CIPD - Corporate social responsibility

Corporate and HR strategy

Originally issued in June 2006; latest revision September 2007

This factsheet gives introductory guidance. It:

explains what is meant by corporate social responsibility (CSR)
examines why CSR is seen as increasingly important
looks at HR’s role in identifying, developing and embedding CSR and the risks of HR being involved
considers what to cover in a CSR strategy
includes the CIPD viewpoint.

What is CSR?

CSR covers all aspects of corporate governance. It is about how companies conduct their business in an ethical way, taking account of their impact economically, socially, environmentally and in terms of human rights. This moves beyond traditional business stakeholders such as shareholders or local suppliers. CSR includes social partners such as local communities, and global responsibilities such as protecting the environment and ensuring good labour standards in overseas suppliers. CSR also includes relationships with employees and customers. It inevitably involves working in partnership with other organisations or groups. It can be seen as a form of strategic management, encouraging the organisation to scan the horizon and think laterally about how its relationships will contribute long-term to its bottom line in a constantly changing world.

Why does CSR matter?

CSR has grown in importance in recent years, often through public scandals and mis-management. This has meant increased demands from customers, employees, statutory bodies and the general public for detailed information about whether companies are meeting acceptable standards. Increasingly companies have to take account of how their actions impact on society. The ‘employer brand’ has become an important way to add value but it is also more vulnerable to scrutiny and suspicion. Bad publicity travels fast through communication channels which are often out of organisational control such as the Internet.

CSR is an issue in which we all have a stake. Our actions today will influence the lives of future generations through for example, trying to protect the environment. It is changing the way business is done.

Being proactive about CSR will increasingly provide a competitive advantage both externally through protecting company reputation and the accompanying publicity, and internally through employee engagement. To really ‘do’ CSR businesses need to accept that they don’t exist in a vacuum but operate in a wider community that has an impact on their, and others, futures.

When CSR is done well, it means a precious, though precarious, trust in your business. Successful CSR can bring benefits such as a distinct position in your marketplace, protecting your employer brand, and building credibility and trust with current and potential customers and employees. It can help significantly with recruitment, engagement and retention of employees.

For more information on employer branding, see our report on the topic.

Go to our employer branding report

Why does HR matter in CSR?

Companies increasingly need to co-ordinate their CSR activities and demonstrate their commitment to CSR. Effective CSR depends on being seen as important throughout an organisation. Delivery, not rhetoric, is the key to stakeholders developing trust in an organisation.

HR has a key role in making CSR work. CSR without HR runs the risk of being dismissed as PR or shallow ‘window-dressing’. And CSR is an opportunity for HR to demonstrate a strategic focus and act as a business partner.

CSR needs to be embedded in an organisation’s culture to make a change to actions and attitudes, and the support of the top team is critical to success. HR already works at communicating and implementing ideas, policies, cultural and behavioural change across organisations. Its role in influencing attitudes and links with line managers and the top team mean it is ideally placed to do the same with CSR.

HR is also responsible for the key systems and processes underpinning effective delivery. Through HR, CSR can be given credibility and aligned with how businesses run. CSR could be integrated into processes such as the employer brand, recruitment, appraisal, retention, motivation, reward, internal communications, diversity, coaching and training.

The way a company treats its employees contributes directly to it being seen as willing to accept its wider responsibilities. Building credibility and trusting their employer are being increasingly seen as important by employees when they choose who they want to work for. People, especially Generation X and younger, don’t want to work where there is a clash with their personal values. Present and future employees are placing increasing value on the credibility of an organisation’s brand. Employers are using the positive aspects of their brand in recruiting, motivating and retaining highly-skilled people.

What are the risks in HR’s involvement with CSR?

The trust built through successful CSR is hard to regain if lost. HR needs to ensure that their organisation’s CSR can stand up to the inevitable scrutiny by stakeholders, and that training and communication mean it’s embedded throughout the culture of an organisation.

HR needs to be an active business partner working with other functions, for example finance, PR/marketing etc. It will need to look beyond the boundaries of usual practice and arguably work on its own PR. CSR is a strategic opportunity which is market-led and is restrained by bureaucracy. It needs dynamism, creativity, imagination and even opportunism.

What to consider when starting a CSR strategy

Clarify your core values and principles.
Make sure you know who your key internal and external stakeholders are and which issues affect your relationship with them.
Get the top team on board, and know how to sell the benefits of CSR to different stakeholders.
Understand how the CSR strategy is aligned to your business strategy and HR practices.
Get endorsement for the CSR strategy from inside and outside your organisation.
Communicate consistently.
Training is vital, as CSR will only have an impact if employees are engaged: attitudes or behaviour won’t change otherwise.
Effectively measure and evaluate CSR, otherwise the time, effort and money invested are based on assumptions, not results.

Direct results (such as saving fuel resulting in lower carbon emissions) and indirect results (increased employee satisfaction) of CSR strategies can be shown to contribute to business performance. One way outcomes can be measured is through a balanced scorecard approach, which allows for the different types of factors that contribute to a business’s bottom line including internal people, processes and customers. CIPD’s case study work¹ shows that companies recognise there is considerable scope for clearer measurement.

The CSR Competency Framework

CIPD has worked with the Department of Trade and Industry’s CSR Academy to develop the first CSR Competency Framework² – a template to help managers understand CSR and integrate it into their organisations.

The CSR Competency Framework identifies six characteristics underpinning effective CSR work:

Understanding society – understanding the role of each player in society, including government, business, trade unions, non-governmental organisations and civil society.
Building capacity – external partnerships and creating strategic networks and alliances.
Questioning ‘business as usual’ - openness to new ideas, challenging others to adopt new ways of thinking and questioning ‘business as usual’ attitudes.
Stakeholder relations – identifying stakeholders, building relations externally and internally, engaging in consultation and balancing demands.
Strategic view – taking a strategic view of the business environment.
Harnessing diversity – respecting diversity and adjusting the approach to different situations.

The CSR Academy have also developed a practical guide³ on how to use the competency framework in day-to-day business.

CIPD viewpoint

CSR will continue moving up the business agenda. Successful CSR strategies depend on building relationships with a range of stakeholders and getting buy-in across the organisation. Enlightened people management practices are key in delivering this and CSR offers HR professionals many opportunities to make a strategic contribution to their business. This may mean reviewing existing policies and practices on, for example, internal communications, recruitment, induction, health and safety, diversity or training. One of the main conclusions from the CIPD case studies was that CSR became an instrument of change in an organisation’s behaviours, attitudes and performance and this was where the HR function made its greatest contribution to the success of CSR initiatives.

Useful contacts

CSR Academy

References

CHARTERED INSTITUTE OF PERSONNEL AND DEVELOPMENT (2005) Making CSR happen: the contribution of people management. London: CIPD. For further information go to the CIPD Bookstore.
CSR ACADEMY. (2006) The CSR Competency Framework. Norwich: Stationery Office. Available at: http://www.bitc.org.uk/resources/training/csr_academy/
csr_acad_pubs.html.
CSR ACADEMY. (2006) The CSR Competency Framework introductory pack. Norwich: Stationery Office. For further information go to The Stationery Office website.

Corporate social responsibility