Treasury Today Country Profiles in association with Citi

Don’t just tick the CSR boxes

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Corporates may once have viewed their approach to people and society as less of a concern than hard numbers. But expectations have changed; businesses can no longer ignore their role in society.

In the face of rising levels of automation, the quest for new skills, ageing workforces and tightening labour market, the spotlight is shining on the evolving role in society of corporates.

According to Deloitte in its 2018 Global Human Capital Trends report, “The Rise of the Social Enterprise”, human capital priorities are being reshaped. It states that there is still a long way to go to meet societal expectations but argues that building a more social enterprise “will be a differentiator for businesses to attract the right talent, drive customer loyalty and sustain long-term growth”.

Organisations are increasingly expected to be a force for social good – externally for customers, communities and society, and internally for employees. Deloitte proposes that “true social enterprises must take a total stakeholder approach to pressing public issues to maintain reputation and relevancy”. CSR has become the philosophy which defines the relationship between the company and its stakeholders.

Corporate citizenship

According to the report, 77% of respondents cited ‘citizenship’ as important or very important. This is driven in the main (says Deloitte) by the millennial demographic’s higher expectations for corporate responsibility. However, although there is a strong suggestion of a correlation between corporate social impact and financial performance, only 18% of respondents say citizenship is a top priority in corporate strategy. In fact, 34% said they had few or poorly funded citizenship programmes, and 22% are not focused on this at all.

Workers unite

The shape of the workforce is changing. By 2020, 37% of organisations expect a growth in contractors, 23% in freelancers and 13% in the short-term contract gig economy. But only 16% reported the adoption of policies and practices to manage this variety of worker-types. Deloitte says it is critical to successfully implement hybrid workforce strategies “because they can have a significant impact on an organisation’s employment brand and external reputation”.

Building new career models and skills is cited as very important for 47% of those surveyed. However, 54% do not have a programme in place to achieve the right skill-set in the future. Just 18% feel employees are given career-development opportunities. “Companies need to work to develop and implement robust solutions to decrease the growing skills gaps,” states Deloitte.

Around 43% of respondents say a focus on employee well-being reinforces their organisation’s goals, 60% say it improves employee retention and 61% claim it drives productivity and bottom line results. But then only 3% thought their reward systems are very effective at motivating talent. More frequent rewards and other incentives, like holiday time, should be explored by companies engaging as a social enterprise as a means of talent acquisition and retention, Deloitte advises.

Robots and humans

More than 40% of firms believe automation will have a major impact on jobs and just over 60% are actively redesigning jobs around Artificial Intelligence (AI) and robotics. 72% of respondents rate AI as important or very important.

Of senior executives though, 63% recognise a growing need in their organisations for the complex problem-solving skills of humans. Cognitive abilities (55%) and social skills (52%) rounded off the top three human needs.

These skills will be essential. Some 70% of executives believe collaboration platforms will play a major part in the working day of employees in the future and 67% believe the same of ‘work-based social media’. For 47%, the productivity of the hyperconnected workforce is a very important issue.

AI, robotics, automation and the concurrent development of human skills must match the need for increased productivity, say 72% of respondents. However, only 31% are ready to transform and redesign how work gets done to leverage the blend of human skills and technology needed to stay ahead of the competition.

Data responsibility

As part of this push for technology and connectivity in the workplace, Deloitte says ‘people analytics’ has become a leading issue for executives. Although 84% of respondents rate this as important or very important, only 10% feel ready to deal with the challenge. And whilst 64% of companies actively manage legal liability related to people data within their organisation, only 22% claim to have excellent processes to safeguard this data.

Businesses that do not have the right processes in place are exposing themselves to additional risks that could threaten their status as a positive social enterprise, comments Deloitte. With so much media focus on data misuse, this warning is not to be ignored.

Stakeholder respect

A Deloitte spokesperson commented that the social enterprise “is not about check-the-box CSR initiatives, but integrating citizenship, fairness, inclusion, and purpose as core values across work practices”.

If the success of a company depends on maintaining a strong relationship with its stakeholders, managing that relationship has become an essential tool for value creation. Given the increased level of understanding, awareness and expectations of stakeholders, treating CSR as a box-ticking exercise is likely to be detrimental to that relationship and, ultimately, the bottom line.