The world is considered a more corrupt place than it was three yearsago. Trust in banks has declined dramatically. Employees at FranceTelecom and Foxconn have committed suicide due to work pressures.Meanwhile, the number of internal security breaches by staff has risendramatically, while in 2010 alone, a third of large companies suffereddeliberate misuse of confidential data.
Corporate social responsibility (CSR) is a key element of managing riskand protecting and enhancing company reputation. But the facts abovewould indicate that businesses have not been taking corporateresponsibility very seriously in the three years since HR magazinelaunched its Make a Difference campaign.
Last year's respected Trust Barometer from PR firm Edelman found thattrust in business had improved slightly since 2007, but that the overallrise was minimal. The barometer (the latest of which is due out thismonth) also found for the first time that trust and transparency were asimportant to corporate reputation as quality of product and service -ranking higher than product quality in the US and much of WesternEurope.
Meanwhile, a survey of 91,000 respondents from 86 countries last monthby corruption monitor NGO Transparency International found that six in10 people believed their country had become more corrupt and that theglobal financial crisis had undermined faith in economic institutions.Christopher Wasserman, president and founder of the Zermatt Summit,which campaigns for greater transparency and accountability in business,says business leaders need to take more responsibility and behave moreethically themselves to combat such impressions. "For stability to berestored and sustained, we urgently need to govern and run our companieswith an ethical, transparent and accountable mandate, which needs tolead to a significant change in leadership behaviours - without which weare heading for further catastrophe," he believes.
Against this background, CSR Europe launched the Enterprise 2020initiative in October last year. Some 70 global companies and 27European business associations are involved in the initiative to createa sustainable future through examining various questions - from how toembed sustainability into a global supply chain to how to fosterhealthier lifestyles in the workplace.
More recently, IBM UK brought together thought leaders in business,government and academia as part of national initiative 'Start',developed by The Prince's Charities Foundation to promote and celebratesustainable living. At the event Stephen Leonard, IBM UK & Ireland chiefexecutive, said the coming decade had to be one of action anddecision.
"Designers and architects are taught differently to businesspeople. Whenthey design a chair, they do not just think about the chair, but thechair in the room, the room in the house, the house on the street andthe street in the environment. This is the level and type of thinking weneed in our people and skills if we are to have a long-term impact," hesaid.
Yet in all the discussion about corporate responsibility, there appearsto be a major missing link - that of HR. Three years on from ourcampaign to encourage HR to take a leading role in embedding corporateresponsibility into organisational culture, there is still, on thewhole, a lack of buy-in. Yet HR plays a crucial role in ensuring theright corporate climate and practices that enable businesses to succeedin a responsible way.
"The big message is that it is time for HR to wake up to CSR," statesformer HR director Elaine Cohen, who has written a book on the subject,CSR for HR: A necessary partnership for advancing responsible businesspractices.
"Business strategy is developing into a strategy based onsustainability. This has been driving practices for the past five yearsbut has bypassed the HR function altogether," she says. "Few senior HRpeople are involved in developing CSR strategy, while HR managers do notunderstand the broader implications of CSR for the HR function. It mustunderstand sustainability in order to be an adequate, supportive andeffective business partner. "
Will Snell, director of social enterprise, Skills Venture, goes a stepfurther, arguing that CSR is dead and has been replaced with corporatesocial human resources, or CSHR.
"CSR is dead, because almost all aspects of CSR make such obviously goodbusiness sense that they should be done anyway by any successfulcompany," he says.
"Companies should be minimising their environmental footprint, ensuringfair treatment of workers in their supply chain and so on, becausefailure to do so would result in negative publicity and could jeopardisetheir 'licence to operate' in the long term. This also applies to theaspects of CSR that relate directly to HR; if companies are not treatingtheir own staff well, they will not survive."
Snell believes that CSR is about people and that the most importantpeople of all are your employees: "CSR can benefit the bottom line, butonly under a different guise: CSHR."
In this he agrees with Cohen, who argues for the creation of the CSHRmanager, a role that completely intertwines HR with CR practices.
She says HR needs to better understand the stakeholders affected by thefunction - who go far beyond the traditional HR stakeholders ofmanagement team and employees. Rather, the way HR practises its work hasan impact, she says, on the broader society through recruitment, pay andremuneration; on the fabric of society, in the way HR develops skillsand talent; on the environment, through the way HR supportsenvironmentally conscious employees; and on the supply chain, in the wayHR trains and motivates staff dealing with external suppliers.
"CSR is as much about how you do something as what you do. HR needs todrive the change processes," Cohen says.
Each and every one of a company's employees engaged in its activitiesmust be committed to the concept. As Cohen states, you cannot develop aCSR-enabled culture unless every employee really understands what itmeans and what they have to do - and this comes down to HRprocesses.
The problem is that, quite rightly, the chief executive and boardroommanagement team 'own' CSR. And too often they look to other functions,such as legal, corporate affairs or even marketing, to deliver thestrategy, rather than to HR. CSR can end up merely as a series ofinitiatives designed to generate good PR. In this state of affairs, itis down to HR directors to seize the initiative, rather than wait forthe CEO to bring them on board, believes Cohen.
"When HR does HR with a CSR mindset, then business wins, employees win,the community wins and HR wins," she says. "This is the next big thingfor HR legitimacy."
Snell agrees: "An HR function that has embraced CSHR can help thecompany to do this by integrating CSR priorities into HR business, andby acting as a natural home for many (although not all) of the keyaspects of CSR."
The benefits of taking a CSHR approach are well documented. Unilever hasstated it gets a $5 return for every $1 spent on staffwellbeing. A survey of 1.6 million employees from 70 companies conductedby Sirota in 2007 found high levels of engagement in the 86% ofemployees satisfied with their organisation's CSR commitment. Whenemployees were negative about their employer's CSR approach, then only37% were highly engaged.
Sustainable business pioneer InterfaceFLOR, a carpet giant based inGeorgia, US, last month set out the Mission Zero milestones it had metin 2010. Back in 1994, founder Ray Anderson outlined his bold vision forthe future: "To be the first company that, by its deeds, shows theentire industrial world what sustainability is in all its dimensions:people, process, product, place and profits - and in doing so, becomerestorative through the power of influence."
InterfaceFLOR says that promoting an enlightened and engaged culture isone of the most important elements in its progress to date. This hasbrought innovation, such as when factory employee Billy Ingram changedhow nylon was fed into the tufting machines - resulting in a reductionin waste that saved more than $1 million a year.
So what can an HR director do? Among the obvious areas are recruitingfor a diverse workforce, developing a culture of inclusion, generatingwellbeing programmes and creating processes through which employees canbe involved in the community through volunteering. Then there is thewhole question of reward and remuneration. "Some 8% of people employedfull time in Europe are living below the poverty line, despite the factthat they get up on Monday morning and come back on Friday, havingworked a full week. How can that be?" asks Cohen.
One company that put the idea of a 'living wage' on its agenda is Swisspharmaceutical company, Novartis. It is one of the first firms to definea living wage in each of its global operations, making adjustments topay to ensure employees could have a basic standard of living. NovartisHR led the programme.
Clothing retailer Timberland has taken a different approach, paying abasic wage but providing employees with a range of benefits such aseducation and help with housing.
Meanwhile, at DIY giant Kingfisher, owner of B&Q, pay and bonuses arelinked to green targets and objectives. "I, and the board, are rewardedthrough sustainability measures, not just hard financials such aswhether we hit profit," says Euan Sutherland, Kingfisher chiefexecutive. "It's about leading from the top, as well as making it theDNA of the business."
More than 5,000 B&Q store staff have voluntarily undertaken a bespokee-learning model around sustainability and the firm has invested ineco-advisers and experts in stores (they are the ones wearing the greenaprons).
Sutherland says it is a great way to engage staff, a point with whichSnell agrees. He argues that it is employee volunteering that istherefore the most important element of CSHR. "This most directlyengages staff in those aspects of CSR that go beyond 'responsibility',"he says. "Issues such as wellbeing, health and safety, diversity, humanrights and environmental protection are all crucial; but in thehierarchy of needs, they are hygiene factors. Volunteering can tap intothe issues that make employees love the company they work for and, in sodoing, it can have a dramatic impact on recruitment and retention,engagement and motivation, and personal and skills development. Theseare the issues that make a company stand out from its peers; the otherfactors are those that it needs to get right simply in order tosurvive.
"Again, these are benefits that are absolutely core to HR, but they alsoextend beyond HR into business development benefits and bottom-linegrowth," he says.
There have been some step changes in the past three years, but in mostcases change is not happening quickly enough. As Cohen says, it is timeto put the HR into CSR to drive the change needed. "The bottom line isthat these activities should be HR-driven," she says. "If the HR managerwill not do something about it, then no-one else will."
PRACTICAL TIPS FOR HR DIRECTORS IN IMPLEMENTING CSR
There is no doubt that CSR is rising on the business agenda. Thiscreates an opportunity for HR directors to lead initiatives that willimpact business delivery. With such a great opportunity, what are sometips for getting started?
Tip 1: Ask probing questions about how CSR can be linked to employees'day-to-day experience
- Does our current employee proposition represent a fair and responsibleemployer? Do we ask our employees how we can make the employeeproposition more CSR-led? For example, does the coverage of our benefitprovision pose a CSR risk?
- Is the organisation meeting real CSR targets or are we just payinglipservice? Employees are sensitive to any lack of delivery - forexample, they will question how we can claim to be 'green' when we stilluse paper or plastic cups for coffee.
- Have we really considered how to reduce paper usage in our officethrough workflow documentation and automation of our employeeprocesses?
- How well do we engage with our community and voluntary sectors aroundwhere we work? Do we offer employees a chance to get involved or to leadthese initiatives?
Tip 2: Avoid making CSR for HR sound like the latest management fad
Post-recession, business leaders are likely to be weary of new ideasthat sound like the fix for all problems. It may be advisable to use a'cloaked' strategy whereby CSR initiatives are wrapped into cost savingsor risk management exercises. The results can then be communicated morebroadly as part of a CSR agenda that already has been demonstrated inthe organisation.
Tip 3: Help CSR champions link employee activities back to businessobjectives
There is an opportunity to work alongside CSR leaders to develop abusiness case for CSR-led processes. Business benefits such as costreduction from reduced paper usage, risk mitigation around employeebehaviours, compensation and benefits provision can be compelling forsenior management, when positioned with business drivers in mind. Manyleading HR directors have had significant experience in building costand risk business cases for transformation functions - so they have realexpertise to add here.
We see multiple CSR avenues and options for HR directors to progress intheir organisations. This can only help to raise HR's profile and giveit another reason to be at the heart of the business deliveryconversation, both internally and externally.
Anna Marie Detert is head of human capital at Buck Consultants, sponsorof the HR Leaders Club
PHASE 1: SUPPORT READINESS FOR CSR
Implement the ethical business programme: assimilation of code of ethicsand all supporting codes and structures
Survey internal and external HR stakeholders on satisfaction with HRperformance and impacts, needs and aspirations
Develop a position and policy on human rights and examine all aspects ofbusiness activities that are relevant to support adherence to humanrights principles in broadest sense
Examine existing organisational culture and elements that support CSRand block CSR through series of round table discussions and reviews ofcore business processes
PHASE 2: ENGAGEMENT
Develop a community involvement cross-company steering team to establishpotential for employee volunteering Survey employees for potentialinterest and readiness Meet potential community partners Develop apolicy and plan for volunteering activities
Establish pilot green teams comprising employee volunteers in differentdepartments Train green teams in basic environmental protection Measurecost savings and impact reductions as result of green team activity.Reward green teams for savings and benefits If successful, roll out
PHASE 3: ADAPTING HR PROCESSES
Revise the employer brand, positioning it as an ethical business, reviewrecruitment plans and ensure processes support diversity andinclusion
Review remuneration processes to ensure complete equality of opportunityin pay systems and especially gender balance. Incorporate rewards forethical behaviour in plans
HEALTH & SAFETY
Examine all existing activities that contribute to employee health,safety and wellbeing and develop a plan to improve
PHASE 4: TRAINING AND COMMUNICATIONS
Train all managers in the concepts and practices of CSR that relate tothe company and in contributions they can make in their own roles
Develop briefing sessions for all employees on CSR to be delivered bymanagers
Incorporate CSR training into all new-hire orientation
Incorporate CSR messages and stories into regular internalcommunications
Start a company blog that employees can contribute to
Develop a presence in social media
Use social media for recruiting
Source: CSR for HR, author Elaine Cohen. Published by GreenleafPublishing