ORC Sightlines

April 2003

ORC Raises Corporate Social Responsibility Issues

In the US high-profile fraud cases have turned a spotlight on corporate probity. Issues of corporate governance and behavior have never been more on the minds of American lawmakers, business people, and the general public. Meanwhile, the European Union and the United Nations have both been considering how corporate social responsibility (CSR) might best be guaranteed throughout a company’s supply chain, and an ever growing list of non-governmental organizations has been increasing pressure on companies regarding CSR issues (the environment, labor rights, etc.). Without prodding from external bodies, many larger companies committed to good corporate citizenship have put CSR on their agendas. Nevertheless a degree of popular mistrust of global business as a whole and specific allegations of company complicity in human rights abuses in some parts of the world ensure continued visibility of CSR and a growing impact of CSR concerns on the HR function and on companies’ approaches to global workplace policies.

At two recent ORC briefings for HR professionals, many participants were surprised by the complexity of CSR issues and by the growing numbers of players in the field. A burgeoning collection of non-governmental and campaigning organizations, human rights activists, church and faith groups, ethical investors, labor unions, international governmental organizations, and national public policy initiatives present multiple and sometimes contradictory challenges to companies shaping a CSR policy.

Currently, only a modest number of companies are actively engaged in CSR activities outside of initiatives benefiting their local communities or applying internal business conduct guidelines. Particular exceptions include companies producing highly branded goods and thus susceptible to “name and shame” campaigns and consumer boycotts. But the pressure is steadily growing on all companies to show their credentials, not only in environmental protection and sustainable development, but also by embracing human and labor rights positions and standards (some of which are contrary to US law). Labor unions have become very active in pushing these objectives and projecting themselves as the natural workplace partners for socially responsible employers.

In ORC’s view, companies are likely to see two trends develop: greater emphasis on involvement of the entire supply chain in CSR efforts and use of independent external monitors. At present, the few organizations that engage their supply chain in CSR largely limit their efforts to encouraging good practice rather than rigorously monitoring supply chain compliance, and what monitoring is done tends to be performed internally.

ORC urges HR leaders to take cognizance of the issues and become involved in their organizations’ CSR efforts. Many companies have already established internal jobs at senior levels to deal with CSR or aspects of CSR issues. However, if the business is to successfully respond to this new challenge, HR input is necessary to help develop effective, responsive management processes and integrate labor and other HR specialists in the process.

For more information on corporate social responsibility, contact Philip Sack, philip.sack@orcww.com (+44 (0)20 7591 5609).

HR Metrics Front and Center

HR metrics has been a topic of intense interest in most ORC network groups. HR leaders are trying to figure out not only the best way to measure return on investment of their programs and processes, but also how to identify economic and social trends that will affect the workforce and impact their companies’ ability to accomplish business objectives.

Last month, members of the Human Resources Solutions Network (HRSN) focused their attention on this subject. Their discussions on HR effectiveness metrics revealed a tension between two basic approaches. Some companies work with the kinds of measures developed by firms such as Hackett or Saratoga that appear to allow companies to benchmark against each other, especially regarding costs of delivering services. Many of these measures, while useful as a rough guide, do not allow apple-to-apple comparisons because of differences in organizations, structures, and means of allocating and gathering data. Therefore another approach is developing that is more customized and focused on an individual company’s specific situation. In this internal approach the company essentially benchmarks against itself, looking across business units and over time to identify the trends that have the most significance for its particular business strategy.

There is also growing interest in performing in-depth statistical studies of the characteristics of a company’s current employee base and future skills and education required, further correlating the data with demographic projections for the regional and national workforce. Gaps between needed skill sets and current and projected availability will then suggest steps the company might have to take relating to staffing and recruiting, organizational development and effectiveness, diversity management, compensation and benefits, and so forth.

Information mined from such analyses has led companies to devise a variety of HR strategies aimed at overcoming anticipated skills shortages. One company, for example, has found that the aging of its workforce and the tendency for the company’s strategy to advance faster than what is being taught in schools will result in serious skills gaps in the future. The company realized that much of the gap will have to be made up with internal training, and HR is ramping up now to be able to provide that training when and as it is needed. Other companies’ approaches include

HRSN is a network of leaders of divisional and business unit HR organizations.

UK Employers Prepare for New Anti-Discrimination Laws

The UK, along with the other 14 European member states, is currently preparing for the extension of anti-discrimination legislation into areas not previously covered. Legislation covering race and ethnic origin, religion and belief, and sexual orientation will be implemented in 2003, and disability and age laws will be in effect by 2006. Many UK employers are concerned that there will not be sufficient time to make the necessary changes to the pension infrastructure and other policies relating to age discrimination.

The Vanguard Equal Employment Opportunity Group managed by ORC’s London office has been working with the UK Government and the equality bodies to identify issues causing concern to employers and to prepare strategies to address them. At Vanguard’s March meeting in London, members debated whether the new measures would permit companies to set compulsory retirement ages and, if not, whether they would be permitted to show an objective justification for compelling retirement in certain circumstances. While these questions remain unanswered, it is clear that employers in the UK will need to develop and manage performance more effectively, rather than relying on compulsory retirement to provide an easy means of exit for poor performers.

Religion and belief is another area where lack of definition is leaving British employers feeling vulnerable. So far, the Government has not specified what constitutes a religion or belief except to say that “belief” does not cover political convictions. Despite the uncertainty, there are a number of practical ways these companies are preparing for the coming mandates. Policies and procedures should be adopted to provide time off for religious festivals and for making reasonable accommodations to permit employees to fulfill the requirements of their religions. Also, employees need to be reminded of their responsibilities as well as their individual rights, especially the responsibility to respect others and maintain a workplace free of intimidation and hostility.

Two ORC memos providing further information on the new UK measures are available:

To request copies or for more information on these subjects or the Vanguard network, contact Deirdre Golden, deirdre.golden@orcww.com.


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