Special Articles / K.N. Ajith / Social Work Foot Prints, Vol.V, Issue.4
The article examines the different explanations of the concept of CSR, and the strengths and weaknesses of CSR. It discusses the shift from CSR to CSV (Creating Shared Value) by enlightened companies across the globe. CSR in India has evolved from merchant philanthropy to social development oriented activities by companies. But CSR has always been discretionary in nature by the corporate organizations. Some companies have been outstanding in the CSR domain, while many companies involved themselves in CSR activities only for image building. The new Companies Act of 2013 made CSR mandatory for a class of companies. This article also discusses the CSR legislation of the government of India and its implications.
Key Words: Corporate social responsibility, creating shared value, employee volunteering, HR practices.
Business and community, taken together, consist of an interactive system. Each needs the other. Each can influence the other. They are intertwined so completely that an action taken by one will inevitably affect the other. The boundary line between the two is blurred and indistinct. Business organizations respond to external social change in different ways, which are categorized into three strategies by Post and Mahon (1980) : (a) an adaptive strategy, (b) a proactive strategy, and (c) an interactive strategy. The first strategy is usually adopted after some significant social change is already under way. The company then tries to adapt to a change in its environment that it may not have anticipated. Often, company practices will be modified only after strong pressures are applied. Proactive companies are a step ahead of those that merely adapt in a reactive way, because they understand the need to “get on top” of the changes that are occurring in their environment. Such companies try to manipulate the environment in ways that will be to their own advantage; and these steps may or may not be in the broader public interest. When a company is able to anticipate environmental change and blend its own goals with those of the society it has adopted an interactive strategy. An interactive strategy promotes harmonious relations between a company and the public by reducing the gap between public expectations and business performance. Post and Mahon conclude that in the long run an interactive strategy will bring greater, more lasting benefits for both business and society.
Community orientation of corporate organizations is an evolving ideology. It is also known as corporate citizenship. Three concepts arose about the social performance of companies since the beginning of the twentieth century. During the 1950s and 1960s, the concept of corporate social responsibility came into prominence. The concept of corporate social responsiveness emerged during the early 1970s followed by the concept of social rectitude during the mid-1970s (Frederick, 1987). Corporate social responsibility (CSR) is the widely popular concept globally, replacing corporate philanthropy. CSR is now giving way to CSV (creating shared value).
Corporate Social Responsibility (CSR) is an umbrella term (Blowfield and Frynas, 2005) used to describe different socially oriented practices. American economist Bowen (1953), known as the father of the modern practice of corporate social responsibility, was the first to bring CSR into the business domain through his book “Social Responsibility of the Businessman”. The term CSR “is a brilliant one, it is something but not always the same thing to everybody” (Votaw and Sethi, 1973).
Carroll (1991) proposed a pyramidal structure to explain CSR with four layers of responsibilities: economic, legal, ethical and philanthropic. Economic and legal responsibilities are demanded by the state and society, the ethical aspect is expected from business and the philanthropic responsibility is purely discretionary. Ethical responsibility of business, though not codified by legislation, includes activities that are often restricted or prohibited by the governments and society. “A corporation can and should have a conscience. The language of ethics does have a place in the vocabulary of an organization” (Goodpaster and Mathews, 1982). Kautilya, the legendary Indian statesman, economist and philosopher of the third century BC, advocated “business practices based on moral principles” (Frynas, 2006). Holme and Watts (2000) define corporate social responsibility as the “continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large”. CSR to Ward and Fox (2002) is environmental, social and human rights based initiatives of corporations. Small and medium-sized enterprises have limited resources and less brand-related pressure to focus on CSR. Hence, CSR tends to be ‘implicit’ (informal), rather than ‘explicit’ (formal). In small companies, “CSR relies more on the moral commitment of the owner and the direct feedback given by the local community and customers” (Visser, 2006).
Strategic CSR1 is a recent concept suggested by Crawford and Scaletta (2005) as well as by Porter and Kramer (2006). The latter say that “If corporations were to analyze their prospects for social responsibility using the same frameworks that guide their core business choices”, corporate social responsibility “can be much more than a cost, a constraint, or a charitable deed – it can be a source of opportunity, innovation and competitive advantage”. Halme and Laurila (2008) suggest the term innovation CSR which converts developmental and social issues to business opportunities to solve the problems. Zadek, et al (2003) describe three generations of CSR. First generation CSR is corporate charity; while second generation CSR is strategic CSR; and third generation CSR is competitive CSR which is based on collective actions of companies and their stakeholders in order to develop markets. “Competitive advantage within one or several sectors arising through interactions between the business community, labor organizations and wider civil society, and the public sector focuses on the enhancement of corporate responsibility” (Zadek, et al., 2003).
Ajith (2011) is of the view that CSR should aim at a just social order, and sustainability of the eco-system and society should be its core element. The three corner stones of the concept of sustainable development in the UN document are economic development, environmental protection and social equity.2 Elkington’s (1997) “Triple Bottom Line” or TBL consists of three Ps: profit, people and planet, and it captures a spectrum of criteria for measuring organizational success: economic, ecological and social.
CSR is voluntary going beyond statutory compliance. For example, many companies pay unskilled workers more than the legally prescribed minimum wages, so that the employees can have a reasonable standard of living, while ensuring their loyalty. Sometimes the benefit of CSR, according to Cohen (2010), is a sort of defence strategy – business organizations have been attacked for irresponsible practices and CSR then becomes their defence. Most of the Western apparel and fashion businesses were criticized by social activists and consumer groups in the 1990s as their outsourced manufacturing supply chains in countries like Bangladesh, India and China employed women and children in sweatshop3 conditions. CSR, then was their best defence. Now, many of these companies have very strict standards and they closely monitor the suppliers’ adherence to these standards. In India, the Government of India made a conscious emphasis on the concept of “responsible business” in the voluntary guidelines for companies (2011).
Bishop and Green (2008) coined the concept of philanthrocapitalism. They recommend it as the remedy for the many social problems that face even the rich societies based on “innovative partnerships between business, non-profits and government”. They assert that “as governments cut back their spending on social causes, giving may be the greatest force for societal change in our world.” The philanthrocapitalist movement led by Warren Buffet and Bill Gates, is spearheading the “Giving Pledge”4 campaign among wealthy business leaders to give away at least a half of their wealth. Though a laudable philanthropic initiative, there are many operational limitations in terms of reach and effectiveness as the number of people to be covered is humongous.
Visser sees CSR evolving through five ‘ages and stages’: “defensive CSR in the age of greed, charitable CSR in the age of philanthropy, promotional CSR in the age of marketing, strategic CSR in the age of management, and transformative CSR in the age of responsibility”. He classifies the first four as ‘CSR 1.0’, and the last age as ‘CSR 2.0’. “CSR is steadily professionalising, and as it becomes more embedded and transformative, CSR will become more of a force for competitive differentiation and employee motivation” (Visser, 2011). Cohen (2010) says that CSR is “a way of doing business that is based on ethical principles and structured management controls, and that takes into account social and environmental considerations alongside economic considerations” while making business decisions.
Business organizations across the globe have come under intense social scrutiny in recent years. Scams, fraudulent practices, growing income inequalities, increasing environmental degradation and depletion of natural resources, often illegally, have dented the images of the companies in India. Forcible acquisition of agricultural and forest land, displacement of millions of families using the “doctrine of pre-eminence” for public interest, and glaring development deficit pushed tribals in India into left extremism and insurgency. Communities across India revolted against corporate policies with government support which marginalized them by dispossession of their land and livelihood.
The Supreme Court of India (2010) stated that “to millions of Indians, development is a dreadful and hateful word, that is aimed at denying them even the source of sustenance”. Social anthropologist Padel (2010), a crusader against the mining policy of the Indian government, is critical of bauxite mining. He observed that “on the one side, there is ecoside and on the other, displacement and dispossession of adivasis5 which is cultural genocide”. About one-third of the districts in India have extremist or naxalite presence according to media reports. Union Minister Chidambaram (2010) cautioned the corporate leaders that people in naxal-dominated areas do not have faith in the good sense of business organizations, and they also lack confidence in the government. Globally today “companies are widely perceived to be prospering at the expense of the broader community” (Porter and Kramer, 2011). A flurry of shocking disclosures about malfeasance in high profit companies, and the concomitant global recession have shattered the myth of capitalism. There is a growing credibility gap and trust deficit on the part of business today. While the “Occupy Wall Street” movement is a protest against corporate greed which triggered the meltdown of Western economies, the exploited and exasperated people in naxal dominated regions have taken to armed struggle against the Indian state itself. In this scenario, Corporate Social Responsibility (CSR) is shifting its emphasis from condescending corporate philanthropy to sustainable activities for the development of communities more often under pressure from the government and civil society. Mahindra (2012), a leading industrialist, says that there is an “outcry across the world for businesses to be more alive to issues larger than profits, especially after the big bad wolf image that business earned during the recession”. Member of Parliament, and industrialist Aga (2012) does not mince words while commenting that in many instances there is only lip-service paid to CSR and sometimes CSR is brazenly used as a short cut to capture mind-space and public imagination. Aga cautions that it would be a terrible mistake if CSR is reduced to a tactic or mere business strategy. CSR spending is often used for tax savings or brand building. Most companies have set up trusts and foundations, which enjoy tax exemption, to channel funds for CSR.
CSR is often used by the government of India to obfuscate the fact that the focus of any business is to do business in a transparent and profitable manner. It is the government’s duty to promote public welfare by taxing private sector profits. The government should not abdicate its responsibilities by trying to make CSR spending mandatory. It is only by offering quality products and services that companies can thrive, and the government cannot depend on the companies to focus on areas where it has failed to perform. While Buffett and Gates make a pitch for corporate charity, Steve Jobs, co-founder of Apple, was not known to be enthusiastic of corporate philanthropy. Jobs, a highly competitive innovator, built a business empire worth billions, created some of the world’s most iconic products for consumers, and generated prosperity for shareholders and workers. That is how Jobs promoted societal good.
Corporations are “amoral legal entities… and the notion of social responsibility is not part of the DNA of corporate structures….if we look back at history the notion of CSR appears to be an oxymoron” (D’Souza, 2011). Nobel Laureate and economist Friedman was not a proponent of CSR. He asserts that “Only people have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but “business” as a whole cannot be said to have responsibilities”. Social responsibility of business is a “fundamentally subversive doctrine” in a free society, and in such a society, “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” (Friedman, 2002).
Corporate social responsibility (CSR) has now become an integral part of the business lingua. In a short span of one decade, CSR has become high on the agenda of any assessment of corporate performance. The evolution of sustainable corporate social responsibility from unstructured corporate philanthropy has been demonstrated by the contribution of many Indian companies embracing the well-being of a wide spectrum of stakeholders. At the same time, many companies are indifferent to their mandatory and moral responsibilities towards society and the environment. Hence the government stepped in with the CSR related amendment in 2013.
The new Companies Act, 2013 which is operational from April 2014, will require a certain class of companies to mandatorily spend on CSR activities. Section 135 of the Act mandates every company having a net worth of Rs. 500 crore or more, or a turnover of Rs.1,000 crore or more, or a net profit of Rs.5 crore or more to spend in every financial year at least 2 per cent of the average net profits made during three immediately preceding financial years. Though there are more than 8, 00,000 registered companies in India, the CSR provisions of the Act apply only to 2 per cent of these. Now about 16,000 companies will fall within the ambit of CSR law. Chatterjee (2013), CEO, Indian Institute of Corporate Affairs, and the architect of the CSR law, says: “We are evolving a model that is truly Indian, developed for India, by India and in India. The idea is to address the lack of social and economic development in many areas, as also to reach out to the poor and the marginalized…..The corporate social responsibility legislation provides an opportunity to refocus by catalyzing a process of national regeneration, wherein Corporate India can work hand in hand with the government”.
Schedule VII of the Companies Act prescribes the following activities which the companies are expected to include in their CSR policies.
The government will also prescribe other activities under CSR from time to time as has been announced during the last week of June, 2014 (Times of India, June 26, 2014) including slum redevelopment, road safety awareness, consumer protection services, supplementing government schemes like mid-day meals, and interestingly donations to IIM, Ahmedabad for renovation of class rooms. Activities which are exclusively for the benefit of the employees or their families are not CSR activities.
The companies are required to constitute CSR committees with directors of companies as members. The CSR committee should consist of a minimum of three directors of which one should be an independent director except those companies which are not required to appoint an independent director. A private company having only two directors on its Board should constitute its CSR committee with two such directors.
The CSR Committee should prepare the CSR policy of the company which should include the following;
a) A list of CSR projects and programmes which the company plans to undertake during the implementation year, specifying modalities of execution in the areas/sectors chosen and implementation schedules for the same.
b) CSR projects/programmes of the company may also focus on integrating business models with social and environmental priorities and processes in order to create shared value.
c) Specifying that surplus arising out of the CSR activity will not be part of business profits of the company.
d) A transparent monitoring mechanism for ensuring implementation of the projects/programmes.
A company may carry on CSR activities directly or by setting up a company or society or foundation or any other form of entity operating within India to facilitate implementation of its CSR activities. A company may also implement its CSR programmes through trusts or societies, operating in India, which are not set up by the company itself. Companies may also collaborate or pool resources with other companies to undertake CSR activities and any expenditure incurred on such collaborative efforts would qualify for computing the CSR spending. All CSR activities are to be undertaken within India.
The Board’s report of a company should include an annual report on CSR containing particulars specified in the Annexure of the Act. Companies should disclose the contents of the CSR policy in their reports and the same should be displayed on the company’s website.
Not spending on CSR or failing to report it to the Ministry of Corporate Affairs would attract a fine of Rs.50 lakh and even imprisonment of two years.
The mandatory clauses in the Act miss totally what corporate social responsibility actually is, which is an ethical attitude and voluntary action. Mahatma Gandhi (1947) was a votary of the ethical model of voluntary commitment to public welfare by companies. His Trusteeship philosophy is valid even today. “Suppose I have come by a fair amount of wealth - either by way of legacy, or by means of trade and industry - I must know that all the wealth does not belong to me: what belongs to me is the right to an honourable livelihood, no better than that enjoyed by millions of others. The rest of my wealth belongs to the community and must be used for the welfare of the community”. Economic analyst Aiyar (2012) observes that CSR means observing the highest standards in dealing with health and environmental hazards, and in presenting corporate accounts accurately. He adds that if a company cheats its stakeholders, fiddles its accounts and ignores hazards, then it is grossly irresponsible whether or not it spends 2 per cent of its profit on government approved activities. CSR allocation can even camouflage lack of ethics. Consumers are duped by CSR awards, and they are willing to pay more for products from such award winning companies. Aiyar cites Satyam and the oil multinational British Petroleum6 which caused the biggest environmental disaster in history when its Maconodo well exploded in the Caribbean Ocean because of its failure to observe many safety procedures. Corporate spending on CSR, far from being an evidence of business ethics, is often a cloak for gross misgovernance, warns Aiyar.
Survey of Executives
Socially responsive executives are more likely to modify their business policies and practices than those who discharge their responsibilities only in an economic context. Executives in socially responsible companies consider not only the interests of their core stakeholders but also the interests of all the stakeholders. Hence studies on the community orientation of corporate executives are a necessity. That is the rationale of the present survey. The objective of the survey was to study the perceptions of corporate executives on corporate social responsibility and related issues.
A two-stage sampling design was used for the study. At the first stage, companies were selected and at the second stage, corporate executives were selected from the sampled companies. Business World ranks 500 biggest public limited companies in India every year. Out of the 500 companies, 26 were registered at Chennai, which constituted the sampling frame at the first stage. Out of the 26 companies, four were selected purposively for the study; three with a long tradition belonging primarily to the manufacturing sector and one recently established belonging to the information technology sector. The sampling frame at the second stage comprised 902 executives in the four companies having designations from Assistant Manager to Vice-President, and a sample of around 100 executives was considered statistically sufficient and efficient. Hence it was decided to select around 11 per cent of the universe for the final sample. The primary data was collected from the sampled corporate executives using a structured pre-tested questionnaire, which was mailed to them. The executives selected for the study were asked to rank the factors in order of importance ranging from a score of 1 for the least important to a score of 9 for the most important. The scores are grouped into three categories: low, moderate and high. Scores 1 to 3 fall in the low category, 4 to 6 fall under moderate category and 7 to 9 in the high category.
Perceptions of CSR
The responses to perceptions of CSR were grouped into three categories: charity (60 per cent), business ethics (22 per cent), and environmental protection (18 per cent). Thus corporate philanthropy as CSR is the understanding of the majority. However a significant proportion views CSR as ethical practices and sustainability of natural resources.
Drivers of CSR Awareness
The executives, have identified certain drivers that propel increased awareness of corporate social responsibility. The reputation of a company stands out as the most prominent factor causing greater awareness of corporate social responsibility. Rising international standards is the second-ranked factor. Group Pressure by CII, FICCI and other groups, is rated third. Competition in the market is ranked last as an awareness-enhancing factor.
The interests of many sections of the society are at stake when a company comes into existence and starts growing. Four main stakeholders are identified by the corporate executives. Customers, including the community, top the list of stakeholders according to the rating of the executives. Regulatory bodies are equally ranked closely followed by shareholders. Employees get a prominent fourth rank in order of importance of stakeholders.
Advantages of CSR
When a company undertakes socially useful programmes, the resultant benefits to the company are many.
Executives are highly sensitive to the social image of their companies and obviously that is ranked first among the advantages of corporate social responsibility. Customer loyalty and allegiance of employees are ranked second and third respectively with only a minor difference. The executives give a low rank to reduction in control by the regulatory bodies because of CSR.
All India CSR Rating
In India, the first systematic rating has been pioneered by Karmayog7, a non-profit initiative as a CSR watchdog organization. Karmayog rating of companies ranges from level 0 to level 5 and is based on the main products and services. At present, 500 largest companies in India are being rated. No company has so far been given the highest rating of 5 from 2007 to 2010. Only 12 companies secured the rating of 4 in 2010; the ratings of the other companies were 3 (13.2 per cent), 2 (32.2 per cent), 1 (29.6 per cent) and 0 (22.6 per cent). Out of the 66 public sector undertakings, the ratings of 58 were between 0 and 2; only 8 could secure level 3 rating. Among the 39 multi-national corporations, only one was given a rating of 4, while the rating of 3 was secured by 9. The aggregate average score is 1.43. Construction, infrastructure and trading sectors are the lowest category with a mean score of 0.6.
The Karmayog* ratings for 2010 are converted for this paper by the author as mean rating scores and presented below.
Karmayog observes that there has been a trend towards compartmentalizing CSR and turning it a specialized activity. Unless CSR is intrinsic to all aspects of a business enterprise and is reflected in the actions of a company in all aspects, the rating gets lowered. The present ratings are indicators of the distance companies need to cover to reduce the gap between professed goals and reality (Aga, 2012).
CSR to CSV
CSR and philanthrocapitalism have not made any significant dent on the lives of the people across the world. Economist Stiglitz (2012) warns prophetically : “The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought : an understanding that their fate is bound up with how the other 99 per cent live. Throughout history, this is something that the top 1 per cent eventually do Iearn. Too late”. Prahalad (2004), management specialist, argues for sustainable solutions to global poverty through a better approach that involves partnering with the poor “to innovate and achieve sustainable win-win scenarios where the poor actively engaged and, at the same time, the companies providing products and services to them are profitable”. Such a collaboration between the poor consumers, governments, civil society groups and firms can create the largest and fastest growing markets in the world. The BOP (bottom of the pyramid) markets must become an integral part of the work of the private sector and a component of the core businesses of the firms. They cannot be “relegated to the realm of corporate social responsibility initiatives”. Prahalad strongly advocates for a paradigm shift from treating the poor as the wards of the state with aid and subsidies to viewing them as active consumers and entrepreneurs.
The limitations of CSR are reinforced by Porter and Kramer (2011) who state that the more business has begun to embrace corporate social responsibility, the more it has been blamed for society’s failures. Most companies remain stuck in a CSR mind-set in which societal issues are at the periphery, not the core. Porter and Kramer propose the concept of shared value which is defined as “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates”. Creation of shared value (CSV) focuses on identifying and expanding the connections between societal and economic progress as “businesses have rarely approached societal issues from a value perspective”. Rather these have been treated as peripheral matters through CSR obscuring the close links between economic and social concerns. Mahindra (2012) declares that “CSR is dead, long live shared values”. Creating shared value (CSV) should supercede CSR in guiding the investments of companies in their communities as CSR programmes focus mostly on reputation. CSV, in contrast, is integral to the profitability and competitive position of companies. CSV utilizes the skills, resources and expertise of the companies to create economic value by creating social value (Porter and Kramer, 2011).
Community work is no longer a voluntary activity instead it is an imperative for business. In future, customers as well as employees would want to be associated with environmentally and socially responsible corporations. Jamsetji Tata, the founder of the Tata conglomerate, said: “In a free enterprise, the community is not just another stakeholder in our business, but is in fact the very purpose of its existence” (Tata Services, 2010). The nature of CSR in the country has evolved over the decades and has seen many changes. Charity-based, short-term social welfare programmes are being replaced by long-term social engagement initiatives aimed at creating shared value for the companies and the communities. There is an increasing realization that business cannot succeed without an effective connect with the society at large and have started considering CSV as an imperative for doing business rather than a choice. There are already some outstanding examples of Indian companies creating shared value.
Fabindia8 works closely with artisans across India linking over 80,000 crafts-based rural producers to urban markets. It preserves traditional Indian handicrafts while creating a base for sustainable employment for skilled rural workers. The company claims to promote “inclusive capitalism” through Community Owned Companies (COC) which are value adding intermediaries between the rural producers and Fabindia. COCs are owned by the communities in which they operate and a minimum 26 per cent shareholding of these companies is that of the craft persons. Fabindia’s unique business values of being a profitable retail platform, while also creating a community-led supply chain with artisan shareholders and directors set a high standard of vision, innovation and social commitment. Fabindia has significantly impacted sustainable livelihood in the rural sector, while becoming one of the largest private platforms for products that are made from traditional techniques, skills and hand-based processes.
Amul Dairy9, founded in 1946 as a co-operative in Anand in Gujarat (Kaira District Milk Producers’ Union), ultimately transformed a milk-starved India as the largest milk producer in the world. The exploitative trade practices by the local trade cartel triggered off the co-operative movement and the government of India formed the National Dairy Development Board. Through the “White Revolution” Amul dairy products–milk, cheese, ice cream and chocolates – have become world class. The milk producers and the communities around them along with the consumers are benefitted by Amul. Over 15 million milk producers in 1,50,000 co-operatives and 22 state marketing federations ensure a better life for millions. Amul successfully competed against global giants like Nestle and Polson.
Hindustan Lever10 is Unilever’s business in India. The company generates around half its business from India’s towns and cities, and half from rural areas, where its products are sold in some 100,000 villages with populations of 2,000 or more. By the end of the 1990s, the company came up with Project Shakti (which means ‘strength’ in Sanskrit) to expand its market. It was a bold and innovative solution. The company tapped into the growing number of women‘s self-help groups in the country. The company provides self-help group women with training in selling, commercial knowledge and book-keeping. The women who are trained can choose to set up their own business or to become distributors or Shakti Ammas (empowered mothers) as they have become known. Each woman who becomes a distributor invests INR 10,000 - 15,000 (US$220-330) in stock at the outset, usually borrowing from self-help groups or micro-finance banks facilitated by Hindustan Lever. Each aims to have around 500 customers, mainly drawn from her village’s self-help groups and from nearby smaller villages. Most women generate sales of INR 10,000-12,000 a month, netting a monthly profit of INR 700-1,000 (US$15-22), which is a far cry from the handful of rupees they earned working in the field. For those with husbands who work in the fields, this typically doubles the household income.
The successful corporations of the future will be those which align their business with the development of the communities in which they operate. Kanter (2012) is of the view that “institutional logic holds that companies are more than instruments for generating money; they are also vehicles for accomplishing societal purposes and for providing meaningful livelihoods for those who work in them”. The value that a company creates, according to this school of thought, should be measured not just in terms of short-term profits or employee benefits but also in terms of how it sustains the conditions that allow it to flourish over time.
From cheque book philanthropy, some companies have steadily moved over to skill-based employee volunteering to communities around the enterprises. Employee volunteering is not philanthropy. The volunteer contributes skill, time and experience, without any monetary benefits, for the welfare of the community. Volunteering has many benefits for the companies as well as to the employees. It leads to personal growth and development of the employees. It also provides key career experiences and teaches valuable job skills. Tata group companies, and Mahindra and Mahindra are known to have systematically planned employee volunteering programmes. Cappelli (2012) praises some corporations in India that put charitable money behind social missions at a level that dwarfs anything that one would see in the US: sixty-five per cent of the profits of the Tata group companies, for example, go to social development.
HR Practices and CSR
Mees and Bunham (2005) subsumed the relationship between CSR and HR as a mathematical equation: CSR – HR=PR (Public Relations). They added that “If employees are not engaged, Corporate Social Responsibility becomes an exercise in public relations. Credibility of an organization will become damaged when it becomes evident that a company is not ‘walking the talk’ ”. Effective CSR is a matter of attitude which should be fostered by HR. CSR or CSV should be embedded into everything a company does. HR administrators will have to become actively involved in engaging employees and executives so that the CSR mind-set would fully permeate the company. Cohen (2010) prefers the role description as Corporate Social Human Resource Manager.
HR functions of an organization can be instrumental in facilitating a comprehensive approach for creation of a culture of sustainability and environmental stewardship (Jay, 2010). HR has the responsibility to align the companies with the regulatory policies of the government. HR professionals can play a major role in business processes. Managements supported by sensitive HR practices can create enabling conditions to make CSR work as desirable and honoured as meeting the sales targets.
The human rights violations by many companies have created challenges for the working place in developing as well as in developed economies that CSR or CSV cannot address unless it is part of an overall HR strategy of the companies. Companies, particularly in the garment sector, have always been outsourcing work to lower wage locations. So long as profits come from products that are harmful to the planet and people, little shared value can be created. HR practitioners need to respond to this challenge by creating the framework and protocols that are essential to integrate ethics, accountability and governance standards within performance appraisals. Kanter (2012) is of the view that articulating a purpose broader than making profit can guide strategies and actions, open new sources for innovation and help people express corporate and personal values in their day-to-day work.
No company can succeed in the long-term if they do not recruit, train and motivate people who have the ability to respond to and shape the challenges of the future. The recruitment and selection of new employees help demonstrate the intentions of a company, highlighting the skills and attitudes to which it attaches the highest priority. The choice of new recruits also gives an opportunity to the company to communicate the values of the organization, and the opportunities for career growth and community engagement.
Companies operating ethically and demonstrating a keen concern for health, safety and quality of life of the working people are the desired enterprises. Sustainable programmes do motivate employees to perform to their highest potential. If the values of a company and its employees are aligned, then the morale and commitment of the employees will increase. Employees, who participate in community development partnerships and programmes, are highly energized by the experience, and are more likely to recommend the company, stay with it, and be motivated in their jobs.
In common parlance, ESOP means employee stock options programme, But in Mahindra and Mahindra, ESOP stands for employee social options programme. The same business process used for core business choices is employed by HR in designing employee volunteer opportunities. Employees generate ideas for projects that meet the needs of communities around their place of work. They plan, implement each activity and monitor the results (Mahindra, 2012). “Great Companies assume that they can trust people and can rely on relationships, not just rules and structures. They are more likely to treat employees as self-determining professionals who co-ordinate and integrate activities by self- organizing and generating new ideas” (Kanter, 2012).
Employees are core stakeholders of a company, they need to be engaged intensively in order to ensure that they uphold responsible business practices. CSR or CSV would benefit the business and community by creating opportunities only when HR becomes a core partner.HR should champion a bold and successful CSV initiative.
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