Corporate Social Responsibility

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Your people are your assets: The globally-oriented ethics of Corporate Social Responsibility also have to be translated in sound, human resources management practices within the organisation itself.

CSR – ethical rights and duties

Corporate Social Responsibility, or CSR, is an umbrella term under which the ethical rights and duties existing between companies and society is debated. CSR has grown in popularity in the last few years, especially in Europe and more recently in the U.S.

A widely quoted definition by the World Business Council for Sustainable Development states that “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.” The dominant question for today’s managers is: how do we become socially responsible within the organisation, too?

Stakeholders are us

CSR is commonly described as aligning a company’s activities with the social, economic and environmental expectations of all of its “stakeholders”, that is, virtually anyone affected by a company’s products or means of production in all aspects of their business operations.

A company’s stakeholders are all those who are influenced by, or can influence, a business’s decisions and actions. These can include employees, suppliers, customers, community organizations, subsidiaries and affiliates, joint venture partners, local neighbourhoods, investors and shareholders.

The CSR movement may be understood as an attempt to remind the people who constitute these corporations that they have other responsibilities beyond corporate ones. This article will examine how these increased responsibilities have to create a new paradigm of human resource management.

The human resources link

CSR may be based within the human resources, business development or PR departments of a company, or may be given a separate unit reporting to the CEO or in some cases directly to the Board of Directors. Really progressive companies do not have a CSR department or function at all – the concept is so embedded in the company itself that employees implement the company’s values on their own accord.

Corporate Social Responsibility can be an important aid to personnel recruitment and employee retention, particularly within the graduate student market. Potential recruits are increasingly likely to ask about a firm’s CSR policy during an interview and having an inclusive policy can give an added advantage. CSR can also help to build a “feel good” atmosphere among existing staff, particularly when they can become involved through fundraising activities, charitable donations or volunteer work.

How to become a socially responsible organisation

CSR is about doing business better through creating wealth of all types for all stakeholders involved within an organisation. Business relationships with stakeholders must be in harmony with prevailing societal values and answerable to universal ethical norms.

CSR requires that businesses justify and measure the actual or potential economic, social and environmental impacts of their business decisions. In some cases the application of a strong CSR policy by a business can involve actions being taken which exceed the mere compliance with minimum legal requirements. This can sometimes give a company a competitive and reputational advantage by demonstrating that they have the interests of society at large as an integral part of their policy making.

Towards human value management

CSR and Human Resources Management (HRM) are intrinsically linked when organisations are perceived as developing towards open systems. A rethink of the role and perception of HRM towards a new strategic approach is required, which Schoemaker, Nijhof and Jonker refer to as ‘human value management’ (2006).

A CSR-based approach to HR

In their CSR-based approach to HR, individuals are no longer only seen as employees with talents and competencies. Instead the individual is “bound’ to the organisation based on shared values as part of a human network”. This implies that the development of social capital corresponding to the development of individual employees becomes important.

Perceiving the organisation as an open system implies a shift in what needs to be managed: from focusing on internal processes to managing cross-border processes, especially those that establish the employee-stakeholder interface (Jonker and De Witte, 2006). This shift can only come about when based on the value-driven behaviour of individual employees; they become the actual asset of the organisation.

Equality and coordination

This behaviour can’t be managed in the traditional way of management, but by leadership. ‘Servant leadership’ fits within this perspective because it refrains from a hierarchical approach to employee relations (Lozano, 1998). Instead it builds upon the equality of human beings, stressing coordination through values and individual judgement instead of imposing restrictive norms and enforcement tactics. By giving employees more responsibilities, this form of organisation has the potential to utilise the full talents and competencies of employees.

Human value management

A Human Value Management approach can lead to a new direction in personnel management, so that it becomes stakeholder management. Organisations are obliged to make their employees aware of their own acts and consequences. This asks for “instruments” and approaches beyond traditional HRM-instruments like performance management or reward. Creating awareness, making sense of the work, providing meaning to the activities of an organisation, all ask for an identity based on living values.

The five main capacities

The embeddedness of the main social responsiveness capabilities in an organisation can be assessed by a strategic management framework and measurement tool. According to research carried out by the Australia Centre for Corporate Responsibility, these five capabilities are: stakeholder engagement, ethical business behaviour, social accountability, value-attuned communications and dialogue.

Stakeholder engagement is seen to be about building co-operative, mutually reinforcing relationships. Stakeholder engagement is a core part of an organisation’s behaviour when its people understand the relationships and interdependencies between the firm and its stakeholders that contribute to long-term and sustainable success.

Ethical business behaviour is reflected in the firm’s behaviour when it maintains a caring workplace atmosphere in which people sincerely care about the wellbeing of others. It is embedded at the structural level when a firm is committed to, and reinforces, ethical behaviour through the development of formal ethical codes, rewards for ethical behaviour and punishments for unethical behaviour.

Social accountability

Social accountability occurs at the behavioural level when managers believe that the firm is accountable to stakeholders for the firm’s social impacts. It occurs at the structural level through systems for reporting the firm’s social performance, even when the news is not all good.

Value-attuned communication integrates the structural and behavioural dimensions of the social responsiveness capabilities. It relies on the ability of communications employees to understand and pass on important stakeholder information to all parts of the firm. In order to be effective, communication staff must be able to detect societal values and be supported by managers in their efforts to align firm and stakeholder values.

Dialogue

Dialogue comprises a respectful attitude towards all involved in the dialogue and a structure that gives equal power to all concerning the agenda for dialogue. An effective information flow is one where there is agreement about the way topics are selected for discussion and satisfaction with the framework within which discussions take place. Dialogue also performs an important basis for achieving outcomes that are genuinely desired by all, based on openness and mutual respect for all as free and moral agents.

An open system

The responsible organisation tries to develop itself as an open system, based on values and combining market orientation and social responsibility in an indivisible yet distinctive way. It must find ways to organise a responsible workplace, seeing how such responsibilities can then be translated and embedded in everyday practice. Another issue is how to trace and develop organisational values – what values are needed and how such values can be linked with the wider community in which the organisation operates.

Social capital, the advantage created by a person’s location in a structure of relationships, is not an end in itself. However, when the organisation is perceived as an open system, social capital and its development becomes a central issue – not only for the employees but for all relevant and legitimate stakeholders involved. Developing social capital requires a shift towards a value-driven perspective – this implies that themes such as identity, community of work and ‘new’ responsibilities need to be incorporated into the actual organisational and managerial debates.

Management needs to formulate what kind of competencies are needed to support this kind of approach, on the level of the employee, management or other stakeholders in the networks and see what kind of interconnectedness and reciprocity is needed in order to make this concept come to life. How can employees’ talents be put to use to create a responsible organisation?

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