CSR: chief HR officers see limited impact on bottom line
Sian Harrington, January 23, 2013
On the fifth anniversary of HR magazine’s ongoing CSHR Make a Difference campaign to encourage HR directors to take a lead in embedding corporate social responsibility (CSR) into the business, research shows there is still some way to go.
Chief HR officers see limited impact for CSR on the bottom line and this is a barrier to broadening CSR efforts, according to Cornell University research.
Where CSR is strategically built around the company’s business, it is more effective than where it has little alignment to the business’s capabilities or strategic objectives.
Yet, as the research found, HR directors widely regard CSR as a tool to support the company’s reputation rather than having an impact on the firm’s operational or financial performance.
The research, HR in the C-Suite, conducted by Cornell’s Center for Advanced Human Resource Studies, is the first to include CSR since the study’s launch in 2009.
Main obstacles to CSR are lack of finances, lack of integration and alignment, lack of a clear result and lack of leadership buy-in.
Pat Wright, Thomas C Vandiver Bicentennial chair at the Darla Moore School of Business at the University of South Carolina and one of the report’s authors, says the results generally reflect a US-centric outlook on CSR.
“I think the US still doesn’t see CSR/ sustainability the same way as it is viewed in Europe,” he said.
“What comes out here is that CSR seems to be something you do to gain positive outcomes (such as reputation and brand). Thus, unless you can translate the outcomes of CSR to the bottom line, it is hard to get true buy-in from much of the organisation. This leads to CSR consisting mainly of giving money (or products) to causes to gain positive reputation points in the public opinion, but not as much emphasis on other aspects of CSR.”
John Ainley, non-executive director of West Bromwich Building Society and former group HR director of Aviva, said he was not surprised with the findings.
“The body of evidence building up related to CSR and bottom-line impact is less developed in the US than in the UK,” he said, “but the huge impact on reputation does have bottom-line benefits. If a CSR culture is imbued within an organisation, then that organisation is worth trusting. And a company worth trusting is one people want to work in and deal with.”
He added areas such as carbon reduction also had significant benefits on the bottom line through cost savings.
The top employee CSR activity is providing paid time off for volunteering, cited by 70% of respondents. In terms of the business impact of CSR strategies, increasing employee engagement scores 3.8 on an index of 5 and attracting and retaining employees 3.4. Impact on product/service quality, sales increases, cost reduction and overall profitability all come at the bottom of the index.
The study found CEOs to be the greatest champions of CSR, with the executive leadership team and high potentials mostly classed as supporters, and line managers and frontline employees either supporters or moderate supporters.
“There is a schizophrenia as to where CSR should report to, but it doesn’t matter as long as it is the best-placed person,” Ainley added. “My view is that HR is a sensible place to have it because of the link to engagement and therefore business results.”