The new model for CSR
Katie Jacobs, May 21, 2013
Great strides are being taken in the march for corporate social responsibility, and it’s HR’s job to steer it.
A cake sale, a fun run, a day spent painting and decorating a community centre, an oversized cheque. When you think of corporate social responsibility (CSR), it’s likely that those are some of the images that spring to mind. They’re nice: nice for employees’ self-esteem, nice for companies’ reputations, nice for charities’ diminishing coffers. But what if there was a way for CSR to be more than just ‘nice’ – for it to be truly sustainable, creating healthier communities and healthier businesses for everyone?
HR magazine began its campaign for CSR five years ago. First dubbed ‘Make a Difference’, it morphed into the slightly catchier ‘CSHR’ in 2011. Since then, we’ve kept a close eye on the evolution of CSR, and HR’s role in this. And it’s clear that although the recession has forced it to change, CSR may well emerge stronger and more closely aligned to business strategy than ever before.
The concept of ‘creating shared value’ (CSV) has been floating around since Harvard Business School professors Michael E Porter and Mark R Kramer’s influential 2011 report of that title calling for a move from CSR to CSV. In it, they state: “The concept of shared value – which focuses on the connections between societal and economic progress – has the power to unleash the next wave of global growth.”
With public trust in business at an all-time low, “companies must take the lead in bringing business and society back together,” write Porter and Kramer. “The purpose of the corporation must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy. It will also reshape capitalism and its relationship to society. Perhaps most important of all, learning how to create shared value is our best chance to legitimise business again.” In short, businesses have to play a part in creating healthy societies, as these are the markets in which they must continue to operate.
It’s a laudable, if hefty, aim – and it looks as if many forward-thinking businesses are indeed working towards it. With a distinct link to leadership development and training, HR is playing a leading part in them doing so. It’s no longer a matter of simple fundraising or a day of manual labour a year, but having business and people development strategies in place that can’t help but improve the communities that organisations operate in, as well as the organisations themselves.
“This is the key evolution we’ve seen,” says Matthew Gitsham, director of the Ashridge Centre for Business and Sustainability at Ashridge Business School, who has been researching for some years how companies approach sustainability. “[CSR activity] has come much closer to business strategy. Why? It makes sense. There are so many changes going on in the world and companies have to think strategically. Plus, the impact of the financial crisis means there has been a pull towards things that give value.”
Whereas much of the criticism of CSR activities in the past has been that companies are merely paying lip service to a buzzword or attempting to create good PR, Gitsham says the idea of positive reputation isn’t the only impetus for forging close links with communities. “Reputation is important,” he acknowledges, “but companies are recognising it isn’t the only reason. It’s not just behaving with integrity, but thinking strategically about mega-trends. Doing so can be lucrative and provide ideas for new products and services.”
Gitsham also believes that although the idea of responsibility and improving trust is a good incentive (Edelman’s 2013 Global Trust Barometer report found that although trust in business has increased from last year, only 18% of the general population trust business leaders to tell the truth), it is “a little misplaced”. Gitsham says: “Most people in the business world are pretty responsible. The new thing is: how can we take what’s changing in the world and find ways to grow the business by doing the right thing? It’s finding commercially sustainable ways to fix problems. Commercial solutions are bigger in scale than just charity.”
The need for commerciality is clear, as businesses continue slashing budgets in every area. “Companies need a solid business case behind any community initiative,” says Jan Levy, managing director of Three Hands, an organisation that helps businesses work with communities. “Just creating social value is no longer enough – there has to be business value alongside it. Companies are starting to ask themselves questions about purpose and values. It’s no longer just about delivering ROI to shareholders, but having a higher purpose, addressing something in society and delivering long-term return for all stakeholders.” For Levy, the term CSR is a tricky one. He prefers “community investment” – the process, he explains, “by which companies contribute to a healthier community with a view to making the business healthier”.
It’s a view shared by James Watts, VP for HR at fast food restaurant chain KFC. “CSR is not something you choose to do or not do,” he says. “It’s an obligation of any big business to run their business in a way that gives back to the community that supports it.” Education is central to that philosophy, and KFC has been working with Barnardo’s to provide young people from disadvantaged backgrounds the chance to gain valuable work experience, and even a job, as well as improving the management and leadership skills of existing staff. “The bridge between CSR and our people is one of our key drivers,” says Ian Hagg, head of CSR at KFC. Watts adds: “When it’s a win-win for everyone, that’s when it’s successful.”
At insurers Legal & General, strategic CSR activity is also completely tied to the wider business vision, and has a big role in finding commercially viable solutions to market challenges. “With things getting tighter in the economy and some big social changes, we wanted to find solutions,” recalls head of CSR Graham Precey. “We soon learned that if we wanted to learn about changes in our markets, the answer was to be found in the third sector. If you want to understand issues in the marketplace and how to be in the shoes of your customers, find a charity partner.”
This has led to Legal & General working with a wide range of charity partners – and paying for their expertise. Frontline staff have been trained by Macmillan Cancer Care to make sure they are suitably sensitive when taking calls relating to critical illness cover. Those in the home insurance business have spent days with the Royal National Lifeboat Institution (RNLI) to better understand flooding issues. “The RNLI helped us bring flooding alive to the frontline claims team,” says Precey. “It’s immersive learning.” And to bring the message of pension auto-enrolment home, employees were challenged to see if they could live on the state pension for a week. “CSR is a lateral way of looking at developing skills,” says Julia Clayworth, head of employee engagement and communication. “And people are being evaluated against behaviours like ‘taking a wider interest’ in their performance reviews. The CSR activities can obviously link very well to that.”
Linking CSR to performance management is one clear way for HR to take responsibility for a company’s link to the wider community. Phil Brown, head of people development at Anglian Water, understands this well. “A lot of companies have tacked CSR onto the business plan,” he explains. “We wanted to say: ‘if you don’t think about sustainability, you’re missing the point’. It’s directly linked with performance management – we encourage our people to think about it in everything they do.”
Anglian Water used to operate a silent service, says Brown, but could not remain quiet as issues of water shortages rose up the sustainability agenda. “Now we are a campaigning organisation,” he says. “We’ve raised our head above the parapet, and we need our employees to feel confident doing the same.” In practice, that means working with schools and educating the public about not wasting water and thinking about water recycling and sewage, through the campaign ‘Love every drop’. “We wanted to engage employees and customers in valuing our product,” says Brown. “We are asking people to think slightly differently, and that means managing them in a different way.”
Managing in a different way calls for a new type of leader – one who truly understands the importance of sustainability to business. That’s the type of leader the broadcasting behemoth Sky has been aiming to cultivate over the past few years. Sky’s CSR projects, which it terms the ‘Bigger Picture’, include its Podium leadership development programme, where HR, CSR and community become so aligned, it’s almost impossible to see the joins.
Daniella Vega is head of corporate responsibility at Sky. In the decade she has worked there, she has seen its CSR-focus become “more and more aligned with our core business strategy”, and what she calls the “convergence of HR and CSR”. “When I first started at Sky, I had little contact with HR,” she recalls. “Now they are one of the departments I work most closely with. We are linked in terms of future talent, L&D and diversity.”
Sky’s Podium programme includes everything you’d expect from a leadership development scheme, plus an innovative final module that sees participants put what they’ve learned into practice with a community partner. And not just any community partner, says Laura Seber, senior talent development consultant. “The community partners are carefully selected to make sure you immediately see the business value in working with them,” she says. “That helps our leaders see it as part of what they do every day, not just something on the side.” This includes working with organisations such as Childnet to improve internet safety for children, or Action on Hearing Loss to develop ways of improving accessibility for the hard of hearing. “Many of these people are Sky customers, or could be future customers,” Seber adds. “It’s a clear business need.”
With this part of the programme, Sky is cultivating leaders who understand the diversity of the market and the needs of the customer base, while the charity partner gets advice on developing its strategy. It creates a lasting legacy, says Seber: “People are aware forevermore of the impact they have on the community and ultimately our customers.” The company checks in after three and six months to see if learning is being consistently applied. Ben Brown, responsibility manager, concludes: “If we can help address these issues, it makes society more resilient, which makes our business more resilient.”
The link between L&D, especially leadership development, and CSR appears to be driving much of the move to embed community involvement deeply into business strategy, and a move to give skills and time rather than money. Pilotlight is an organisation encouraging exactly this, working with companies to help small charities operate more like businesses. “It is transformative for the charities, but we never realised the impact it would have on the business leaders,” says Pilotlight’s chief executive Fiona Halton.
As part of Pilotlight’s work, senior leaders from different companies and business functions are put into teams to work with a charity on developing a strategy. “People say they learn more with us than on business school courses,” says Halton. “They get out more than they put in. It’s not being done because it’s nice. It’s being done because it develops an organisation’s people and gives value beyond a course.”
Ashridge’s Gitsham also believes in the transformative power of immersive, experiential learning, which often involves witnessing global shifts such as climate change or deforestation first-hand. “The common theme is powerful personal experience,” he says. “If those are the kind of experiences that leaders need, either we need to select people for career progression who have had them, encourage them to seek it for themselves, or actively embed it in how we approach leadership development. You can talk about the issues as much as you like, but what really has an impact is first-hand experience – taking the experience of volunteering and turning it into leadership development.”
And for any experience to be counted as a success, it needs to translate into positive new behaviours. Here, supplying proactive support back in the organisation afterwards is vital, says Gitsham. “That converts a shift in mindset into habitual new behaviours,” he explains. “You need line managers to be supportive, to recognise and reward new desired behaviours, to give people space and resources to take on new activities, and so on.”
The kind of immersive experiences that Gitsham has studied don’t come cheap (Sky sending senior leaders to the Amazon region, or HSBC sending leaders to work with climate scientists in scientific forest research stations, for example). But for organisations without such deep pockets, there are more austerity-friendly ways for HR to link development to community, and reap the business benefits.
Claire Atkinson, former CSR director at BUPA, runs Inspire, Motivate and Engage, an organisation that provides fully accredited training management and leadership courses that also include mentoring opportunities. These allow employees to support young unemployed people online while developing their own coaching and management skills.
Atkinson says she started the venture after getting “frustrated by the team-challenge type of CSR activities on offer”. “People know volunteering develops skills, but it can be wishy-washy,” she says. “It needs to be about putting learning into practice. I’m surprised how many companies are still stuck at the ‘painting and decorating’ stage [of CSR], but more and more I hear they are getting sick of it and are looking for more value.”
Simon Lucas, managing director at recruitment company Society, works with Business in the Community to get the most out of employee volunteering. As well as such tangible events as the organisation’s flagship Give and Gain Day, Lucas is trying to embed sustainability further into his business model. “I’m trying to find a mechanism to help our clients give something back, like giving free recruitment advice to their charity partners,” he says. “We want it in the DNA of the business, something you do in good times and bad. Getting as much out as you put in isn’t a bad thing – when the business is fully invested and is measuring the benefits, it’s not fluffy and it delivers more to the community.”
Whatever the scale of the initiative – whether sending your top performers to live with a tribe in the Amazon rainforest, spending months helping a charity with its business model or encouraging employees to give up some time to mentor a young person online – HR’s role is central in moving CSR from ‘giving back’ to sustainable partnering that works for the individual, the business and the community. “HR and CSR go together in interesting ways,” says Halton from Pilotlight. “There is a growth in HR being interested in stretching their people’s skills in the community. It’s cost-effective to bring HR and CSR together, and each benefits and gives reality to the other. Our very existence proves the two can work together sustainably – we wouldn’t exist if they couldn’t.”
Levy at Three Hands is more cautious, saying the link between the two functions is “getting there”. But he agrees that HR can add an important focus. “Developing people through community initiatives often needs more focus than CSR offers,” he says. “HR can do the process.” Vega from Sky agrees that HR brings something new to the party. “The lines between CSR and HR have blurred,” she says. “Sustainability is all about people, and HR gives CSR a more practical, action-oriented approach.”
Colleen Theron, director at sustainability consultancy CLT Envirolaw, goes further. She says: “HR is often the propelling force in trying to get change”. She also brings up the recruitment challenge, a key business driver for organisations becoming more sustainable. “As the world’s population grows and gets more and more stretched, it will only get harder to get top talent to work for you,” she predicts. “That’s the business case for HR.” Indeed, according to a 2011 survey by Deloitte, 70% of Millennials (workers aged 18 to 26) say a company’s commitment to the community has an influence on their decision to work there.
While some of the approaches to working in the community may be new, the business issues they are solving are not new, declares Levy. “[This approach] is creating solutions to age-old problems, like graduate recruitment, trust and engagement,” he says. “It’s not philanthropy or ‘giving back’; it’s business problems on which to base community investment.” With total social involvement, he adds, it is “difficult to see what’s for the business and what’s for the community”. One thing is crystal clear, however: done right, it means everyone’s a winner.
Making sustainability stick in the mind
Talking about creating shared value is all very well, but how do you achieve real shifts in mindset and new sustainable behaviours? Ashridge’s Matthew Gitsham says there are four key ingredients:
1. Experiential learning is crucial. Getting a first-hand experience of what today’s global and societal challenges are all about is what makes a rationally understood idea at the back of the mind come alive, and makes you want to act on it. But experiential learning on its own is not enough.
2. You can’t just give people a random experience; you have to help them work out its business relevance. The best mechanism is a project-based business challenge, where participants have to develop some kind of project with business value based on their experience.
3. Clear sponsorship and involvement from the CEO and other senior leadership is vital.
4. Make sure you provide active support when back in the organisation after the experience. This helps convert a shift in mindset to a habitual new behaviour. Consider things like encouraging line managers to be supportive, giving people renhanced job roles, having a dedicated coordinator to provide ongoing encouragement and organise refreshers, and recognising and rewarding positive new behaviours.