Lawyers view – Corporate Social Responsibility

Mark Mansell highlights the key issues of corporate social responsibility, its
impact and describes how it is changing the face of UK business

Corporate social responsibility (CSR) has received a great deal of publicity
recently, with businesses signing up to its principles and an increasing number
producing reports on their activities. An industry, complete with its own
buzzwords, talking about triple bottom line reporting, sustainable development
and a Quaker business tradition, seems to have sprung up around CSR.

It is all about adopting a holistic approach to business. Rather than just
concentrating on shareholder value, it looks to address environmental and
social concerns, hence the triple bottom line. Every business has its
stakeholders. These include business partners, customers, the communities in
which the business operates and, importantly, employees.

While CSR originated in the US, it is now part of the European Union’s
policy. Over the past three years, there have been a number of EU initiatives
supporting CSR and seeking to find ways to promote its development. Within the
EU, the UK is leading the way, with government and business bodies promoting
CSR.

It is a central tenet of CSR that it is voluntary. While the EU and the UK
government are anxious to promote good corporate citizenship, it is recognised
that the way this is done will vary from business to business.

Many CSR initiatives impact directly on employees. These include:

– Open dialogue with the workforce

– Workforce diversity

– Training and career development

– Incentivising employees

– Work-life balance

– Health and safety

– Socially responsible restructuring

From this list, it is clear that HR professionals have a central role to
play in implementing CSR. Yet, in practice, what can be done?

Creating the vision

As with any policy, winning over senior management is critical if CSR is to
be seen as a core value. Getting the commitment of the chairman or chief
executive is vital if the business is going to take these issues seriously.

Once that commitment has been obtained, the next step will involve reviewing
and revising workplace policies to ensure they are consistent with the
objectives at the heart of CSR. It is also important to involve employees in
determining and shaping what is being done.

It is often surprising how unaware workers are of the benefits their
employers provide over and above their basic terms and conditions. At the same
time, employees should be made aware of their own responsibility to others that
they come in contact with. In any business, staff are the most important asset.
If stakeholders outside the company are to be engaged, this has to be through
the organisation’s employees.

Involving trade unions or other staff representatives, is an important part
of getting ownership and buy-in from the workforce. If an employee
representative body is not in place, setting up focus groups or using team
briefings can perform the same function.

Involving workers in this way will help secure commitment throughout the
business. It also encourages them to feel they have a part to play in
generating new ideas.

As with any initiative, it is never enough just to introduce a policy.
Regular checks should be made to make sure initiatives are successful and
changes should be made and policies adapted to suit changing circumstances.

Embracing diversity

The area of equal opportunities is increasingly regulated. As well as our
existing laws, over the next three years we will see new legislation extending
protection against discrimination on the grounds of sexual orientation,
religion and age. But, within business, the debate has moved on from equality
of opportunity to diversity. It is not just about ensuring someone is not
treated unfavourably. It is about recognising the benefits of a diverse
workforce and embracing diversity as a core value.

Views on sex and race within the workforce have changed significantly since
legislation was first introduced, and the same is happening with disability. As
well as committing to policies that provide equality of opportunity, the
introduction of programmes, such as diversity training, will help to encourage
employees to understand and value those from backgrounds different to their
own.

Changes being made to the UK’s anti-discrimination laws include giving
employers more scope to encourage under represented groups to apply for jobs
and train them so that they are equipped for these positions. Any diversity
strategy and introductory training on cultural awareness should identify where
the composition of the workforce does not reflect a business’ commitment to
diversity.

While it would still be illegal to discriminate at the point of selection,
by using training, more targeted advertising and target setting, it is possible
to start addressing these issues. Perhaps the most effective way of ensuring
this becomes a priority is to include it within managers’ objectives and to
take it into account at appraisal time and when awarding performance-related
pay.

Dealing with harassment

When encouraging diversity, it is vital employers ensure staff are not
bullied or harassed for any reason. As with discrimination, this is an area
where changes are in the process of being introduced to the law, with
harassment recognised as a specific form of discrimination separate from direct
discrimination.

Actions that lead to a hostile work environment or violate an individual’s
dignity, will be subject to greater legal penalties. Even if that were not the
case, to demonstrate a commitment to diversity, it is necessary to establish
and operate a strong policy against harassment and bullying. In doing this, it
is vital the policy applies to all.

Often it will be senior managers and, in many cases, the most valuable
people within an organisation, who are guilty of unacceptable behaviour. The
way in which an organisation deals with these individuals will set the tone for
the whole of the workforce. Tolerate behaviour and everybody will believe it is
acceptable, whatever the company’s policy may say. On the other hand, if harassment
is dealt with quickly and effectively, whoever the individual is, the opposite
message will be received.

As part of the process, a timely, fair and confidential complaints procedure
is needed. In certain cases, it may be appropriate to involve individuals with
a greater degree of independence in handling claims either from within an
organisation or by introducing a completely independent third party. In
addition, confidential counselling lines are increasingly a part of corporate
life.

Training

Lifetime training and knowledge development are an important aspect of CSR.
The idea is that the employees will continue to learn and develop new skills
throughout their career. With the need to acquire new skills and with the
turnover of skills becoming ever more frequent, there is a clear correlation
between an employee’s needs and the interests of the employer.

There are a number of ways this can be achieved. Career guidance can be
provided through appraisal or other processes. Appraisals can be the first step
in promoting training, which gives an ideal opportunity for either the company
or an employee to identify training needs. It can also help the employer shape
an employee’s expectations.

Where there is a commitment to training, other forms of support are
inevitably required. This will usually involve time off work and financial
assistance. While it was fashionable to require training costs to be reimbursed
where an employee left shortly after completing training, this is now less
often the case. Employers need to balance the desire to avoid equipping staff
to make them attractive to other prospective employers and putting people off
participating in training.

Training can also involve opening up opportunities within the community.
Volunteering for pro bono activities can help people develop a wider range of
skills and contacts. Mentoring is valuable for an employee, whether they are
being mentored or whether they are mentoring others.

Relating pay to performance

There are clearly good business reasons for linking pay to performance. This
allows employees to share in business success and promotes a strong feeling of
partnership.

Probably the most widely used ways of doing this are option or share
purchase plans. For the employers, the benefit of these plans is that the
shares or options need to be held over a period of time for their potential to
be realised. The downside at the moment is that because of the depressed
financial markets – incentives that did carry a large amount of value may
currently be below the value at which they were granted.

The important point in addressing performance related pay is to create a
real sense of value. Where one particular mechanism, such as options, is not
providing the required incentivisation, others, such as long-term incentive
programmes, can still achieve the same effect. Whichever is used, it is
important to reward genuine performance and retain valued employees within the
business.

Work-life balance

Work-life balance continues to be the Holy Grail. All employers stress its
importance, yet within the UK, the long hours culture seems to be becoming ever
more prevalent.

There are a variety of ways in which this can be tackled. There are simple
things that can be done, such as avoiding late meetings or travelling at short
notice, which can eat into personal time.

With the Government’s recent legislation promoting flexible working, it will
be interesting to see whether employers more readily embrace the idea. While
there still seems to be a high level of resistance to atypical working, the
cases that have come before employment tribunals relating to refusals of
requests to work flexibly tend to show that, very often, such concerns are
unfounded.

Where there are doubts as to whether a particular request to work flexibly
can be accommodated, it is in an employer’s interest to use either a trial
period, or make an alternative suggestion to meet an employee’s needs. This
allows valuable skills to be retained and often helps motivate an employee.
Educating managers is also key. Where someone has climbed the career ladder the
hard way, there can be a tendency to think that everyone else should be able to
reach the same level of achievement without offering steps that allow work and
family responsibilities to be balanced.

Health and safety checklist

It is important that employers promote a healthy lifestyle for employees.
This goes beyond obligations under the health and safety legislation. It is now
common to provide health screening or health club membership as part of a
benefits package. Encouraging employees to take up these benefits and allowing
them the time to do so benefits staff and employer.

Workplace stress is increasingly a problem and this can manifest itself in
all kinds of situations. Establishing measures to promote work-life balance can
alleviate stress. When this is coupled with other measures, such as proper
monitoring and the use of helplines, these can be very effective ways of
reducing stress-related problems.

Socially responsible restructuring

In many ways, corporate social responsibility and redundancy seem strange
bedfellows. However well run a business is, the need to make employees
redundant is almost certain to arise from time to time. When a business faces
redundancies, it is important the they are made in such a way as to lessen the
impact for those who are made redundant; and, at the same time, preserve morale
among those who have retained their jobs.

There is already legislation that requires consultation where 20 or more
employees are being made redundant. CSR suggests employers go beyond their
statutory obligations and adopt social plans along the lines of those in use in
continental Europe. For many employers, this may be counter cultural. Even if
an employer does not want to go this far, involving staff in the redundancy
process will ensure the consultation is genuine.

Providing career counselling or outplacement for those who are made
redundant will also allow the redundancy exercise to be completed with the
minimum of disruption and with employees retaining a sense of dignity. This has
many benefits for employers, not least minimising the risk of tribunal claims.

Reporting on CSR

There is still little guidance on exactly how employers should report on
their CSR initiatives. What is important is that statements have real
credibility, and objective standards should be set. Some form of auditing is
highly beneficial. Statements made by a third party with a degree of
independence will always carry far more weight than what a company says about
itself. But perhaps the most important thing to bear in mind in relation to
reporting, is that where recommendations or promises are made, they are
implemented. Little can be more damaging to credibility than promising a lot
and delivering little.

Conclusion

So, HR clearly has a significant part to play in implementing CSR and making
sure the behaviour that CSR policies encourage becomes a reality within a
business. CSR is not just about providing employees with benefits. It also
makes sound business sense, increasing and protecting shareholder value. Recent
company failures demonstrate all too clearly how over-concentration on
producing financial results can lead to disaster. By concentrating on all of
the stakeholders in the business, this is far less likely to happen. It also
helps to enhance a company’s reputation, allowing it to attract and retain the
best employees and develop long-lasting customer relations. With CSR, it may
actually be possible to have your cake and eat it.

Mark Mansell heads international law firm Allen & Overy’s Employment
Law Group

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