I know you have read about the recent shift by corporate leaders towards viewing socially responsible business practices as strategic issue – rather than peripheral issue related to brand perception and public relations.
I will discuss what that shift means for the HR profession and the reasons HR professionals must take the lead in their organisations.
There are four main points:
1) The evolution of CSR and business sustainability The term, “corporate social responsibility” was rarely heard until the 1970s when few pioneering companies, such as Ben & Jerry’s Ice Cream in the US and The Body Shop in the UK, ventured into the marketing of social responsibility as business strategy.
Ben & Jerry’s, for instance, was founded in 1978 with the stated purpose to share its business rewards with its employees and with the community.
On the other side of the Atlantic, The Body Shop was founded in 1976 and made news when it announced it would not sell cosmetic products tested on animals.
Three decades ago, Ben & Jerry’s and The Body Shop were often lauded but rarely emulated. Today, you can’t open business magazine or financial newspaper without reading about some company’s latest sustainability initiative. It’s safe to say that corporate social responsibility has gone mainstream. Companies everywhere are embracing the notion that they exist to do more than just make big profit. They know they must make money ethically and at the same time invest in the planet and the people of the communities in which they operate.
2) The Triple Bottom Line This new way of thinking was succinctly described in 1994 by John Elkington, when he coined the term, “The Triple Bottom Line” also known as “People, Planet, Profit”. Elkington, pioneer in the corporate responsibility space, argued for an expanded spectrum of values and criteria for measuring organisational success that would include economic, environmental, and social factors.
He explained the “Three Ps” as follows:
• People (Human Capital) – pertains to fair and beneficial business practices towards labour and the community and region in which corporation conducts its business.
• Planet (Natural Capital) – refers to sustainable environmental practices.
• Profit – the lasting economic impact the organisation has on its economic environment, not just the internal profit made by company or organisation.
The Triple Bottom Line concept dictates that company’s responsibility should be to stakeholders, rather than to shareholders. “Stakeholder” in the TBL context means anyone who is influenced, either directly or indirectly by the actions of the firm.
3) SHRM 2007 CSR pilot study I’d like to take look at an important international CSR study published last year by my organisation Society for Human Resource Management (SHRM). Our 2007 CSR pilot study was conducted in collaboration with HR organisations in six other countries: Mexico, China, India, Australia, Brazil, and Canada.
One of the basic objectives of the study was to gauge the level of CSR participation in the involved countries. More than 80 percent of the organisations polled had executed some type of CSR practice. That is very significant number, which is very encouraging.
We also gained considerable new insights into how organisations in the countries had embedded CSR within their core business in four key areas – with HR professionals uniquely positioned to drive results in each.
Employment Branding: HR professionals can help to build trust for their organisations by identifying the important issues in the communities where they operate and then developing mutually beneficial actions. In addition, they should monitor global fair labour standards and practices to be sure their workplace conditions conform. When company is successful with its employment branding strategy, more consumers will favour its products, and more suppliers will want to work with it. Most importantly, as we discussed earlier, more potential employees will want to join the company, and it will be easier to retain existing employees.
Corporate Culture: The pilot study responses indicate that HR professionals in the seven countries are using two principal means to build an ethical corporate culture through CSR: they are including CSR in their organisational mission statements and incorporating CSR efforts as part of their organisations’ goals.
Ironically, though, the second-ranked CSR driver in most of the seven countries was promoting public relations. Employee activism ranked third in the United States, but larger percentages of respondents from Brazil and India than from the US reported that it was driver of their CSR programmes. The low figures for employee activism represent wake-up call, since employee commitment and engagement are so crucial to the success of any CSR programme.
Corporate Strategy: HR professionals need to understand the business strategy of their organisations to anticipate competencies that will fuel future growth. CSR can be helpful tool in the process of making sure that workplace culture and brand align with strategic corporate goals.
Two practices highlighted in the pilot study give some indication of how HR professionals and their organisations are integrating CSR into their strategic planning. The numbers for both are relatively low and indicate this is category that may need more attention and resources. One of the practices measured was the percentage of organisations that considered the social impact of their business decisions. The other CSR practice was cause marketing – aligning company’s products or marketing with particular social cause.
Transparency: Increasingly, there has been an emphasis on the need for more corporate transparency and reporting on CSR activities. In response, many organisations have begun publishing CSR annual report that measures economic, social, and environmental performance – the triple bottom line.
Our pilot study found out that the number of organisations publishing such reports across the seven countries is still relatively small. Brazil had the highest response rate in this category with 35 percent, while Mexico had 25 percent and the US, only nine percent.
4) Role of HR in CSR Our pilot study gave us fresh data confirming that HR professionals and their organisations are moving in the right direction with their CSR and business sustainability programmes, but it is also clear that there is still substantial room for improvement. While nearly two-thirds of the US HR professionals interviewed were directly involved in CSR activities, only 13 percent were mainly responsible for creating CSR strategy, and only 23 percent were charged with implementing the strategy.
These numbers need to change, because we believe that an organisation’s CSR and sustainability programmes can be most effective with the HR team in the lead. Because sustainability is so new at most organisations, there is still no clear consensus in the US or in other countries as to which function or department should take the lead.
It is apparent that holistic view of CSR and business sustainability is needed at most organisations, and HR professionals have an opportunity to step into this leadership void. For variety of reasons, HR is in the best position to get comprehensive CSR programmes rolling that will engage and benefit the entire organisation and its stakeholders.
It makes sense for HR to lead sustainability initiatives, since recruitment, retention, morale, productivity, recognition and rewards – as well as innovation – are major components of CSR/business sustainability strategy.
Does HR have what it takes to lead in CSR, and will HR professionals have the courage to stand up and be heard? Without doubt, the skills needed to create and lead sustainability strategy dovetail nicely with HR professionals’ backgrounds, experience
