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Published April 2008

Corporate Responsibility's Impact on Talent Management

Beth Kniss

 

Spawned from increased public awareness of such global issues as climate change, consumer product safety and rapid industrialization, corporate responsibility — a concept in which organizations feel an obligation to consider and operate in the interests of customers, employees, shareholders, communities and the environment — is becoming mainstream.

The history of formalized corporate responsibility in the U.S. is heavily rooted in a series of corporate scandals uncovered in the 1980s and 1990s. This resulted in new U.S. legislation when corporate giants such as Enron and WorldCom, among others, received worldwide attention when it was uncovered they had lied about their financial strength through inaccurate financial reporting and wrongdoings by corporate officers.

American confidence in the ethics of big business was seriously shaken. The Sarbanes-Oxley Act (SOX) was passed in 2002 and became known as the Corporate Responsibility Act. The goal was to institute a uniform system of corporate accountability and disclosure for U.S. public companies that was firmly backed with compliance and audit procedures. Additionally, corporate officers became criminally responsible for their companies financial reporting errors, and subsequent U.S. sentencing guidelines have been established, creating a formula for corporate criminal fines.

The notoriety of a few dishonest organizations and the resulting scrutiny have helped the corporate responsibility industry grow to a $20 billion dollar market in the U.S., according to the Corporate Responsibility Officer (CRO), a leading corporate responsibility membership platform.

As the industry has emerged, professional associations have been born, launching conferences, Webinars and magazines as communication vehicles.

CRO launched in 2006 and has more than 100 corporate members, including Pepsi, Starbucks, IBM, Citigroup, Intel, Dell, Avon, Gap, Washington Mutual, Mattel, Stanford, Harvard, Columbia and many others. The Business for Social Responsibility (BSR) was created in 1992 with the goal to create a more just and sustainable global economy. Headquartered in the U.S., the BSR is a nonprofit business association with more than 250 member companies.

Considering the penalties to pocket and reputation related to a lack of corporate responsibility, the impact on talent management is increasingly visible as more corporations examine the value in this practice. The Conference Board reports that two-thirds of surveyed corporations feel corporate citizenship and sustainability issues are of growing importance for their businesses.

This likely is because corporate responsibility's biggest impact hits businesses at their core. A trend is solidifying, and organizations now are executing corporate responsibility as a piece of their business strategy. The once rare, even faddish practice is taking its place beside more established human capital management strategies that talent managers leverage to impact their employees and the bottom line. Consider the following:

• In 2007, BSR reported 82 percent of private sector executives, NGOs and policymakers are optimistic companies around the world will make corporate social responsibility a core business strategy in the next five years.
• Grant Thorton's 2007 Corporate Responsibility Survey found 77 percent of business executives expect corporate responsibility initiatives to have a major impact on their business strategies during the next several years.
• Seventy-five percent of surveyed business executives believe corporate responsibility could enhance profitability.
• Weber Shandwick's 2006 Safeguarding Reputation report said 79 percent of global business executives believe companies with strong corporate responsibility track records recover their reputations faster post-crisis than those with weaker records.

Talent Management Benefits

 

 

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