Linking Employee Policies to New Forms of Value Creation: The Challenge for Organisations Is to Work Harder to Demonstrate the Link between Employment Policies, Practice and Value Creation
Baty, David, Graham, Helen, Luchinkina, Karina, Woodward, Jennifer, European Business Forum
In responding to calls for greater Corporate Social Responsibility, many companies initially focused on the environmental aspects, largely because they had been actively managing and reporting on their environmental impact well before the term CSR came to the fore. Recently, however, increased attention has been given to the social dimensions, including those related to employees. This is due in part to the recognition by organisations that they have a responsibility to the societies in which they operate. It also reflects the emergence of new forms of value which go beyond the traditional profit and loss account and include those linked to brand, intellectual capital and business ethics. The implications for companies are that:
* the views of a diverse group of stakeholders, including investors, consumers and employees, can affect their value;
* innovative approaches to measuring and reporting are required to satisfy stakeholders, and;
* employee-related issues are seen as being even more critical to the generation of stakeholder value.
Two areas frequently cited in this context are organisations' employee training and work-life balance policies. The level of training investment, for example, is among the eligibility criteria for companies appearing in the Dow Jones Sustainability Index while employee surveys conducted by Fortune magazine and the Great Places to Work Institute identify training and work-life balance policies as key issues for employees.
Given this new context, PwC has surveyed Human Resource (HR) leaders from over 1,000 organisations in 47 countries in order to understand their perspective on key issues linked to CSR. This is the first time that such a wide group of HR leaders has been questioned on this topic. The survey aimed to examine four key questions:
* How do HR leaders perceive the social reputation of their organisation and what do they consider to be the most important factors influencing it?
* What responsibility do they believe the HR function has for the social reputation of their organisation?
* How do organisations' employee policies and practices related to training and work-life balance link to social reputation, and how are they evaluated and reported?
* How do organisations currently approach the reporting of their general employee policies and practices and employee-related CSR, and what future developments are likely?
HR leaders' perceptions of social reputation
Among HR leaders 84 per cent feel that their organisation has a positive social reputation either 'to a great extent' or 'to some extent'. As Figure 1 illustrates, when asked which factors influence social reputation, 75 per cent identified the provision of a healthy and safe working environment although there are significant differences between regions. European respondents also consider that 'acting responsibly towards all stakeholders' and 'good environmental performance' are key to social reputation. By contrast, Northern American organisations consider that 'support for community projects' and 'charitable contributions' are significant.
HR leaders in the energy and utilities and consumer and industrial products sectors also identify 'environmental performance' as a factor influencing social reputation. Other sectors in general identify fewer factors as important to social reputation.
The HR function's responsibility for social reputation
Reflecting the diverse drivers of social reputation, three quarters of organisations in the survey believe that the HR function shares responsibility for managing social reputation with other business groups. Around eight per cent of HR leaders feel the HR function has full responsibility in this area. The majority of the latter are in Central and Eastern Europe.
About seven per cent either do not know or state that no one has responsibility for the social reputation of his or her organisation. …