In the previous issue of Responsible Business, we elaborated on the topic of stakeholders and stakeholder management. We highlighted the significance of stakeholder engagement when establishing responsible and sustainable relationships internally and externally. In the third part of this series, we focus on the workplace area of Corporate Social Responsibility, and more specifically on the Human Resources function which is crucial to fostering a CSR culture within the organization, and developing a strong and engaged workforce that identifies with the company and reaches out to stakeholders.
An organization cannot look into its environment and engage its surrounding community if it is unable or unwilling to initially look into its own people first who carry the company’s core competencies.
Corporate Social Responsibility entails that the company places special emphasis internally as a first step to improving its competitiveness and reputation. By presenting itself as an excellent employer which cares for its people and involves them in the circle of social responsibility, it can emit a better image. This involvement forms the cultural framework in the firm’s business management and creates awareness towards the need to achieve business goals in the best possible and ethical manner.
The Human Resources (HR) function is a critical partner in making this happen. HR managers have the tools and the opportunity to employ people responsibly, offer development opportunities, and leverage employee commitment to and engagement in the firm which consequently refines the firm’s CSR strategy. Further, HR professionals in organizations that perceive successful CSR as a key driver of their financial performance can be influential in fulfilling that objective.
HR is a key organizational leader and can take the lead or partner with other executives to work cross-functionally to integrate CSR objectives into business processes. HR can emulate the organization’s CSR commitment vertically and horizontally across departments. As a strategic partner in the organization, HR can also help drive the formulation of the company’s CSR strategy, especially since HR has an important “people perspective” to contribute and will be involved in implementing key measures. Furthermore, HR can manage the implementation of the CSR strategy and monitor its adoption proactively while evaluating its success throughout the company. In a CSR context, this means not only contributing more towards the achievement of business objectives, as they relate to the marketplace, customers and suppliers, for example, but in other areas too: in the workplace, by playing an active role in the culture the company wants to create; in the community, by getting involved and sharing the employees’ skills and energies in volunteer activity; and in protecting the environment both inside and outside the workplace.
The Business Case
One of the first areas a business needs to consider when it is planning a roadmap for social responsibility is what sort of a workplace it creates for employees. As mentioned earlier, employees are the group of stakeholders who keep the business running. They provide the know-how, productivity, and innovation necessary for business activity. Therefore, the continued success of a company is contingent on the commitment of its staff.
HR professionals are highly attuned to considering CSR from both a values-based and a business-case perspective. Through CSR, HR managers seek to promote the retention and development of their staff and nurture workplace environments that attracts recruits of the highest calibre. By properly implementing CSR, HR can lower employee turnover and help the company build a quality workforce, increase employee productivity and efficiency, and lower operational costs.
Indeed, latest studies and surveys show that new graduates searching for jobs put social responsibility of the company high on their list of priorities. They are even willing to take a pay cut to work for a socially responsible company. A recent study by PricewaterhouseCoopers titled “Managing People 2020” found that 88% of graduates chose employers based on strong CSR values, 86% would consider leaving if the company’s CSR values no longer meet their expectations.Working employees further show significantly more loyalty to companies that have proven commitment to corporate responsibility.
Undoubtedly, a strong employer brand aligned with employee values and concerns is becoming recognized as one of the best ways of retaining talent with employees proud to work for a business that is highly regarded. In fact, the Society for Human Resources Management (2011) found that strong sustainability programs helped achieve 55% better morale, business processes were 43% more efficient, public image was 43% stronger and employee loyalty was 38% better. Consequently, employees who have a favorable view of an organization’s corporate social responsibility commitment are also positive about other factors important to its success, including:
• Senior management’s integrity
• Senior management’s inspirational
sense of direction
• Organization’s competitiveness
in the marketplace
• Company’s interest in employees’
• Employee’s engagement or pride
in their organization.
In response to these aspirations, the ‘Developing the Global Leader of Tomorrow’ project by the United Nations Global Compact Principles for Responsible Management Education (PRME) identified a range of human resource levers that are important for developing CSR organizational capabilities. These include building CSR knowledge and skills through leadership development programs, career development planning, succession planning, performance management, incentive systems, competency frameworks, and seeking knowledge and skills when recruiting new talent into the organization while considering alignment with the company’s CSR vision and goals.
Sustaining a Responsible Workplace
The strategic direction of an organization is set by the CEO and executive team, however, the HR department can help business units establish CSR targets and develop performance evaluation systems that foster CSR behaviour by providing the right tools and counsel. Wellness, diversity, work-life balance and flextime policies are CSR programs which fall directly within the HR manager’s purview and are at the core of a responsible workplace. Relevant issues range from employee rights and rewards, remuneration and compensation, employee wellbeing, and recruiting processes, among others.
- Employee rights: A responsible business takes active steps to ensure employees are informed about and understand what they should be able to expect from their employer both in terms of the law and in terms of additional employee policies and practices which apply in the workplace. Some of these rights are protected by the Universal Declaration of Human Rights, the Global Compact of the United Nations, the International Labor Organization standards, or even by local law and the company’s code of ethics.
- Employee reward: CSR thinking also considers the company’s remuneration and reward policy and how it is applied in the business. This mindset also considers who are the top wage earners and what levels of salary do they earn in relation to the rest of the employees in the business. A major issue in the debate around the global financial crisis was the inflated salaries of senior business people – chairmen of boards of directors, CEOs, senior management – and the terms and conditions they were awarded accordingly including many different types of personal benefits. To implement a responsible and sustainable approach within the organization, HR professionals need to consider the difference between remuneration levels and salary packages concerning men and women, in addition to option programs, profit-sharing and financial transparency as well as an accurate depiction of the pay scale review, administration and its link to performance.
- Employee wellbeing: This covers a whole range of issues, including safety at work which makes it particularly important in jobs where there is exposure to the general public. Wellbeing also includes welfare and social benefits and looks with a holistic approach to how a company deals with employees. It also examines the ways in which employees are encouraged to balance their work-life activities or work-life balance as there are many companies today who promote work-life management programs and find that they gain immeasurable benefits in return.
- Employee Recruitment: Employee diversity and a culture of inclusion and CSR is a great recruitment tool. More and more research suggests that people looking for jobs want better lives; they don’t just want better jobs. People want to make a difference and recognize their purpose in life is not simply about making shareholders richer. People want to feel worthwhile and not become another statistic on the payroll.
- Employee Performance Management: The total reward and recognition program, including base salary, incentive pay, long term incentives and other non-monetary recognition benefits (such as award programs, employee of the month, promotions, career pathing, etc.), needs to be aligned with the company’s CSR values and strategy. Anything less would certainly depreciate a company’s CSR objectives. CSR should be recognized in both the basic job responsibilities as well as the annual performance objectives of the individuals and team.
Creating a culture of change and responsibility is a vital HR role. HR’s mandate to communicate and implement ideas, policies, and behavioral change internally makes it central to fulfilling an organization’s objectives to integrate CSR into its bottom line. A good initiative to start with is designing and conducting an employee engagement survey and to take the lead while doing that with a CSR mind-set by creating the link to company as well as CSR values. A survey is an essential tool for understanding and measuring the application of responsible practices, as well as the aspirations of employees and the messages they are sending. The employee engagement survey is the first step in creating a two-way dialogue with employees.
While CSR and sustainability policies entail an advanced role for HR to engage employees in initiatives that increase their loyalty and commitment to the growth of the company, the latter translates into an enhanced productivity which is an essential factor for business sustainability. Consequently, it can be debated whether sustainability drives employee engagement or if employee engagement is a driver of sustainability?
Sustainability as a driver of employee engagement: According to a recent global workforce study by “Towers Perrin”, CSR was ranked number three in the top ten items that drive employee engagement, right under “senior management’s sincere interest in employee wellbeing” and the “opportunity an employee has to improve skills and capabilities”. Employees care deeply about their company’s social responsibility and sustainability practices. They want to work for an organization that not only performs well in its industry, but also has a solid record of performance in environmental stewardship, diversity and community involvement.
Employee engagement as a driver of sustainability: Forward thinking organizations know that sustainability is here to stay. Like quality and safety, it is critical to their future performance and viability. Companies that take a long-term view integrate sustainability into their business strategy and create an engaging culture that satisfies the triple-bottom-line. Employee engagement can be the difference between making sustainability stick and watching an important corporate strategy lose momentum and fizzle out over time. Best practice CSR firms actively sponsor the establishment of “CSR Champions Teams” in which employees throughout the organization are encouraged to join a group that meets on company time to conceive and launch CSR initiatives that both greens the company’s operations and achieves social value.
Source: Responsible Business Magazine