Corporate social responsibility goes beyond goodwill to deliver business benefits in the war for talent, says Kate Donovan
A good corporate social responsibility (CSR) record is now almost a pre-requisite for long-term business success. In recent years, organisations have come under increasing pressure from stakeholders, customers, employees, regulators and the general public to conduct their business in accordance with acceptable economic, social, and environmental standards and to pay regard to basic human rights.
The government is also playing its part by putting the environment at the top of its agenda. Plans to cut carbon emissions set out in the government’s draft Climate Change Bill will ultimately force organisations to assess their own output. This was made perfectly clear last month when Gordon Brown, in his first speech on the environment as prime minister, said he was willing to raise the UK’s emission target from a 60% cut by 2050 to 80%.
Consumers’ desire to deal with ethical organisations is also driving CSR up the corporate agenda. Many organisations are revising their products and services to meet this demand and, then in a bid to differentiate themselves from rivals, are marketing their new-found ethical credentials to consumers.
Projecting the right corporate image into the market can also help to recruit, retain and motivate key staff for whom working for a socially-responsible company is important.
The views of senior company executives appear to back this up, according to a study, Corporate responsibility and the modern business leader, conducted by Robert Half and the Institute of Chartered Accountants in England and Wales. It found that employees want to work for socially-responsible organisations, while companies that respect this through their business practices and the way they treat employees stand to benefit from improved morale, motivation and retention rates.
HR, therefore, has a key role to play in implementing a CSR strategy, not least in helping to differentiate an employer’s brand and image within the job market. One way to do this is by offering CSR-related benefits.
So implementing measures to help staff achieve a work-life balance, charitable giving, community volunteering opportunities, employee training and development, and ethical pension investment funds can have an impact on CSR
One area, in particular, that employees appear to be concerned about is the environment. According to the results of an online survey published by Ceridian in January, 69% of staff believe it is important for employers to be environmentally responsible, while 57% wish their employer would do more in this area. Just under a third (32%) of employees aged 16-24 years said that they would consider changing employers for a greener benefits package, while 35%believed that if they were to receive greener perks then this would make them more loyal to their current employer.
While CSR-related benefits can help to improve or promote an organisation’s reputation as an employer of choice, this may only be short-lived. Staff must see that CSR policies are embedded in an organisation’s business practices, if they are to be truly emotionally engaged and motivated.
Jennifer Powell, principal at Towers Perrin, explains that for employees to buy in to their organisation’s commitment to CSR, it is important for senior leaders to be seen to be visibly living company values. “Senior leaders need to be authentic in their role, and live and breathe the values of the company and communicate that very openly,” she says.
Employee welfare is one area of the CSR agenda where senior management can make a contribution.
Annika Haslett, head of flexible benefits at Gissings Advisory Services, says: “As part of a CSR policy, an employer ought to be demonstrating a clear commitment to the welfare of their employees and this can be easily achieved at a basic level through human resources (HR) and benefits policy.”
This means ensuring that employees achieve a work-life balance and are given adequate support for their caring responsibilities.
Flexible working would certainly help many employees to manage their commitments to both work and home. By law, employers have to offer staff the right to request flexible working arrangements to parents with children under the age of six years and those who care for elderly or disabled relatives. However, there are government plans, unveiled in this year’s Queen’s speech, to extend the right to request to work flexibly to parents of older children.
However, employers could take this a step further, as BT has done by offering all employees the opportunity to apply for flexible working arrangements. It introduced home-working in 1986 and makes provision for part-time work, job sharing, term-time working, nine-day fortnights, compressed working weeks and staggered hours.
Becky Mason, senior people and policy manager, says that the opportunity makes employees more committed and loyal, and increases productivity and engagement, while encouraging a diverse workforce. “It’s tapping into pools of resources that would otherwise find it difficult to work, so particularly disabled people, people with caring responsibilities and lone parents,” she says.
Additional government proposals are also planned to benefit parents by extending statutory maternity pay and maternity allowance to 52 weeks, and introducing additional paternity leave and pay.
Enriching carers’ lives
However, the government is under increasing pressure to give more recognition to the needs of carers. A number of large employers, including BT, IBM, HSBC, Ford UK, John Lewis and KPMG, have called on the government to provide tax breaks for carer vouchers, just as it already does for childcare vouchers.
Employers may want to look beyond their own organisation’s caring needs and provide staff with the opportunity to do their bit for the wider community. Such a strategy also reflects well on the organisation and has other business benefits in the form of boosting motivation and retention. Some employers give employees time off to participate in events that support their community, such as clearing up local areas, painting schools or helping out in youth centres. “The offering of benefits such as time release to be spent in volunteering, sponsored sabbaticals and discounted holiday purchase for specific charitable events enables both employees and employers to simultaneously support CSR,” says Haslett.
BT allows its employees to apply for sabbaticals for purposes of volunteering or self-improvement. They are allowed a maximum of four breaks totalling up to two years, providing there is a minimum of two years between breaks. It has found that these breaks can act as a retention tool and can help to re-energise employees.
Helping employees donate to charity, for example, through a tax-efficient payroll giving or give-as-you-earn scheme is also a popular perk. Donations are made from employees’ gross pay, which effectively increases the value of their contribution. Employers can demonstrate their own generosity and CSR credentials by choosing to match contributions. Peter O’Hara, managing director of Workplace Giving UK, says there has been a 4.6% increase on the monies going to charity through payroll giving in the last two financial years.
Such schemes can be used by organisations to promote themselves positively to the outside world, particularly since the government’s introduction of payroll giving quality marks, which reward employers for achieving a high take-up. “A lot of our clients are using [quality marks] on their websites, in their literature and even [on] store posters to show their company is behind the scheme. It portrays to consumers they are a caring company,” says O’Hara.
Employers can also demonstrate their CSR credentials to staff by showing greater care for the environment in the provision of perks. Employers, such as Coca-Cola Enterprises are already taking steps to review their fleet management practices in a bid to reduce their carbon footprint.
Again there are benefits for the business. Greener vehicles, such as diesel and liquefied petroleum gas (LPG) cars, for example, are eligible for tax savings on fuel costs.
The government is also currently looking into possible changes to approved mileage allowance payments (Amaps) to try and encourage drivers to be more environmentally aware. In May this year, as part of its review of employee car ownership schemes and the interaction with company car tax and mileage payments, HM Revenue & Customs (HMRC) published an open letter asking for comment on possible changes to Amaps that would link them to the carbon dioxide (CO2) emissions of the cars being driven.
Gary Hull, director of employment solutions at PricewaterhouseCoopers, predicts this issue will be dealt with in next year’s Budget.
Partly due to government fiscal policy which has been designed to encourage the use of greener vehicles, company cars now emit more than 40% less CO2 than they did five years ago, according to ALD Automotive’s analysis of the vehicles added to its fleet during the last five years.
The availability of greener alternatives for company fleets such as low-emission petrol and diesel vehicles is continuing to increase. Hull says he has seen more dual-fuel cars being included in company fleets. “I think over the next few years we’ll find more and more people taking those cars as a benefit,” he says.
Some employers are looking to reduce the need for staff to travel by car altogether by providing employer-funded buses between sites or even between the workplace and local transport links.
Organisations that are unable to pay for this type of service could consider offering bus travel that is paid for by staff through a salary sacrifice arrangement, producing tax and national insurance (NI) efficiencies.
Employers can also give their staff the opportunity to do their own bit for the environment by including carbon offsetting as a benefit. Dairy produce firm Danone Dairies, for example, gives employees the option to offset their carbon footprint by salary sacrificing a monthly contribution to fund the planting of trees in the UK through the Woodland Trust, through a flexible benefits scheme. Staff can access the carbon calculator through the company’s intranet, and donations are free from tax and NI.
Elsewhere in the benefits package, employers can also give staff options that reflect their beliefs and ethical concerns. For example, they can provide staff with access to ethical pension fund investment options, such as Friends Provident’s stewardship fund. Julia Dreblow, SRI marketing manager at Friends Provident, explains: “[Our fund] offers employers a means of demonstrating empathy with their employees’ personal values, while showing the outside world that they are committed to putting environmental and social issues on the agenda across the board as part of a joined-up CSR strategy.”
The fund aims to include companies that demonstrate positive values such as good environmental management, promotion and the protection of human rights, and excludes those that produce tobacco or alcohol or have poor environmental practices. It offers fund choices that support ethical and sustainable lifestyles such as fair trade and organic food production.
The reluctance of some employees to take on a pension due to concerns that their contributions might be invested in a company whose service or values do not reflect their religious beliefs is met by HSBC’s Shariah Law fund for defined contribution pensions (HSBC Amanah Global Equity Index fund), which Friends Provident linked to in December 2004.
The fund aims to meet the requirements of Islamic law (Shariah Law) and is available for both employer and trustee-based schemes. The fund includes opportunities to invest in companies engaged in Shariah-compliant activities so excludes organisations that are involved in genetic engineering, pornography and pork products, for example.
Dreblow believes such ethical funds go beyond merely preventing employees feeling discriminated against. “Without it, some investors may feel unable to join a scheme when not joining could leave them and their families worse off in later life,” she explains.
The success and popularity of CSR activities ultimately depend on communication. Ensuring staff and potential recruits are aware of the benefits options available helps to demonstrate that the employer is committed to pursuing a CSR agenda. The many business benefits can then be measured via surveys, exits interviews, focus groups and ease of recruitment.
Case study: Enviros
Enviros offsets CO2
As an environmental consultancy, Enviros reflects its values in its benefits package.
Via its flexible benefits scheme, for example, employees can offset their carbon emissions. The perk enables staff to calculate how much they would need to contribute to offset their carbon emissions. The cost is then deducted from their flexible benefits pot.
Jo Addington, head of human resources, says: “The reason you choose your benefits must be linked to what your values are and, as an organisation, we are an environmental consultancy so the green agenda is what we are passionate about.”†
Employees can also opt to take up a give-as-you-earn charitable donation scheme, while Enviros’ stakeholder pension scheme uses Friends Provident’s stewardship fund so that employees know their money is being invested in ethical enterprises and companies.
The consultancy also caters for parents by offering childcare vouchers and emergency childcare provisions.
Case study: Coda
Coda offers Shariah fund in GPP
Coda demonstrates its corporate social responsibility credentials through benefits by matching charity donations from staff and offering them a pension fund that meets their religious needs.
It offers staff a Shariah-compliant fund in its group personal pension (GPP) plan. The HSBC Amanah Global Equity Index, Shariah Law Compliant fund does not invest in companies that are involved in genetic engineering, pornography and pork products, so is compliant with Islamic (Shariah) law. Dave Belmont, company secretary, says: “We want to be inclusive.”†
As well as contributing 6.75% to its GPP for staff, Coda offers a salary sacrifice arrangement and reinvests its national insurance savings in higher employer contributions.
It also matches charity donations up to approximately £1,200, typically in respect of two selected charities, when staff participate in fundraising events.
These measures are all used to demonstrate that Coda is a good organisation to work for. “We like to employ responsible people and, in turn, they want us to act responsibly too,” explains Belmont.