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August 7, 2013 | Volume 7 | Number 7
August 7, 2013
Corporate social responsibility (CSR), business ethics, responsible business practices, sustainability. These are words that managers will have to become more familiar with in the future, in order to be successful. As such, it is worth understanding what CSR is, its role in business and how it relates to the management of people, especially in terms of their health and well-being.
Corporate Social Responsibility
Simply put, CSR reflects moving away from an emphasis on the bottom line, to a focus on the triple bottom line: people, planet and profit. The European Commission (2011) defines it as “the responsibility of enterprises for their impacts on society,” a definition which is increasingly being adopted by various stakeholders (e.g., European Trade Union Confederation, 2011; CSR Europe, 2011). This definition makes it clear; companies should be doing more than what is required legally. They should ensure that they do not have an adverse impact on society and the environment. A philosophy that is especially relevant in light of the recent global financial crisis and its catastrophic impact on virtually every aspect of life.
Given that most adults spend a significant proportion of their lives at work, CSR includes a focus on how organizations manage their people. A variety of statistics highlight the relationship between working conditions and health and productivity. In the U.S., the American Psychological Association (APA; 2013) found that 65 percent of employees report that work is a significant source of stress, while the International Labour Organization (ILO; 2013) reports that the cost of occupational disease and injury amounts to 4 percent of global GDP. As such, the starting point to managing human capital should be ensuring the health and well-being of employees; in part because the most popular concepts in modern management cannot be implemented without a healthy workforce as a foundation. Innovation, high-performing teams, six sigma, etc., are incompatible with highly stressed, unhealthy or absent employees.
Models of Healthy Workplaces and Corporate Social Responsibility
The World Health Organization (WHO; 2010) defines health as “a state of complete physical, mental and social wellbeing and not merely the absence of disease.” Not only is this definition compatible with the notion that health serves as a precursor for performance, but it shows the relevance of CSR. To achieve such a goal, organizations would have to go well beyond legislative and regulatory requirements, because (among other issues) basic compliance is designed to establish a “floor” of minimally acceptable results, rather than drive high-level outcomes, such as optimal health and performance. Contemporary models of healthy workplaces in one way or another allude to this concept. Perhaps the most explicit is the WHO Healthy Workplace Framework which details a process model of action, to be implemented in four ‘avenues of influence’: physical, psychosocial, personal health resources and enterprise community involvement (2010). The last avenue, is linked to the notion of CSR, as it details what an organization can do above and beyond what is legally required to benefit the community it operates in. This includes its own workforce.
APA’s Psychologically Healthy Workplace model, although not as explicitly, also implies the value of managing employees responsibly, through what it prescribes. For example, although work-life balance is not something legally protected, APA promotes initiatives to help employees manage the interface between their work and their personal lives.
A research team based at the University of Nottingham, in collaboration with WHO and the University of Oveido recently considered 100 companies from the Financial Times 500, with regard to their performance in managing their people in relation to CSR. The goal was to identify whether companies understood the imperative to do more than what is legally required. CSR-related communications (e.g., CSR reports) were analysed looking for initiatives that fell under 30 specific subthemes and six broader themes. The six broad themes were: Employment Conditions; Organisational Development and Culture; Industrial Relations; OHS System; Diversity and Discrimination; and Human Rights. These broad themes were developed considering several CSR tools and guidance documents to establish best practices in managing employees responsibly (Mari Ripa et al., 2013). The themes also reflect several models of creating optimal workplaces, including that of the American Psychological Association, shown below (Figure 1).
A radar plot (Figure 2) summarises the number of companies reporting initiatives falling under the six themes. Each point on the graph represents the percentage of companies that reported on a given theme. Analysis was conducted across the six WHO world regions: The Americas (AMRO), Africa (AFRO), the Eastern Mediterranean (EMRO), Europe (EURO), South East Asia (SEARO) and the Western Pacific (WPRO). While initiatives themselves often left a lot to be desired (often forming basic reactionary interventions like training, rather than addressing the source of the problem through workplace design), the message is clear: companies around the world understand that managing people is about acting responsibly, and report their initiatives as part of their CSR agendas.
Why Should Companies Care?
While it might be obvious how other stakeholders benefit, some CEOs or managers might ask, “What’s in it for us?” First, it is important to note that many criticisms have been levied at our current economic framework. Indeed the largest professional association for managers, the Academy of Management, had as its 2013 conference theme: “Capitalism in Question.” As such, it appears that there is a need to consider carefully what values modern companies adopt. Ensuring that work is not a danger to employee health and well-being is certainly a value that should be enshrined. Outside of the workplace, it is unthinkable to deliberately cause harm to another individual.
Aligned with this is a strong business case for acting responsibly. Recent corporate crises including the British Petroleum oil spill, the global financial crisis and the shootings at Marikana have thrust companies into the spotlight, and those being seen as unethical stand to suffer the consequences. Research has suggested that consumers are more likely to purchase goods and services from ethical companies (Sen & Bhattacharya, 2001); while similarly, job seekers also prefer to apply to companies which are seen to manage employees well (Business in the Community, 2003). Emerging research is also showing that whether a company is showcased on ethical indexes, including the Dow Jones Sustainability Index, and the FTSE4Good, (which operate like their sister financial indexes), is associated with increased investment (Robinson et al., 2011).
While these ratings relate to being ethical in general (of which managing employees is a part), there is a particularly strong case for applying concepts of responsibility to how a company manages its people. Google is one of the youngest organizations to be listed in the top three companies ranked by market capitalization (Sullivan, 2013). It is no secret that it has achieved such heights through effective management of its people. Initiatives include the 20 percent rule, whereby employees are given a fifth of their time to work on projects that are their own idea and might someday become Google products (how Gmail and Google News were born); ensuring that people collaborate and communicate through design of the workplace (Sullivan, 2012); constant management development and verification of this through subordinate ratings (Bryant, 2011); and a focus on diversity through assessing recruitment procedures for potential biases (Google, 2011).
Occupational health, safety and well-being is about ensuring that workers are put in the best possible position to perform. Dealing with these issues in as responsible a manner as possible can ultimately benefit the organization and its stakeholders. Many of the world’s most successful companies understand this argument. It is up to practitioners to take this message to organizations, and organizations themselves to realize what is in the best interests of all involved.
American Psychological Association. (2013). Highlights of APA Stress in America™: Missing the Health Care Connection. Accessed July 17, 2013 from: http://www.apa.org/news/press/releases/stress/2012/report-summary.aspx
Andreou, N.J.A., Leka, S., Jain, A., & Mari Ripa, D. (2013; under review for publication in the Journal of Business Ethics). How corporate social responsibility contributes to managing working conditions: Part 2: An analysis of 100 FT500 enterprises.
Bryant, A. (2011). Google’s Quest to Build a Better Boss. Accessed July 17, 2013 from: http://www.nytimes.com/2011/03/13/business/13hire.html?pagewanted=all&_r=0
Business in the Community. (2003). Responsibility: Driving innovation, inspiring employees. London: BITC.
CSR Europe. (2011). New EU definition on CSR mirrors Enterprise 2020 aspirations. Accessed July 17, 2013 from: http://www.csreurope.org/new-eu-definition-csr-mirrors-enterprise-2020-aspirations
European Commission (EC). (2011). A renewed EU strategy for 2011-2014 for Corporate Social Responsibility. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. Accessed July 17, 2013 from: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0681:FIN:EN:PDF
European Trade Union Confederation (ETUC). (2011). Renewed EU Strategy 2011-2014 for Corporate Social Responsibility (CSR). Accessed July 17, 2013 from: http://www.etuc.org/a/9430
Google Inc. (2011). Diversity and Inclusion. Accessed July 17, 2013 from: http://static.googleusercontent.com/external_content/untrusted_dlcp/www.google.com/en/us/diversity/pdf/Google-Diversity-and-Inclusion-2011-Annual-Report.pdf
International Labor Organization (ILO). (2013). Occupational Safety and Health. Accessed July 17, 2013 from: http://www.ilo.org/global/standards/subjects-covered-by-international-labour-standards/occupational-safety-and-health/lang—en/index.htm
Mari Ripa, D., Andreou, N.J.A., Jain, A., Leka, S., & Olaizola, J.H. (2013 – under review Journal of Business Ethics). How corporate social responsibility contributes to managing working conditions: Part 1: An analysis of CSR tools and instruments.
Robinson, M., Kleffner, A., & Bertels, S. (2011). Signalling sustainability leadership: Empirical evidence of the value of DJSI membership. Journal of Business Ethics, 101, 493-505.
Sen, S., & Bhattacharya, C.B. (2001). Does Doing Good Always Lead to Doing Better? Consumer Reactions to Corporate Social Responsibility. Journal of Marketing Research, 38(2), 225-243.
Sullivan, J. (2012). The Death of the Cubicle – and the Killers are Collaboration and Innovation. Accessed July 17, 2013 from: http://www.ere.net/2012/05/21/the-death-of-the-cubicle-and-the-killers-are-collaboration-and-innovation/
Sullivan, J. (2013). How Google Became the #3 Most Valuable Firm by Using People Analytics to Reinvent HR. Accessed July 17, 2013 from: http://www.ere.net/2013/02/25/how-google-became-the-3-most-valuable-firm-by-using-people-analytics-to-reinvent-hr/
World Health Organisation. (2010). WHO Healthy Workplace Framework and Model: Background and Supporting Literature and Practices. Accessed July 17, 2013 from: http://www.who.int/occupational_health/healthy_workplace_framework.pdf
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