By Karen Higginbottom
Originally published on www.forbes.com
The history of corporate philanthropy goes back to at least the 19th Century in the UK where the innovative working practices of Quaker organizations such as Cadburys and Rowntree Mackintosh put employee welfare and ethical behavior at the heart of their business values.
The term ‘CSR’ emerged in the 1960s, commented Jonny Gifford, research advisor to the Chartered Institute of Personnel and Development (CIPD). “The term ‘CSR’ became increasingly common in the 1990s, in particular when the spotlight was being shone on poor working conditions in global supply chains,” he said. “CSR or CR (corporate responsibility) has its sceptics as well as advocates but the defining feature is that it activity and standards that companies voluntarily sign up to, separate from legal governance.”
However, CSR became a bit of a buzzword 10-15 years ago, acknowledged Gifford. “Organizations found it easier to turn it into a branding opportunity by having a CSR webpage but wouldn’t necessarily do anything about it. However, you can only say that you care about CSR for a certain time before you actually have to do something about it as expectations are raised among stakeholders.”
Organizational attitudes to CSR have changed over the last ten years and the term is no longer an acronym which you can put into a box, remarked Gifford. “The more we talk about responsible business practices the better. There are two broad aspects to corporate responsibility: one is the traditional focus on CSR which is what the organization does with the local communities in which it operates and environmental policies and then activities which are core to the business and how they make their money.”
People play a central role in the value creation process which is about understanding the way an organization works and the consequences of its activities, argued Gifford. “For example, how you treat your customers and how you treat suppliers ethically. If you define your value creation in narrow financial terms, you can develop this very far while maintaining a deep disregard for social responsibility. But a triple bottom line view focuses on long-term value creation and brings this together with a much wider stakeholder view. This leads organizations to look at what is socially and environmentally sustainable and ethics is integrally linked to value creation.”
Gifford argued that HR profession has a three-fold role in CSR as many aspects relate to HR management. “HR needs to make sure people management practices are ethical and secondly, to embed corporate responsibility you need to give people the right support and training and HR has a role in learning and development side of that. The third aspect is embedding ethics into the organizational culture. That’s about being able at board level to ask the challenging questions.”
The HR function should be totally integrated into CSR, said Judi Marshall, programme director in MA in leadership for sustainability for Lancaster University Management School. “It’s not always the case as sometimes it’s a marketing tool. The HR function needs to think about leadership, recruitment and reward. Some of the best organizations have taken an interesting HR aspect to this where they look at the work-life balance of CSR.”
One of the challenges facing organizations when it comes to the impact of CSR is measuring the impact of those activities on the targeted communities, said Professor Kamel Mellahi, professor of strategic management at Warwick Business School. “CSR differs from any other corporate activity. It deals with issues like environmental pollution, child labor and product safety which are often seen as outside the traditional boundaries of a business. Therefore it’s not easy to measure CSR performance by using traditional indicators such as return on investment. Effective measures of CSR must consider economic, social and environmental impact.”
Embedding corporate responsibility into a business is about making it an integrated part of the culture of the organization, added Gifford. “Now HR is ideally placed to gauge organizational culture, understand it and change it.”
HR could play a much more prominent role in an organization’s CSR strategy, agreed Professor Mellahi. “HR hasn’t taken ownership of HR issues associated with CSR. These have become management team issues such as a governance and diversity. HR is only taking a supporting role but it ought to champion it and the profession has an excellent opportunity to take a leadership role in CSR.”
Research indicates that HR is very rarely involved in devising CR strategy. The CIPD’s report The Role of HR in Corporate Responsibility surveyed 353 HR professional and 523 middle and senior managers and found that only 13% of business leaders reported that HR was responsible for setting CR strategy. When it came to implementing CR strategy, only 26% of business leaders thought that HR was responsible for implementation. The report revealed that the biggest driver for an organization’s increased focus on CR was greater pressure from governments or regulators.
It’s time for the HR profession to move out of the shadows and take an active role in an organization’s CSR strategy. Many elements of a CSR strategy involve people and it’s an opportunity that the profession should grasp now.