders, identified profitability as the most important measure of corporate success. Almost 30 per cent identified criteria that reflected CSR – almost one in four cited reputation and integrity of the brand and one in 20 cited CSR as the most important measure of corporate success (Economist 2004).
CSR certainly seems to be the emerging flavour of the month, but is it a reflection of a ‘two-faced capitalism’?
In some senses it could be.
First, Porter argues CSR initiatives need to be undertaken not for “feel good reasons” or as defensive actions to avoid scandals, but they should be integrated into an organisation’s competitive strategy. Companies need to be clear about how CSR initiatives contribute to organisational success and efficiency. This view reflects an emphasis on the desired outcomes of one stakeholder: shareholders.
Second, many CSR initiatives could just reflect the intention of management and be no more than rhetoric. The intention to further corporate and social responsibility does not appear to be implemented in many cases. Research by Business in the Community (BiTC) found that 60 per cent of firms are not living up to their values. In addition, a report by a charity, Christian Aid cites Shell, British American Tobacco (BAT) and Coca-Cola as paying lip service to CSR, but in reality the community development projects they undertake are ineffective.
It appears that many CSR initiatives reflect the essence of human resource management activities. So what is the role of HRM in CSR? At present, it appears HR is falling down in this task. A survey by Cronin and Zappala in Australia revealed that HR played a negligible role in decision making in corporate citizenship. However, CSR will become an even more widespread and accepted way of doing business and it should have a further impact on HR’s role. Not only will HR need to see its role as strategic from the shareholders viewpoint, but it will also need to accommodate this view with the need to create a situation in which the workforce and the organisation is sustainable over the longer term.
HR has a role in demonstrating the benefits of workplace practices that both reflect CSR and at the same time, contribute to organisational efficiency and success. In order to do this, HR needs to be familiar with the latest research on work practices and employee performance and also the language of business. It requires HR to integrate CSR initiatives through its roles as business partner, employee champion, administrative expert and change agent. It also requires HR to be an organisational advocate in the community and with other external stakeholders.
CSR provides HR with opportunities. It provides a further opportunity to contribute to business success and employee satisfaction and performance. It also provides additional opportunities to contribute to community wellbeing.