When HR magazine launched its Make a Difference campaign in January last year its main aims were to raise awareness of CSR among HR professionals, encourage HR to take a leadership role in CSR and to share best practice.
To kick off the campaign we surveyed readers to garner their views on the importance of CSR. Just 30% of respondents' organisations had a CSR policy in place while 22% were working on one. Only one in 10 HR professionals were responsible for CSR.
Throughout 2008 in the pages of this magazine we have covered the latest thinking in CSR and showcased best practice through case studies as well as revealing exclusive research findings.
To celebrate the first anniversary of our campaign we have conducted another survey of readers, on how the importance of CSR is changing and the impact this has had on the HR role. Some 127 HR directors and specialists responded. We then asked leading business school Ashridge to interpret the findings. To complement the survey Ashridge also sought the views of business leaders around the world and collected examples of best practice. The results are as follows.
How CSR is changing
The role of business in society continues to change in response to globalisation, technological revolution and greater demands for corporate responsibility and accountability. Unsurprisingly, these trends, are changing what is meant by corporate social responsibility (CSR). To date most companies have addressed CSR through policies and procedures while devoting much less effort to embedding CSR into organisational culture and the competencies of their managers. However, Ashridge believes the rate of change is likely to increase rapidly. This will propel HR professionals into the heart of their organisation's responses to the challenges and opportunities CSR presents.
We surveyed HRDs and HR practitioners under three main headings: the range of trends relating to CSR and their likely impact on their organisation over the next three to five years - including such issues as climate change, levels of scrutiny of business, the regulatory environment and pressure on business to contribute to the broader public good; how their organisations were responding to these trends and their likely impact on organisations in the next two years; and how these trends are and will impact on HR functions.
Positive and negative trends
The clear message from the HR practitioners who responded is that the business environment will change considerably over the next three to five years and that these trends create both threats and opportunities. In some areas the impacts will be negative - for example, growing regulation is expected to have a mainly adverse impact on over half the organisations that participated in the survey. The impact of other trends is seen as being primarily positive: for example, growing consumer demands for companies to contribute to the broader public good was seen as a positive trend by over half the respondents. HR practitioners believed their organisations had already changed in response to these trends (see top chart).
Significantly change has not been restricted to areas such as structure, processes and systems but has included the knowledge and skills of leaders and employees as well as organisational culture and values. This represents real change compared with Ashridge's research with companies in 2006 when the focus was much more on areas such as processes and systems. It is interesting how few respondents believe their organisation will not have to change in relation to CSR trends (see chart, top right).
Getting the leadership right
To complement this survey of HR practitioners we surveyed business leaders around the world. What is evident is top business leaders agree with HR professionals that it is not simply a matter of integrating CSR into organisational processes and systems. It needs to be integrated into organisational culture, leadership and into the development of employees. Research published last month by Ashridge, Developing the Global Leader of Tomorrow, indicates there are a whole host of discrete knowledge and skillsets required that underpin the ability to respond effectively. These can be grouped into three clusters: context, complexity and connectedness.
Leaders need to understand the changing business context - 82% of those polled say they need to understand the business risks and opportunities of environmental and social trends. And they need to know how their sector and other actors (regulators, customers, suppliers, investors, NGOs) are responding. Senior executives also need the skills to respond to this information - 70% say the global leader should be able to factor social and environmental trends into strategic decision-making. In different contexts and industry sectors this can mean knowing how to factor these issues into processes like capital expenditure decision-making and brand development, for example.
The second cluster of knowledge and skills are to do with the ability to lead in the face of complexity and ambiguity. The challenges and opportunities these issues present are complex - there is often little agreement about their precise nature and the response required. Leadership in these circumstances requires a range of discrete skills. Of those polled 88% say senior executives need to be flexible and responsive to change; 91% - the ability to find innovative and original ways of solving problems; 90% - the ability to learn from mistakes; and 77% - the ability to balance shorter and longer-term considerations.
The final cluster of knowledge and skills are to do with connectedness - the ability to understand the actors in the wider political landscape and to engage and build effective relationships with new kinds of external partners. This can mean regulators, competitors, NGOs or local communities. The way our current leaders are groomed does not encourage productive engagement with partners outside the organisation - they tend to lack the skills necessary for effective dialogue and partnership. To survive and thrive, 73% of senior executives say the global leader of tomorrow needs to be able to identify key stakeholders that have an influence on the organisation; 74% say they need to understand how the organisation impacts on these stakeholders, both positively and negatively; 75% say they need to be able to engage in effective dialogue; and 80% that they must be able to build partnerships with internal and external stakeholders.
HR today and tomorrow
Returning to our survey of HR practitioners we find they believe they have a critical role to play. They were asked how important recruitment, learning and development, succession planning, (see full list on chart, far left), were in meeting the challenges and grasping the opportunities presented by the trends. It clearly shows practitioners see the importance of CSR to many aspects of their role. However, as the chart (left) shows, in many organisations recognition has yet to translate into practice.
Best practice
Ashridge's research identified some companies that have already taken steps to develop these kinds of knowledge and skills among their senior executives. InferfaceFLOR, the modular flooring and carpet tiles manufacturer (see p30) has introduced in Europe, Middle East, Africa and India a three tier education programme from induction level for all employees up to senior management. The programme progressively raises awareness of key environmental and social issues and develops the skills individuals need for the organisation to be able to fulfil its vision of being environmentally-restorative by 2020. Individuals must have participated in certain levels of the programme, and where appropriate passed a graded assessment, to be considered for promotion to senior roles.
Unilever, the global manufacturer of leading brands in foods, home and personal care, runs a programme for high potentials on its emerging market strategy. Teams of executives build their engagement skills at the same time as researching current social and environmental trends and the business implications by spending time in emerging markets collaborating with NGOs and other grassroots groups. The teams develop business proposals to present to the Unilever board - the most successful are selected for implementation.
For more case studies please go to www.hrmagazine.co.uk
What impact will the following trends have on your organisation in the
next 3 - 5 years?
Very Somewhat Neutral Somewhat Very
negative negative positive positive
Centres of economic activity will shift both globally and regionally
3 20 45 26 6
Competition for talent will intensify, becoming more global
2 29 40 20 9
Regulation of business will continue to increase
10 44 24 19 3
Growing demand for limited resources will increase eg. oil, food, water,
metals etc.
13 42 36 4 5
Role and behaviour of business will come under increasing scrutiny
4 17 29 38 12
Technological connectivity will increase
1 3 10 52 34
Challenges of mitigating and adapting to climate change
2 14 52 25 6
Growing consumer demand for companies to contribute to broader public
good
2 7 33 42 16
NGOs will continue to have a major impact on public opinion and
legislation
4 19 53 16 7
Organisational boundaries will continue to blur and the ability to work
effectively
with other organisations will grow in importance
1 6 32 40 21
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To what extent has your organisation changed each of the following?
Substantial Some Little or Don't
change change no change know
Organisational
processes and systems 23% 54% 20% 2%
Knowledge and
skills of employees 23% 61% 15%
Knowledge and skills
of leaders 31% 53% 16%
Organisational
culture and values 26% 44% 29% 1%
Organisational structure 25% 46% 29%
Organising strategy 27% 49% 23%
How important are each of the following in meeting the challenge and
grasping the opportunities presented by the trends?
Very Important Little or no Don't
important importance know
Recruitment 45% 45% 9% 1%
Performance management
and review systems 62% 32% 5% 1%
Reward and incentive systems 37% 47% 15%
Learning and development 61% 33% 5%
Succession planning 47% 40% 13%
Employee engagement 67% 26% 6% 1%
Change management 56% 37% 6%
Developing policies and
procedures 27% 54% 18% 1%
Creating a 'great place to work' 58% 29% 12%
Employee volunteering programmes 17% 32% 47% 4%
Implementing green fleet 18% 34% 41% 7%
sustainable travel and
benefits programmes
To what extent will your organisation change each of the following in
the next 2 years?
Substantial Some Little or Don't
change change no change know
Organisational processes 23% 51% 19% 6%
and systems
Knowledge and skills of 26% 62% 10% 2%
employees
Knowledge and skills of 29% 57% 10% 2%
leaders
Organisational culture and 17% 47% 32% 3%
values
Organisational structure 19% 47% 27% 5%
Organising strategy 29% 49% 16% 4%
To what extent is your organisation using the following mechanics to
meet the challenges and to grasp the opportunities presented by the
trend?
Great Some Not at Don't
extent all know
Recruitment 22% 56% 22%
Performance management and
review systems 35% 50% 14% 1%
Reward and incentive systems 26% 42% 30% 2%
Learning and development 41% 42% 14% 1%
Succession planning 18% 46% 34% 2%
Employee engagement 30% 49% 19% 2%
Change management 26% 54% 20%
Developing policies and
procedures 18% 59% 19% 2%
Creating a 'great place 30% 46% 22% 1%
to work'
Employee volunteering 13% 29% 54% 4%
programmes
Implementing green fleet 11% 33% 50% 6%
sustainable travel and
benefits programme
