There are various factors and mechanisms involved in putting CR into action.
Stakeholders in corporate responsibility strategy
At the heart of any organisation’s CR strategy are its different stakeholders, and how to create value for each. The long-and short-term interests of customers should be considered, as well as employees and workers throughout the wider value chain, and the general public. This informs an organisation’s understanding of the potential value it creates or the damage it could cause for employees, local communities, customers and the environment, as well as shareholders.
Legal and voluntary measures
Many ethical considerations in the core areas of CR are enshrined in law, including employment law. However, CR strategy typically aims to go beyond legal obligations with organisations taking voluntary measures and initiatives. Indeed, CR has grown in part due to perceived limitations of legislation, either in its scope, detail or power to influence.
Some of the most visible voluntary CR activity relates to community-based activity, for example, supporting local community projects financially or via employee volunteering programmes.
Governance
In shaping how an organisation creates value and questioning how it operates, CR relates closely to corporate governance, the mechanism for holding executive management to account. Effective boards will hold a long-term view, have a clear understanding of business models and will have the strength and independence to challenge the business.
The role of HR teams
HR teams have an important role to play in building and maintaining ethical cultures within organisations, where corporate responsibility is recognised by all. For instance, people professionals might encourage decision-makers to review the ethical dimensions of business decisions. Additionally, they build people management systems that support ethical behaviours through appropriate reward and performance management processes. Read more on how people professionals can help establish an ethical culture.
As well as ensuring fair practices for employees, HR teams also play a coordinating role in other elements of CR, particularly in the absence of a CR team. This might include running an organisation’s volunteering programme, for example.
An HR team’s role in CR takes various forms, including:
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Employment and people management practices. People professionals must first look at their own area and embed CR into core HR practices. It must ensure that, as a minimum, statutory obligations are met in all aspects of employment and people management. Ideally the organisation should aim to go beyond this where possible. This applies to the whole range of HR practices, including recruitment, terms and conditions, health and safety, communications, inclusion, diversity and fair treatment, learning and development, performance management and reward and benefits - see our factsheets on these topics. One area of HR practice that has received particular attention is the fair treatment of whistleblowers.
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Supporting a broad CR strategy. HR teams have a role in communicating with and educating employees at all levels on their social and environmental responsibilities. As well as embedding sustainability concerns through all people management policies and practices, people professionals are central in aligning the organisation’s values, culture and business activity. Equally, learning and development functions play an important role in developing management capability and promoting organisational learning in corporate responsibility.
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Volunteering schemes. HR teams often lead community-based schemes such as employer-supported volunteering programmes. Various CIPD research has argued that these can make important contributions to learning and development as well as employee benefits and engagement.
Beyond the remit of people management practices, people professionals are ideally placed to gauge, understand and help change organisational culture. This critical aspect of corporate responsibility is often summed up as ‘how we do things around here’ and runs through all aspects of an organisation.
However, this is often not reflected in HR teams' current standing. Our research report The role of HR in corporate responsibility shows that many business leaders do not consider that HR teams play a central role in CR. This is not just a problem of perception. The research shaping the CIPD’s Profession for the Future strategy shows that people professionals often feel they have to compromise their principles to meet current business needs. Following standard ‘best practice’ may not suffice because contexts vary. A surer approach emphasises the principles that need to be followed for ethical decision making. We used principle-based standards for people management in our Profession Map.
Partnerships with external agencies
Understanding stakeholder interests is not easy and an organisation’s potential impact and responsibilities vary greatly depending on their size, sector and the nature of their work. CR strategies can benefit from working in partnership with government bodies and non-governmental organisations that protect or represent stakeholder groups, so that the organisation’s local and global responsibilities can be appropriately reflected within its business strategy.
Measurement and impact reporting
CR initiatives can contribute to business targets directly (for example, through reduced environmental costs) and indirectly (for instance, increased employee engagement). Both can be assessed. One way to measure outcomes is through a balanced scorecard approach which includes different types of factors that contribute to a business’s bottom line such as internal people, processes and customers.
For more on the quantitative reporting of indicators relating to employment issues, see our factsheets on people analytics and workforce reporting.
Alternatively, CR or sustainability reports which focus on impact and outcomes, are now widely used, particularly by larger companies, to communicate information regarding the organisation’s social, environmental, economic and ethical performance to a variety of stakeholders, including shareholders, customers, employees, local communities, regulators and government. These can be standalone reports or embedded in a company report or website. The main features include a policy statement, targets, measuring progress and assessing key impacts.
The Global Reporting Initiative (GRI) is a not-for-profit organisation that promotes economic sustainability, provides guidance and support to organisations around sustainability reporting and has produced a comprehensive framework that is used worldwide. The FTSE Group also produces a FTSE4Good Index Series, which aims to measure the companies’ performance in meeting certain globally-recognised CR standards. See Useful contacts for these and other external organisations.
