How CSR relates with HR

Corporate Social Responsibility (CSR) is also often referred to as business responsibility and an organization's action on environmental, ethical, social and economic issues. A well-run business is transparent in its decision-making and processes and this makes for good governance. You need to think of CSR simply as ensuring that your business is aware of its impacts, is accountable for its actions, and that it undertakes these actions in a responsible manner. Furthermore, a well-run business is transparent in its decision-making and processes and this makes for good governance.

It recognizes that its activities have a wider impact on the society in which it operates, and that developments in society in turn impact on its ability to pursue its business sustainably. It actively manages the economic, social, environmental and human rights impacts of its activities both locally and across the world, basing these on principles which reflect both international values and the organizations own values (ethics), reaping benefits for both its own operations and reputation as well as the communities in which it operates. It seeks to achieve these benefits by working closely with other groups and organizations - local communities, civil society groups, other businesses and home and host governments.

In the 1970s and 80s environmental concerns such as loss of the rainforest and the effects of pollution led to the recognition that something had to be done to change the way we were using the planet resources. As a result, heads of state came together at Rio, Brazil in 1992 for what was called the Earth Summit.

Unsustainable use

At Rio, governments pledged action to stop the unsustainable use of resources and to promote sustainable development. Put simply, sustainable development is about society growing in such a way that future generations are not compromised and have access to the same resources that we have. For this to happen social, environmental and economic considerations should be assessed together and not in isolation. The Earth Summit produced various United Nations conventions including conventions on biological diversity and climate change. CSR is now sometimes considered as the business response to the challenge of sustainable development.

The 1990s saw social concerns come to the fore. Poverty and disease became global concerns, as did examples of poor business practice in dealing with social issues such as child labour, bribery and corruption that were exposed by the media. The society began to recognize that governments alone could not solve these problems. Indeed, the outcomes from the Earth Summit's successor - the World Summit for Sustainable Development in 2002 - focused on partnerships. There appeared to be a role for everyone - governments to provide fair and socially just laws, businesses to behave responsibly and consumers to think about their actions by reducing waste or asking questions about how and where their goods came from.

As CSR is all about values and accountability, then it is also about the behaviour of your people and the behaviour of your suppliers. In this sense virtually everything that is found within the HR remit - from training, recruitment, staff retention, policies, procedures and strategy - involves CSR. Traditionally HR and CSR have been led by the need for compliance and keeping up with new laws on employment as well as environmental, ethical and social issues.

Crucial to the delivery

Increasingly HR managers are crucial to the delivery of training to deal with these issues in terms of organizational objectives and strategy. Corporate governance is a board level hot topic - you only have to look at how much publicity the Higgs report on the role of non-executive directors received - and it will continue to develop, as there is increased recognition that how an organization is run is key.

This can cover many areas such as financial integrity, transparency and accountability, leadership from the board and being employer of choice.

It is central to the implementation of policies and programs. Having good corporate governance means that these areas are embedded in the organization and deliver to the business and to stakeholder objectives, and are not just nice-to-have. The HR manager has become central to this role in helping deliver culturally open and transparent organizations where dialogue is celebrated, not feared. For a business being CSR compliant is also an exercise in future-proofing its business as risks and opportunities are identified.

Quite often changes lead to performance improvements such as increased staff retention and customer satisfaction. Adding this value is one of the main reasons why CSR is of increasing relevance to the HR manager. CSR is a crosscutting topic under which numerous issues can be grouped including training and education, capacity building, leadership, health and safety, working conditions, human rights, stakeholder engagement and corporate governance. Large multi-national companies were the first to identify CSR as a potential tool to improve performance and now through their supply chain they are asking suppliers to comply with their standards.

HR practitioners have a crucial role to play in embedding a responsible approach to business in which employers 'live' company values rather than pay lip service to CSR.

According to Corporate Social Responsibility and HR's Role, a new report by the Chartered Institute of Personnel and Development (CIPD), effective implementation of HR policies on employee consultation, diversity, fair treatment and work-life balance are fundamental to projecting the image of a responsible employer.

HR departments are responsible for many of the key systems and processes, including recruitment, training and communications, on which effective delivery of CSR initiatives depends. "HR can give substance to company aspirations to be - and be seen to be - a good employer by championing policies on diversity, work-life balance, employee involvement and training and development," the report said. "Successful practices of this kind not only build credibility and trust with customers and employees but have other positive effects such as improved recruitment and retention rates," it said.

The CSR movement is for us not a threat but an opportunity - it offers a course to follow that can help to establish a new relationship between business and society based on trust and shared values, leading to greater freedom for business and a more enlightened public attitude to profit.

CSR helps to the organization to manage the risk

Managing and controlling risk is a key to running a successful organization. Risk can be defined as the possibility of suffering harm or loss. Within the area of CSR there are four general areas of risk.

* Supply chain - country specific such as human rights abuses, or company specific risks such as pollution.

* Operational risks - this covers compliance with regulation, employee satisfaction and dangerous operations

* Product - this covers use of hazardous raw materials (e.g. nuclear energy) waste during production, and health and safety issues.

* Societal expectations - this covers what society demands of a business in the 21st Century

Corporate social responsibility (CSR) is often referred to as business responsibility and an organization's response on environmental, ethical, social and economic issues. Positive actions that reduce the negative impact of an organization on these issues can be seen as a way of managing risk. An example of this could be a retailer constantly monitoring his employment policies to ensure that they are adhered to throughout its supply chain, so avoiding any scandals on human rights abuse or potential litigation over working standards. An organization's reputation is built on its relationship with staff, customers, suppliers, investors and the community they operate within. These stakeholder are the very same that CSR activities seek to involve. This is why CSR can help maintain and enhance reputations.

Negative impacts

A change in reputation can lead to a number of negative impacts such as a drop in share value of a business, a decrease in profitability as customer and staff loyalty drops, a decrease in business opportunities (as potential partners question the trust and integrity), a decrease in new investment as the business is seen as a greater risk, and even increased insurance premiums.

HR has a crucial role in the development and implementation of CSR within an organization. The development and implementation of CSR policies acts as a mechanism to support employees facing "risks". By first benchmarking your organizations performance on CSR activities you will identify areas of risk. Other tactics include:

* Workshops to engage with staff and suppliers to explore areas of risk

* Develop interactive intranet sites that showcase examples of good practice, or build opportunities for promotion of good practice at staff meetings

* Review company policy and procedures to ensure values are consistent - procurement, recruitment, training, appraisals and exit interviews

* Consult and involve staff more in the running of a business

* Provide feedback questionnaires for employees, customers and suppliers - to show the organization is living its values.

Corporate social responsibility is very important to the individual and the organization also. So every one should be consider this to achieve their organizational goals. It may lead to increasing the goodwill of the public on the organization and its activities. Through this, the organization can attain many new potential customers in future. And also the organization can build it's brand and it can reach a unique market place globally.

T. Karekalan-Dept. of Management Eastern University, Sri Lanka