Companies
are not getting the most out of CSR if they focus solely on risk
reduction and not productivity gains, says Stephanie Draper
The
most common business case made for social responsibility is the
positive effect it has on the management of risk. The recent
Association of British Insurers guidelines on socially responsible
investment put the reduction of risk at the centre of their argument
for greater corporate social responsibility, and the UK company law
review has done likewise. This is hardly surprising, because risk is a
heavyweight business issue and packs a strong punch in the boardroom.
There is, however, a danger that we might be focusing too much on the
threats that CSR can avert and not enough on the opportunities that it
can provide.
Emphasizing the potential rewards of having
CSR policies in place is more likely to generate long-term commitment
than trying to scare directors into action. One way of accentuating the
positive aspects of CSR is to focus on the motivation, retention and
productivity of staff.
Part of the problem of promoting
CSR has always been quantifying its benefits, but it is actually quite
easy to measure the benefits of improved staff morale. Early analysis
from a forthcoming survey by the Industrial Society on UK staff
recruitment strongly suggests, for instance, that employees would
rather work for companies that integrate CSR into their management
systems. Other studies, both in Europe and the US, support these
findings.
Despite such evidence, the effect of CSR on
staff morale and commitment – and therefore business performance – is
often overlooked. Yet in a time of economic downturn, the importance of
employee performance may actually be magnified. Nurturing loyal and
motivated employees can help companies ride out troubled times. If a
company is truly committed to CSR, then it must realize that one of the
most powerful ways of demonstrating this is through the commitment of
its staff. Employees are at the hub of the stakeholder wheel, and their
views and attitudes are an important influence on other stakeholders.
The risk management approach is great for managers and investors, but
it does little to motivate staff, customers and other stakeholder
groups. Employees are much more likely to respond to positive messages
than to warnings about risk reduction. They may not be the original
brokers of social responsibility, but they are central to making these
strategies work in the long term.
Once employees and other
stakeholders are inspired by CSR, the paybacks in terms of productivity
can be substantial – and their engagement is the true route to
embedding CSR in a company’s day-to-day activity.
