Is CSR the new GDP?

What an excellent summer. I know the economic conditions are tough in many sectors. Yet there are butterflies in my garden, my kids won the borough swimming championship, and our local church fete raised lots for charity. We all know our happiness depends on factors outside of the workplace and its productivity. Sociologists find that once we reach a comfortable standard of living, greater output has no effect on happiness.

Economists are questioning whether their output-based measures of national performance, such as Gross Domestic Product, make sense. Do we really need more than 15 varieties of dental floss?

In a service-based economy, measuring performance is more complex than counting the cars off the currently-defunct production line at Rover. For a physiotherapist or advertising executive, the number of consultations or ads gives no indication of performance, which depends on the quality of the service provided.

Business leaders are recognising that a sole focus on short-term outputs is dangerous. CIPD research found the most successful organisations have a ‘big idea’ that attracts staff and customers. Profits are the outcome rather than sole focus of their efforts, with many employing a balanced scorecard of performance.

Companies such as Marks & Spencer and John Lewis have always attempted to manage their people well and serve their community, as well as rewarding shareholders. A new CIPD report, Making CSR Happen, illustrates how closely intertwined HR and corporate social responsibility have become with the business performance agenda.

Accenture Development Partnerships supplies the consultancy’s expertise in developing countries at low prices. Internal volunteers, who take a pay cut, staff the unit. The venture attracts good PR in the current Live 8 climate. But staff from the venture are less likely to leave and more likely to be high-performing consultants.

Another example in the report is BT, which has reduced the number of UK call centres, and set up two new facilities in India. The way it managed this potentially controversial restructuring won praise from consultancy Sustainability, and trade unions. There was extensive consultation, no compulsory redundancies, and extensive retraining. The move had no negative impact on staff satisfaction.

Even financial analysts now take notice of the FTSE4Good index of corporate performance, and chief executives are keen to topple Nationwide from top spot in the Sunday Times’ Best Large Company to Work For.

In 1919, investors sued Ford for suspending its dividend. Henry Ford argued the money was better spent lowering prices, “to do as much good as we can, everywhere, for everybody”. He lost the case.

Today more than ever, ‘good’ companies really are just that. Our measures of national, corporate and individual performance need to recognise this.

Duncan Brown
Assistant director-general
CIPD


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