Since the global financial crisis of 2007/08, the political mood has sobered and society's patience for unethical and irresponsible business has worn thin. Studies have shown levels of trust within society and among employees have declined gradually since the 1970's, but the frequent chain of corporate and Government scandals disclosed in the last decade alone have finally culminated in a change of business practice, or at least the recognition that change is needed.
This is why the CIPD is focussing on research to explore the business case for adopting a responsible and sustainable approach to business, and to consider the key issues and challenges that organisations may encounter along the way.
It is only in recent years that innovation and sustainability have become top priorities in the boardroom, but its dominance on the strategic agenda suggests that senior decision makers are taking the long-term health of their organisations seriously. Investments in employer branding and in enhancing corporate reputation suggest that customers and employees are now recognised as key business stakeholders, in addition to the typically favoured shareholder. But despite the fact that these future strategic challenges are acknowledged, they are not yet fully integrated into the operations and culture of organisations. Many organisations are finding the shift from a traditional finance-focused way of business, which served them well towards the end of the last century, to balancing the needs of all their stakeholders a difficult task. The external context is also placing new demands on organisations to develop leaders that can 'run the show' in the face of all this ambiguity.
The CIPD believes HR has a pivotal role to play in embedding a responsible and sustainable mindset within the organisation, engaging employees at all levels so they understand how this shift in thinking affects what they do in their day-to-day jobs. We believe HR should be involved in the debate at a senior level, not just facilitating the organisation's strategy but actively participating in the discussions and leading the organisation through change. A key skill will be the ability to identify and challenge any business decisions that go against the organisation's values or will have a negative impact on its stakeholders, as well as the future health of the business.
David Peach, UK director of HR for NYSE Euronext endorses the idea that there is opportunity for HR professionals "to become the thought leaders in this space, and to be the creators of strategy", rather than just the facilitators of business strategy that others in the company produce. In a thought piece written for the CIPD (part of the collection Responsibility and Sustainable Business: HR leading the way), Peach explains he sees this as an opportunity for HR to take on the responsibility of being a strategic change leader and supporting the transition to a more sustainable business.
In face of the 21st century challenges, he believes that top of the people agenda for HR strategy will be leadership development, true employee engagement and creating a culture of trust and empowerment. As well as a greater focus on change management and the need to realign the balance of how employees are viewed - as productive and valued stakeholders. "It is only in the last ten years that companies have started to create coherent business strategies that integrate sustainability fully." says Peach.
Even then, it appears that the sentiment for many businesses tends to be more focused on driving efficiency and the need for cheaper and fewer resources, rather than taking an intentional ethical stance. However, is the motivation important? If the primary driver for working responsibly and sustainably is to only reduce reputational risk and increase employee and customer loyalty, but consequentially organisations are still meeting their carbon targets, employing people and giving something back to society, surely the outcome is all that matters?
Catrin Ballinger is a research associate at the CIPD
