By Bill Shireman
Is being a responsible company good for business? It is popular to say so, but people running businesses know it is not always true.
If doing what is good for society were always profitable in the short or medium run, we would have had no finance sector collapse, no climate crisis, no pollution, and no sweatshops. But we have all those things–not because businesspeople are evil or stupid, but because none of us can personally take on the costs of social responsibility, while donating all the benefits to others. In a competitive economy, if being socially responsible costs a company more, it will be outperformed by less responsible competitors.
But the gap between what is good for the company and what is good for society is one of the reasons corporate social responsibility (CSR) can be such a valuable arena for human resources (HR) professionals. CSR can attract, retain, motivate, and mobilize employees to cut costs, drive innovation, and serve as brand ambassadors who are as proud of their companies for their business accomplishments as well as for their social contributions.
Future 500, a nonprofit that resolves conflicts between major companies and stakeholders, often finds that activists think companies are run by amoral executives bent on maximizing profits, no matter the costs to society. Executives often assume the activists are determined to destroy capitalism, no matter the costs to people.
The truth is that most executives show extraordinary energy when they find that “doing good” is compatible with “doing well.” They simply need a map that shows them how to bring the two into alignment.
Companies can profit by being more socially responsible. There are at least five ways HR can help drive sustainable profits from social responsibility:
1. More high-caliber job seekers. I can tell you from personal experience: Top executives and promising employees are highly motivated to have a positive impact on the world. Some may fear CSR issues as a diversion at first; but once they gain a comfort level, they find such issues extraordinarily motivating.
Every major business school in the country has recognized this, and launched “sustainable MBA” programs and specialties–not just to be responsible, but to attract the best and brightest students.
According to the Massachusetts Business Roundtable (2009), “CSR activities comprise an increasingly important way to attract and retain good employees from all generations. Contrary to early research that suggested CSR was more important to young professionals, researchers are now finding that CSR is valued by employees of all experience levels and generations.”
2. More pride, loyalty, and retention. Hewlett-Packard is just one of the companies that builds employee pride and loyalty through its CSR initiatives. The company was founded in 1939 with the objective of “inventing for the common good.” But when a handful of employees formed a sustainability interest group almost 20 years ago, hundreds of employees quickly signed up. Today, thousands of HP employees devote themselves part-time or full-time to business initiatives to save energy, promote cleaner technologies, and help people in need.
Part of the reason is that, according to an article by C.B. Bhattacharya, Sankar Sen, and Daniel Korschen, in the MIT Sloan Management Review, “CSR initiatives reveal the values of a company and thus can be part of the ‘employee value proposition’ that recent studies indicate is the lens through which managers must view talent management today. CSR also humanizes the company in ways that other facets of the job cannot.”
3. More efficient companies. Employees are highly motivated to drive down economic costs, when there is an environmental benefit as well. Dow Chemical provides an example. In the 1970s, people at Dow challenged employees to find ways to reduce pollution. They began a pollution prevention program. The first year, employees came forward with dozens of ideas. The ones implemented paid a return on investment of 173%. For every $1 spent, the company saved $1.73 the first year–and every year after. People thought Dow had just identified the easiest savings, and that the return would decline. But 10 years later, the program was generating hundreds of ideas. Now they paid a 300% return–$3 saved for every $1 spent, the first year alone. Since its inception, Dow’s program has saved billions of dollars.
4. More productive, active, and engaged employees. In the Global Workforce Study, which surveyed nearly 90,000 employees in 18 countries in July 2008, Towers Perrin found that CSR “is in fact linked to how well employees perform.” In other words, “CSR extends to the bottom line.” The study found that CSR is the third most important driver of employee engagement overall. In addition, “for companies in the U.S., an organization’s stature in the community is the second most important driver of employee engagement. This is important because higher employee engagement levels are highly correlated with better business performances as measured by revenue, earnings and other key business metrics.”
5. More innovation. As we continue the inevitable shift from a high-carbon, consumption-intensive economy to a low-carbon, information-rich successor, disruptive products, technologies, and industries will sweep through the global economy. New sectors will emerge, and the ideas and technologies they birth will transform or overthrow every major industry.
That is why many companies believe the most profitable contribution CSR can make may be through innovation. For example, Dow’s 2015 Sustainability Goals, inspired by the U.N. Millennium Development Goals, mobilize the company’s chemists, strategists, and executives to serve the needs of the five billion global citizens who have not yet achieved prosperity. Their product development vision is to drive profits by addressing the challenges of water and food supplies, housing, personal health, energy, climate change, and protection of the environment.
Today’s employees–young and old, at all levels–care about more than the bottom line. They want to feel proud of the company they work for and to be a part of something bigger than themselves, bigger even than their company. HR can attract, keep, and generate more value from better employees by harnessing the power of CSR.
Massachusetts Business Roundtable. 2009. “Corporate Social Responsibility and Employee Recruitment and Retention: A Primer.” Retrieved from www.leaders.umb.edu/images/uploads/MBR_Primer_2009_Update.pdf
About the Author
Called a “master of environmental entrepreneurism,” Bill Shireman has over 20 years of experience developing and implementing programs that align the interests of major corporations and their stakeholders. He develops profitable business strategies… Expand >
Called a “master of environmental entrepreneurism,” Bill Shireman has over 20 years of experience developing and implementing programs that align the interests of major corporations and their stakeholders. He develops profitable business strategies that drive pollution down and profits up.
As president and CEO of Future 500, he helps the world’s largest companies and most impassioned activists–from Coca-Cola, General Motors, Nike, Mitsubishi, and Weyerhaeuser, to Greenpeace, Rainforest Action Network, and the Sierra Club–work together to improve the profits and performance of business.
Advocating technology as a driver of green growth, Bill has led the development and deployment of these and other tools, at diverse companies in Asia, Europe, and throughout North America. While CEO of the largest state recycling lobby in the United States, he wrote California’s bottle bill recycling law, shown by EPA and academic studies to be the world’s most cost-effective. He advocates market-based environmental policies–contending they can be more effective than many command and control laws.