Human Resource Management International Digest

Corporate social responsibility: the risks and opportunities for HR: Integrating human and social values into the
strategic and operational fabric
Jonathan Ledwidge
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Jonathan Ledwidge, (2007),"Corporate social responsibility: the risks and opportunities for HR", Human Resource Management
International Digest, Vol. 15 Iss 6 pp. 27 - 30
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 Corporate social responsibility: the risks
and opportunities for HR
Integrating human and social values into the strategic and operational fabric

Jonathan Ledwidge
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orporate social responsibility (CSR) has brought with it a new challenge for HR

C managers and professionals – one loaded with both risks and opportunities.
Managing those risks and exploiting those opportunities will, however, require a
reappraisal of existing approaches to HR and the scope of its activities.

An era of public and consumer advocacy and activism

Jonathan Ledwidge is the
We live in an era of unprecedented public and consumer advocacy and activism, and with
managing partner of
the internet a constant in terms of increasing transparency and connectivity, this activism will
THAPartners, London, UK.
only intensify over time.
Organizations today are under immense scrutiny to demonstrate that their business stands
for something more than profits. More specifically, they are being required to show that their
activities add at least some value to, and at the very least do not negatively affect, the wider
community.
Organizations have, to a large extent, recognized this and have thus been busy devising
CSR programs in response. There is also little doubt that there are managers and executives
who are personally motivated to ensure that their organizations are acting in the common
good.
However, there is no denying the impact that this will have on the competitiveness and
sustainability of corporate business models. How does this affect the role of HR specialists
and what should they be doing about it?

The problem of multiple organizational identities

More often than not, an organization’s identity and that of its CSR program are not the same.
This is because, in most cases, CSR is seen as a necessity, but one that is complementary
rather than integral to an organization’s core strategy.
Unfortunately this can result in organizations having multiple public identities – one for the
core business and the other(s) for the CSR program(s). This corporate schizophrenia, a
disconnect or discontinuity in the core values, can in the worst cases result in tragedy, bad
publicity, and the destruction of corporate value.
There have been some notable examples.
BP had a great CSR program in Texas but apparently did not pay sufficient attention to the
maintenance of its refinery. When that refinery exploded, lives were lost, many people were

DOI 10.1108/09670730710820190 VOL. 15 NO. 6 2007, pp. 27-30, Q Emerald Group Publishing Limited, ISSN 0967-0734 j HUMAN RESOURCE MANAGEMENT INTERNATIONAL DIGEST j PAGE 27
 injured, plant and equipment were destroyed, and an independent report on the incident
was a public-relations disaster for the company.
In another classic example, Bristol Myers Squibb found itself under federal investigation in
the US for blocking access to generic drugs – something that clearly cannot be reconciled
with its stated mission to ‘‘extend and enhance human life’’.
How does this affect the work of HR managers and what can they do about it?
If you believe that HR has a significant responsibility in respect of developing the core values
and belief systems within and throughout organizations, this corporate schizophrenia must
surely represent a major twenty-first century challenge for all HR managers.
One might argue that not every organization is like BP or Bristol Myers Squibb. However,
even for the average organization, any disconnect in the core values – be it strategic,
operational or geographic – is likely to cause problems.

Focusing on the core values

Perhaps the most important manifestation of any disconnect in the core values is in the
customer experience.
Most polls show that people are, by nature, distrustful of organizations, and believe that,
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while many organizations profess to be good corporate citizens, much of what they do is
motivated by PR and the desire to make more profits. Obviously, the examples cited above
merely reinforce that negative sentiment.
It thus follows that employee-development programs must be geared towards ensuring that
the customer experience reflects the organization’s values with respect to the community.
Sometimes the discontinuity in values can be political and geographic in nature. For
example, Google and Microsoft have been much criticized for bowing to Chinese authorities
by censoring their search-engine results in that country.
Incidents such as these, while having a relatively limited operational impact, can
nevertheless influence how others view the entire organization. In some cases they can also
have a negative impact on employees, managers and ultimately organizational
performance.
HR professionals should be concerned with how their organizations determine the limits,
ethical or otherwise, of core values and beliefs. They should especially consider how or
when such limits, irrespective of where they might be applied, will affect employees, the
organization, its clients, and the wider community.
The primary issue, of course, is that many of today’s CSR programs are just that, programs –
they are not part of the core belief system of people operating within an organization. Until
such time that the human and social values that CSR programs profess to hold dear are fully
integrated into the strategic and operational fabric of an organization, HR must work with
CSR managers and other departments to resolve the conflicts that might arise, and that
might ultimately impair the value of the organization.
Further, if and when an organization does integrate its CSR and core beliefs, HR specialists
must play a key role in embedding those beliefs throughout the organization.

‘‘ The primary issue, of course, is that many of today’s CSR

programs are just that, programs – they are not part of the
core belief system of people operating within an
organization. ’’

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PAGE 28 HUMAN RESOURCE MANAGEMENT INTERNATIONAL DIGEST VOL. 15 NO. 6 2007
 ‘‘ All that is required of the HR specialist, therefore, is to
engineer his or her organizational development and
transformation programs around the right human and social
values. ’’

Innovation still remains an imperative

Thus far we have mostly concerned ourselves with the risks that might arise from having a
disconnect or discontinuity in an organization’s core values. However, while the initial focus
must be to manage those risks, this must certainly be viewed as the minimum position – the
one most likely to resolve internal conflicts and diminish the possibility of negative fall-out.
Consider the environment.
The array of government authorities, consumer groups, non-governmental organizations,
the general public and consumers that increasingly defines the scope of what organizations
can and cannot do will become more rather than less activist. Therefore, organizations will
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find themselves consistently challenged to adapt to new requirements and demands.

Constant change invariably means constant innovation. Thus by definition, the work of HR
must also be focused on developing behaviors that promote innovation as well as minimize
risks. Otherwise, maintaining a competitive advantage will be difficult.
This might sound like an insurmountable challenge, but in reality it is a great opportunity.

Where there is friction there is opportunity

It is years since I completed my MBA but I will always remember the words of one of my
lecturers: ‘‘Where there is friction there is opportunity.’’ Having worked in investment banking
for almost 20 years I was fortunate to witness this principle first-hand.
During the late 1980s, central banks and regulators became fearful of the risks that
international banks posed to the global financial system. Consequently, under what became
know as the Basel accord, regulators imposed a set of capital rules that were designed
better to control the activities of banks by setting limits on the levels of risks they could incur.
The banks that became successful in this new environment were the ones that developed a
culture of managing, pricing and selling risks by introducing innovative and complex
financial products. As the Basel rules increased in complexity, these same banks responded
by increasing the diversity of their products, and with it their competitive advantage.
The challenges faced by organizations in this new era of what I would call human and social
values are certainly not dissimilar to those faced by international banks over the past 20
years.
So how might an HR specialist approach the current problem? Are there any guidelines or is
there any precedence for innovating through human and social values? The answer is yes.

Innovating through human and social values

The record shows that responding to human and social needs has been one of the greatest
catalysts for product innovation and development in the history of commerce.
The industrial revolution was driven by both the personal ambitions of ordinary people as
well as the desire to provide basic goods such as soap, previously the preserve of the rich, to
the common people.

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VOL. 15 NO. 6 2007 HUMAN RESOURCE MANAGEMENT INTERNATIONAL DIGEST PAGE 29
 Ford’s Model-T was similarly driven by two different but complementary sets of human and
social values. The first was his desire to grant mobility to the masses. The second was that
the wages he paid catapulted the ordinary worker into the middle classes.
In our time, the success of the mobile phone, the computer, and the internet can all be
defined in terms of their human purpose. Bill Gates triumphed not because he had the best
product, but because he had a vision of a computer on every desk and in every home, while
the internet has rapidly moved from a distinctly technical triumph to a human and social
phenomenon.
All the evidence suggests that human and social values often provide the greatest
inspiration for performance and innovation. As Drucker noted:

The real development I have seen of people in organizations, especially in big ones, comes from
their being volunteers in a non-profit organization – where you have responsibility, you see
results, and you quickly learn what your values are.

All that is required of the HR specialist, therefore, is to engineer his or her organizational
development and transformation programs around such values. However, to do that we
need a new organizational model – one that places people and human and social values at
the core of everything the organization does.
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Engineering a human and social transformation

Since human and social values are increasingly defining the scope and nature of an
organization’s activities, in order to manage risks and improve innovation, organizations
should develop a human and social model of their business. I call this model the
human-asset model.
The human-asset model recognizes that today’s organizations are best defined as a network
of human assets – managers, employees, suppliers, customers, and the wider community.
In this model, success is determined by the extent to which these assets are motivated to
work and collaborate in pursuit of a common vision or purpose.
Keywords:
Corporate social It is within such a framework that an organization’s common vision or purpose, and thus its
responsibility, core beliefs, can be defined within a human and social context. Consequently, this model
Human resource strategies, enables HR specialists to play a stellar role in determining and developing an organization’s
Strategic alignment core beliefs, and ultimately its competitive advantage.

Note
Jonathan Ledwidge is managing partner of THAPartners and author of the book The Human
Asset Manifesto (Morgan James Publishing). For more information, visit www.thapartners.
com or the blog at http://thamanifesto.typepad.com

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PAGE 30 HUMAN RESOURCE MANAGEMENT INTERNATIONAL DIGEST VOL. 15 NO. 6 2007
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