Archives for July 2007

Corporate Social Responsibility: The Void HR Has To Fill

Jay Handelman, Director of the Centre for Corporate Social Responsibility (CSR) at Queen’s School of Business, says CSR presents the ideal opportunity for HR practitioners to become strategic partners in their organizations. Read on to learn more about CSR, HR’s role in driving it, and why managers are not yet embracing it with open arms.

What is corporate social responsibility?

Handelman: CSR is when a company genuinely tends to the expectations of its societal members, not just its customers or shareholders. If you extend that, CSR is the way a company demonstrates that it is genuinely part of the social fabric, and genuinely cares about the communities and countries in which it resides. The people benefiting from CSR programs look at these companies and say, ‘They genuinely do care about issues that are important, and are not just paying lip service.’ CSR makes sense, because if an organization is not meeting the expectations of constituents, there won’t be enough support for it to survive.

What opportunities does CSR present for HR practitioners?

The initial reaction by lot of companies when they see external pressure to be socially responsible is, We need to do something. So then it becomes a public relations exercise, because the PR department can do something immediately, maybe put out an ad to say, Look what we are doing. I’m sure there are exceptions, but if CSR only resides in the PR department, I don’t think the company is really serious.

Human resources is a pivotal area. Think of the contrast: when CSR is part of the PR department, it’s something externally put out there, but not necessarily internalized within the organization.

I had an MBA student in his 30s who was well along in his career, successful in sales, and he said: “In my company if you read our mission statement and values, and listen to our corporate leaders, it brings tears to your eyes. But if in doing my job I actually followed our code of ethics I’d probably be fired because I wouldn’t get the sales.”

That’s where the HR department comes in. They are the ones who can take it beyond either the PR department or a few passionate people in the upper echelons of the company, so that the sales person is given incentives to be motivated in terms of CSR, and is rewarded for it. If the employee is not, then it looks nice, but that’s it. As many people have noted, one of the best codes of ethics around was the one written by Enron.

So HR’s role is to embed CSR internally?

When an employee is saying, I hear the ads of our company and seethe glossy brochures, but then I think of my day-to-day job and there’s a complete disconnect, that to me is the void HR has to fill. And if that void is not filled, then in my opinion, it is not CSR. CSR will only work if it is a genuine display of being part of the social fabric. And that authenticity comes only when it is internalized. So that is the role the whole HR department has: hiring the right people to achieve CSR goals, then rewarding them and providing incentives. The role of HR department is to foster CSR organically: I see HR as planting seeds within the organization that will develop.

Are Canadian organizations and HR departments being proactive in adopting CSR?

No, Canadian companies in general are lagging behind companies in Europe, and HR here has been lagging too. There are very large exceptions. One consulting company I know of, for example, provides workers with the opportunity to go on a six-month sabbatical every seven years, during which they don’t lose their status in the company. They go and work in a developing country on a project that uses their skills and they receive basic pay.

Recently a top student I know had four or five job offers upon graduation, and I asked her how she decided which one to accept. She told me about this program, and said, “Even though the pay is a little less, I’m going with this one because I can grow as a person and express my values aside from just earning money and focusing on my career.” So an incentive/reward program attracts this kind of person. And then CSR initiatives will start to grow on their own and we won’t need top-down projects.

How widely has CSR been adopted in Europe?

The European Union doesn’t have binding legislation but a treaty whereby they work with countries at the national level implementing programs and supporting companies’ programs. So decisions are made not just by managers about company practices but unions are part of it, and they bring in community groups. So with that blending of decision-making, which speaks to the ideal of CSR, I see Europeans are far advanced: it is just part of what they do. In North America, the distance between the company and community can be quite stark.

Which European best-practices will HR leaders here want to emulate?

In terms of tactics, there are very specific things being done, such as incentive programs to attract the kind of people who will embed CSR, and rewards for that behaviour. But at a more strategic level, what I see is that HR – and this also applies to all other functional areas of organizations – sees just its functional job of working with employees but not the broader stakeholder engagement view.

HR professionals need to ask, So how can we have employees be more engaged with a broader range of stakeholders? How can I help employees to do that? You can’t just go to an employee and say, “Here’s more for you to do – in addition to what you already do, we want you to also go and engage stakeholders.” Rather you need to make this an integral part of what they do. (See sidebar for details of the HR-driven CSR transformation of Paris-based Lafarge Cement.)

So CSR has considerable benefits to organizations, and HR has a pivotal role in changing internal culture?

Right, it is changing culture. So at Lafarge, the individual plant manager, who before would have never even have thought about much less be given responsibility for environmental issues, was asked to engage in community dialogue and come up with solutions. And now this has become just part of what they do. HR is enabling that organic cultural change, helping workers to do that, rewarding workers, re-assigning jobs and job definitions so that the work still gets done. That is strategic level HR.

Why aren’t HR professionals here embracing this strategic role?

In Europe there is a different thinking about what an organization is. In Canada the first thing I hear from HR and other managers is: How much will this cost and what will our return be? As soon as I hear that, I know that this is an organization that just doesn’t get CSR because a lot of the costs and benefits are hard to measure. But if you can step back and think about Lafarge, for example, that became one of most reputable companies in their country via CSR and is able to attract the most talented people, how do you put a price tag on that? You really can’t.

A company that gets CSR realizes this is for its long-run health; it’s not for a quarterly return on investment. I’m not saying throw endless buckets of money at CSR, but you are not asking the question, “If I spend a dollar will I get 10 percent return on it?” Those are the questions I hear in North America, and this mindset permeates HR too.

How do HR managers make the case for CSR – and why they should be leading it?

It think the best way to do that is to be armed with the best practices from other organizations and to share those success stories – especially from competing organizations. They have to sell it and convince others, but it will need to be by way of vision, something greater than, “It will boost our stock price this quarter.”

If HR takes the approach that this is just a cost-benefit thing, then I think they are marginalizing their own role within the organization. When HR says, “Now here’s a vision we have for our organization,” it is increasing its importance as a strategic partner, going beyond its functional aspects.

Who are HR’s CSR allies within the organization?

To embed CSR, HR will have to work with many departments. For example, the CSR aspect in marketing is from a branding perspective. We know in branding if you are not genuine, if it is just a veneer, you are going to be exposed. So marketing has realized that it needs to work with HR to put that authenticity into the brand, because if it is not based on what the organization really stands for, the brand won’t work.

HR also has to work with those who run the organization, who have strategic control, which increasingly are the finance people. So how do you share a passionate vision with bean-counters? You need to get the financial people to see the greater mission of the company. Quite often the way to do that is to point out other companies that have faced threats, whose survival has been threatened by not looking after these social issues – so from a risk-management perspective.

Look at Microsoft: in the late 90s it was threatened. Leaders realized if they didn’t define the company as more than a software monopoly with no larger purpose, even though they were financially successful, they might not continue to exist. What they have done is not philanthropy, but as a company they are contributing more to communities and so on. I was talking to someone from Microsoft and he said when the company was at risk, “No one was in our corner,” and that it was a scary feeling to think everybody in society was saying, “Good riddance to you.”

SIDEBAR: Lafarge’s CSR Transformation

A good example of HR’s importance in a strategic role comes from Lafarge, a cement manufacturer with quite a presence in Canada that’s based in France. Lafarge faced a problem in the 90s. The global economy was really heating up and there was an economic upswing, which was very good for cement manufacturers as there was lots of construction. So Lafarge’s global operations were growing, but they were having a problem as they are a cement company–not a very sexy kind of industry, and probably not very environmentally friendly either. So they were having problems attracting talented people to help grow their international operations.

Ten years ago they implemented a fundamental change, not as a PR exercise, but in terms of who they were as a company. Their HR department was very much part of redefining jobs throughout the organization; not just considering functional jobs, but rather, ‘Your job is to think about a greater purpose for the organization aside from making cement.’

In France Lafarge has become part of many important cultural initiatives, and many environmental initiatives, and has given incentives to people within the organization to come up with solutions about how to be more environmentally responsible. People on the ground decide how that will be done, and it has become part of their jobs.

What has happened over the decade is Lafarge has redefined itself as not just a cement company, but as a French company that has a cultural contribution to make and environmental solutions, as opposed to problems. Now, surveys that rank the 50 best companies to work for in France show Lafarge is in the top 10.

What they did was driven internally by HR, by giving employees incentives to do not just their job in producing cement, but to think about their company in terms of French society.

SIDEBAR: Resources to get up to speed

One of the best online resources for research into CSR is the website of the United Nations Global Compact. In particular, the Learning Forum has dozens of case studies searchable by industry.

The Canadian Business for Social Responsibility provides members with services such as networking, consultation, and conferences.

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