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Paper [OCTOBER 2010]

Corporate Social Responsibility & sustainability

- The new challenges for HRM -

What are the advantages? 10

Role HRM 17

HR initiatives 19

Think tank 22

Cases : Umicore, City of Gent en Philips 34

Published by

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 Content
3 Preface: Can HR save the world?
8 A closer look at CSR
8. Transparency and accountability
9. ISO 26000
9. SA8000 standard
10 What are the advantages?
10. The importance of reputation
11. Internal staff are the most important ‘winners’
12. Why the modest success?
12. The added value of CSR
12. Criticism and comments
14. Is the ROI question relevant?
14 CRS and sustainability policy: variation rules
14. Opinions and definitions from the field (testimonials)
16. HR information is often brief or absent in sustainability report
17 Should HR play a role?
17. Testimonials from HR and CSR professionals
18. Roadmap to integrate CSR and HRM
18. Why HR professionals (should) take CSR programmes seriously
19 HR initiatives within CSR and sustainability
19. General
20. Recruitment & selection
20. Training & development
20. Compensations & benefits
21 Bottlenecks and critical success factors
21. Bottlenecks
21. Critical success factors
22 Think tank sustainable HRM/business
22 Sustainable HR: global reflections and thinking
22. ‘Sustainable HR is still in its embryonic stage and fragmentary’
24. Peggy De Prins: four approaches
25 Recruitment & selection
25. ‘The methods used by headhunters and recruiters are sometimes at odds with sustainability’
27. Wouter Beel: ‘Off to Human Responsible Management’
28 Compensation & benefits
28. ‘A sounder wage system is not possible without first differentiating responsibilities’
30. Walter Janssens: ‘Internal equity has a greater impact on engagement than the amount
of compensation’
31 Training & development
31. ‘Sustainable development also addresses target group diversity’
33. Jan De Visch: ‘Often training misses its target’
34 Cases
34. Umicore: from historical ‘polluter’ to leader in sustainability and CSR
37. City of Ghent: Sustainable human resources and sustainable urban development go hand in hand
40. New remuneration system turns Philips into a more sustainable company
43 Sources – bibliography

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 Foreword
Can HR save the world?

An old Flemish/Dutch saying goes: “He who does good, will meet good” (‘Wie
goed doet, goed ontmoet’). It may sound rather sentimental and old fashioned,
but it does reflect what CRS and sustainable business practices, at least to a large
extent, are about. In English, this proverb could be just read ‘don’t be evil’. It is also
the title of one of the recent good and strongly inspirational publications (only to
be obtained on the internet) that we see as part of the editing process of this White
Paper. This creatively designed e-book has come into being on the initiative of a
think tank (ViNT) attached to an IT company (Sogeti Nederland)

This very readable digital book discusses the question that is often left out from
publications, but also from debates on sustainability of the planet and the
economy: the need for thorough reform or at least a considerable adjustment -
including better regulations - of the economic system and not only the banking
system. The e-book cites scientists and business people who are asking themselves
whether it is not high time for a change in economic paradigms. The majority give
a positive answer; some of them are very cautious and leave the answer in the
middle. It was unthinkable not so long ago that this kind of debate would take
place in a business environment.

Now at this particular time business people and policy makers who do not
emphatically plead for economic reforms are making harsh comments on certain
aspects of the current economic system. Those aspects are called excesses,
but some people, not necessarily dogmatic Marxists, consider them to be the
essence of, or at least inherent to, the present system.

Now, all kinds of critics (of both a Liberal and Christian democratic political
persuasion, for example the German Chancellor and the French President)
question or even denounce matters that were considered until recently to be
‘holy cows’ for the political and economic establishment. A couple of examples:
what has been described as the biased focus on profit maximisation, the extreme
remuneration of some top manager and when there is an expansion of the
business, the unexplainable and irresponsible huge difference between the lowest
and the highest salaries in a company (the so-called wage differential), the failure
of self-regulation and the lack of control in the financial sector and the shortage
of (self) critical thinking in many boardrooms, not only banks. Of course, this is not a
limited recital, but rather a random selection of the most occurring and important
findings and reproaches levelled at the business community. When the leaders of
the business community start to formulate such matters then they undermine the
status quo.

It is not so long ago that such discussions were only found in social, critical
magazines with a small circulation and in publications that were not impressed with
the business community. Today they are accepted as being bon ton - published
in renowned magazines and presented by respected executives and consultants.
They can be read, in the same business press, in columns and articles of reputed
economists such as Joseph Stiglitz and Paul Krugman, who both received an

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 award for economics by Swedish National Bank (the equivalent of the Nobel Prize
but then in the field of economics).

Quite a few of these critical voices see the recent financial and later economic
balderdash as well as the ecological challenge facing us, as an extreme moment
to deal with matters in all kinds of fields in a completely different way even a
fundamentally dissimilar manner.

Tim Jackson (professor of sustainable development at the University of Surrey in the

United Kingdom and reporter for the Sustainable Development Commission of the
British Government) is one of those people who brings up the necessary continual
economic growth for discussion and pleads for “Prosperity without growth”. This
is also the title of his recent book which the Financial Times called ‘one of the
most important books of the year’ in 2009. The (blind?) faith in the necessity of
continuous economic growth in combination with the (naïve?) conviction that the
earth can continue carry this load, is one of the most important pillars of present
day economic thinking. Besides, this vision is not the exclusive property of the
Western or capitalistic world, because the followers of economies with a large to
high government interference (such as the Chinese and Russian economies) also
subscribe to this.

Take note: the title of Jackson’s book is somewhat misleading. The man and his
fellow believers of the independent British think tank New Economics Foundation
(NEF) are not completely against economic growth and ditto investments. But
according to them, these must geared towards energy security, an efficient in-
frastructure and conservation. The role of the government in all this will be very
important. Every invested euro may not discharge any carbon - in fact it should
absorb as much carbon as possible.

According to the supporters of this point of view, we should start looking for a
‘workable version of prosperity’ that is based on one thing: self-development
with ecological boundaries. Tim Jackson does concede that the concept of this
society on a macro-economic scale must still be invented. At present, there is
no theoretical model of the workings of an ecologically and socially sustainable
society that rests on a stationary economy. This ‘turn around’ of our present
economy, also called the transition to a sustainable economy, demands radical
changes in many other social fields and in the fields of ethics and morals.

That the ‘eyes‘ of some of the captains of industry have recently been opened as
a consequence of the bank crisis, and that they dared to speak openly about their
failings, can be read in an interview with Trude Maas-de Brouwer that appeared in
the weekly “Vrij Nederland” last year. This grande dame in ‘corporate Netherlands’
was very frank for someone with such a high profile and fairly hard on some of
the company top dogs, especially those in banking. ‘It was impossible to have
the bankers keep their feet on the ground’ she said. She also showed some self-
criticism: ‘I regret that I did not nag enough about career management within
ABN AMRO.’ For the last ten years, Mrs. Maas-de Brouwer has been the president
of the Board of Governors (in Belgium Board of Directors - de Raad van Bestuur) of
Philips Electronics Nederland and member of the Board of Directors of ABN AMRO

Mrs. Maas-de Brouwer, the former Social Democrat Member of Parliament, was
the chairperson of Hay Group Vision Society in the Netherlands from 1999 to 2006
- the company she set up as a consultative and discussion platform in the field of

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 strategy, organisation and personnel. The aim of the platform is to formulate new
ideas and insight that will help organisations improve. The platform is an initiative
of the homonymic HR management consultancy Hay Group. The Belgian part of
this HR advisor is involved with the think tank that forms the basis of this White Paper.

Methodical think and study groups on HR and associated matters are thin on the
ground and from a quality point of view not always just as high minded. The think
tank’s output on sustainable management and (sustainable) HRM was set up by
HRMinfo.net (the largest community of and most important knowledge provider
for HR professionals in Belgium). About half of this White Paper is based on HRMinfo.
net’s previous publications and knowledge. And a White Paper may become high
minded. Of course, we say so ourselves. But we say that after having become
acquainted with many, probably most, publications on the subject (including a lot
of papers and reports). Their literature was often a disappointing read.

The HRMinfo.net’s think tank consisted of HR directors and managers of companies

and two government departments, four consultants and one academic. They
met four times (see below for more details). Furthermore, a so-called ‘sounding
board’ was set up that provided feedback on the work done by the think tank and
an online discussion annex brainstorming took place using the Synthetron.

This White Paper is the result of consultation and contribution of nearly a hundred
people: HR professionals, but also people responsible for Corporate Social Res-
ponsibility (CSR) and one academic (working with a Management School and a
specialist in HRM and sustainability). It is the justification of ‘The wisdom of crowds’.
For those people who did not know - this is the title of a book that is insufficiently
known in the HR world. Author and journalist James Surowiecki, who writes about
management and economics for the New York Times, the Wall Street Journal,
Wired, Slate and The New Yorker amongst other journals, wrote the book (published
in 2005).

Thinking about the relationship between HR management and sustainable

management - how HRM can help with the development and implementation
of sustainability and CSR policy - is still very limited. One can even say a rarity.
Besides, reflecting on this matter is still in an embryonic stage, and completely
rudimentary and theoretical. There are a couple of exceptions (such as some
papers in the English published Chartered Institute of Personnel and Development)
that offer little or no concrete practical management hints or insights on how to
use these in practice. The following 41pages area intend to do exactly that. Also,
to act as something inspirational.

There are far too few companies and organisation where HR sustainability and
CSR thinking are being embraced as the initiator or just simply as the partner of this
policy. That is a little strange, even troubling, because sustainable management
is quickly finding its way into the business world. It appears that research carried
out by KPMG and PriceWaterhouseCoopers, among others, shows that it has
gained the attention of and concerning more and more CEOs. Though it has to
be admitted that at present it is the hobbyhorse of early adopters en ‘enlightened
businessmen’.

Yet many companies, both large and small, have drastically changed tack
regarding concerns about the environment and sustainability or at least drastically
adjusted their policies. Some large ones have for example started a Climate

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 Change Steering Committee and explicitly subscribe to the insights and basic
assumption of the Kyoto Treaty (on the reduction of greenhouse gasses). It is a
hopeful sign that such initiatives are taking place at an industrial level. Proof is
the existence of such initiatives is the Climate Group that wants to advise and
assist the worldwide banking sector in the field of climate and CO2 policy. The
number of service organisations that wish to give advice (provide expertise) and
assistance in the field of sustainable HRM and the use of HRM techniques and
resources with regard to sustainability policy and CSR policy can still be counted
on one hand, worldwide. This has to do with the still weak demand for that kind of
service or involvement.

The contemporary view is that CSR goes hand in hand with sustainable
management and with sustainable organisations as a whole. This is because
non-profit organisations, such as governments and NGOs, can apply and adhere
to the CSR principles just like normal companies. CSR consists of deeds not just
paying lip service to a principle. It is a fighter. Some companies and organisations
still think that CSR and sustainability are the concern of Public Relations. This way
they show that there exists a very wrong idea about PR. Well understood PR is after
all ‘be good and tell it’, with the accent on the first part of the sentence. Thus, we
come full circle from where we started - be good to others. Be good to people,
the planet and to business.

This cannot be done without a profit. Profit is not a dirty word but an absolute
necessity for the company’s continuity and for all economic activities. Simple.
Today there is a large worldwide consensus about global warming, excepting a
number of ideological hardliners and negationists of the ‘inconvenient truth’. In
brackets: in the meantime Bjorn Lomborg, the Danish scientist and sceptic of the
warming theory, has also grasped what has already been proven for the majority
of scientists - that if we continue with an unaltered policy on CO2 emissions, we
are heading for a downright catastrophe and drastic measures are necessary.

No a priori antagonistic antithesis exists between cost-effectiveness and sustainable

management and sustainability in general. However, there is an area of tension
where it boils down to look for and find equilibrium. Not an easy task, but it can
be done. And it must be done. Should all the interests of all stakeholders be in
balance, and this must be more than is the case at present, this profit must be
fair. In addition, today this is not always the case. What should people think about
the fact, that two years after the bank crisis, the 600 largest companies in Europe
appear to possess 500 billion euro in cash (according to the Belgian business
newspaper De Tijd of 12 August 2010). In addition, the number of millionaires in
the world has increased especially in China and India.

Who knows - the CSR policy may lead to a more fair and acceptable division of
the wealth that can be emphatically quantified and measured. Just like a salary
range - the difference between the best and least paid employees - should form
part of a policy; just like promotion and the design of social innovation. These are
important issues and tasks for the HR department

HR could keep itself also busy with opening up the broader interpretation of the
term governance within companies and organisation. Should an ethics committee
be set up along a Board of Directors and a committee on salaries?

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 These thought on (more) HR participation and leadership when developing and
designing CSR and sustainability policy, would give HR a chance to finally realise
its benefit within organisations. This is really necessary. After all, all studies show
that HR has a ludicrous image problem, not only with CEOs, but also with line
management and employees. It is not seen or insufficiently seen as a strategic
partner, let alone a business partner. HR is unable to show its benefit properly.

CSR and sustainability offer HR the chance to turn the tide. Furthermore, it demands
that HR ponders its own sustainability and its identity. That is also necessary. In other
words, HR will have to become sustainable and strategic or it will disappear.

Marc Ernst
director BizInfo – publisher of a.o. HRMinfo.net

Representatives from the following companies and organisation formed part of the think tank or the
sounding board of HRMinfo.net on sustainable HRM and business : KBC, SD Worx, Indaver, OC-ANB,
Alpro, Max Havelaar, Universiteit Antwerpen Management School (UAMS), Cerm-HR, Hay Group,
Carrefour, de Federale Overheidsdienst P&O, Umicore, AG Insurance en Transform & Connect, Suez
GDF, BNP Paribas Fortis, Vlaams Agentschap voor Overheidspersoneel, Belgacom, IBM, Northgate
Arinso, VDAB, Aviapartner Aero, Randstad, ING, Hogeschool-Universiteit Brussel, Cargill, Trias, Sodexo,
Sara Lee, USG Innotiv, Hamburg-Mannheimer / ERGOLife en Colruyt.

The following people took part in one or more sessions of the think tank: Elly Kog (KBC); Hanna Zijlstra
(SD Worx), Marcel Ceulemans (Indaver), Lore Van De Winkel (OC-ANB); Karolien Vanneste en Ellen
Roels (Alpro); Sylvie Walraevens en Els De Mol (Max Havelaar); Peggy De Prins (Universiteit Antwerpen
Management School – UAMS), Paul Meijer, Winanda Nuyttens en Walter Janssens (Hay Group); Wouter
Beel en Felke Hamerijck (Cerm-HR); Griet Leynaert, Elisabeth Moumal en Peter Desauter (Carrefour);
HildeVerbeken en Kathleen Vanmullem (Federale Overheidsdienst P&O); Mark Dolfyn (Umicore) en
Inke Daems (AG Insurance).

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 About this publication

HRM White Paper is published by BizPlaza.eu

(www.BizPlaza.eu).

BizPlaza.eu is a European platform for communication,

knowledge sharing and networking. It is primarily, but
not exclusively intended for professionals from the 27
member states of the European Union, the EU accession
candidates and other European countries.

BizPlaza.eu is a service/product of BizInfo (www.biz-info.

eu), a community creator and knowledge provider
based in Ghent, Belgium.

For ordering the full version and for more info or a

complimentary excerpt (executive summary) from HRM
White Paper: www.biz-plaza.eu/whitepaper2.

For more information about other White Papers of

BizPlaza: www.biz-plaza.eu/whitepapers

Address:

P.O. Box 67, 9000 - Ghent (centr.), Belgium

Tel.: +32 (0)9 324 8659
Email: management@biz-plaza.eu
URL: www.BizPlaza.eu

Contributors to HRM White Paper: Ilze Raath, Barbara

Vandenbussche, Yves Martens en Marc Ernst.

© BizPlaza/BizInfo gcv
Without prior written permission from the Editor, this publication, either in
whole or in part, may not be reproduced and/or distributed (except brief
passages for journalistic purposes, such as reviews), by electronic or any
other means.

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