December 9th 2019

CRFCast – Responsible Business: How Can HR Drive the Agenda? with Professor David Grayson

In conversation with David Grayson, expert in corporate responsibility and sustainability, we discuss CRF’s research Responsible Business: How Can HR Drive the Agenda? We explore the latest trends, how corporate responsibility interacts with employee experience, the critical role of leaders in promoting sustainability, and how HR should attend to organisation culture in order to successfully embed responsible business strategies.

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Episode Transcript

Gillian Pillans [00:00:03] You're listening to the CRF cast where we explore research we've been working on here at the Corporate Research Forum and we discuss the latest thinking and strategic H.R. topics with academics, practitioners and leading experts in the field. I'm Gillian Palin's research director at CRF. You can explore the full podcast archive and subscribe for updates by searching CRF cast on iTunes or Spotify. You can also find more about CRF and access all our podcasts and other research materials. W w w dot c.r. forum. DOT co. UK.


Gillian Pillans [00:00:48] My guest on today, CRF Cast is David Grayson, professor emeritus of corporate responsibility at the Cranfield School of Management and co author of Serious Research Report Responsible Business. How can H.R. drive the agenda?


Gillian Pillans [00:01:03] We'll be talking about what we mean by responsible business, latest trends in sustainability and corporate responsibility. And we'll be exploring the implications for H.R. leaders.


Gillian Pillans [00:01:16] David welcome and thanks for being with us today. Delighted to be so. Let's talk about the whole agenda of responsible business. So we we find that this has really come up the agenda and that was one of the conclusions of our research. So, for example, the whole concept of organizational purpose is something that said we find our members are talking about a lot. It's become really prominent. And even just recently we saw an example of this with the Business Roundtable, the CEO lobby group in the US, talking about them moving away from shareholder value as the as the primary goal of organizations towards taking a much broader view of stakeholders, including employees, community suppliers, etc.. So what do you think is going on in the worlds of responsible business and and what are the main drivers behind the changes that you're seeing in this field?


Prof David Grayson [00:02:05] So I think it's not so much what's going on in the world of responsible business. It's just what's going on in the world and how is that impacting on business and why is that leading many more businesses to think through? What responsibilities do we really have for our social and our environmental and our economic impacts? And I think there are some really great megatrends, some global forces for change. Any one of which on their own would be having a profound impact on the way that business has to organize itself and behave in in society. But it's because of the combination and the interrelationship between revolutions in the market place in terms of technology, revolutions, in terms of demographics and development and particularly, of course, of of climate emergency revolutions. Also in terms of values. But it's the way that all of those things interact. I mean, we're recording this podcast just after Greta Hamburg has harangued the world's leaders, including President Trump, that they're really not doing what they should be as global leaders. I mean, I think the whole phenomenon of these schoolchildren strikes around the world.


Prof David Grayson [00:03:17] Here you have a younger generation that is seeing around them already. The consequences are very profound human generated climate change and who are deeply concerned about the consequences of it. So that's one really big force that I think is is is going on. I think also there is a recognition that particularly the big global companies are the ones that have a global reach more than most governments in the world. And with that massive reach, with the power of those global brands, comes responsibility.


Gillian Pillans [00:03:57] It's a really interesting point because we see this with the discussions around the Paris climate accord. It's very difficult for one government to unilaterally decide to go in one direction without some sort of global coordination. So in some ways where the paralyzed, as you say, is with these global businesses, that that can impact and influence across a much broader sphere than one single government.


Prof David Grayson [00:04:23] I mean, I think what is really interesting and and what's going on in in New York this week in terms of the U.N. General Assembly and the climate summit associated with this year's General Assembly and so on, is that in addition to all of the the school children's protests around the world, you've also got another statement by a group of global business leaders saying that we really need to have more action on on on on climate change much, much faster. A group of leading international financiers making similar points and talking about the fact that the international finance system needs to get behind better action and faster action on on on on climate change and so on. So I think the reality is that no one institution on its own, no one group of actors on their own can bring about the necessary changes.


Prof David Grayson [00:05:19] You have to have more effective collaboration across the sectors. I think for particularly for bigger businesses, this sense of of how do we collaborate effectively with other businesses on things that are not competitive between businesses, which are fundamental for the licence to operate for business and also the circumstances in which they will do business. I mean, there's not much good business to be done on a dead planet, frankly.


Gillian Pillans [00:05:50] Let's get into a little bit more detail around the sort of actions that organizations are taking. So we've talked about the context and the opportunity. But how does the corporate agenda look today? Where are organizations really focussing their activities that you would particularly highlight?


Prof David Grayson [00:06:06] So I have been not just looking at this, but also been working with with businesses around the world, working with responsible business. Coalitions and so on for. For many years, helping to run one in this country for for it for a few years and so on. And now chairing at an Institute of Business Ethics, which is also very much working in all of this space. So I think there are a number of things which the leading companies are now doing. You taught Julian earlier about the growing interest in what is the purpose of a business. And when global newspapers, global business, newspapers like The Economist and the Financial Times are now running editions talking about what is the purpose of the firm? Then I think we all have to recognize that this is now in the Zeit Geist. I think we need to be very clear what people are saying around all this. It's not something that profits are not important. Of course they are, because ultimately if you don't have a profitable business, then you will not have a business.


Prof David Grayson [00:07:07] So of course, profits remain important. Of course, if you have shareholders, you have to treat shareholders fairly. But in order to treat shareholders fairly for the medium to long term, you, first of all, have to respond to meet the wants and needs of customers in order to do that. You've actually got to have employees who love their job, who are really engaged with their job, who will go the extra mile or the extra kilometre for their customers in order to do that. Most big businesses and most smaller businesses do nowadays need a whole range of business partners and suppliers. If they are going to be able to fulfil the needs of their customers and therefore to produce profits in the long term. So I think in a sense this idea of saying so are you in favour of the shareholder theory of the firm or are you in favour of the stakeholder? The theory of the firm. I think really is a rather kind of anachronistic way of looking at it, because in order to deliver long term shareholder value, you have got to deliver on stakeholder value as well. So I think that is quite right. More organizations and you quoted the Business Roundtable. But there were lots of other groups as as well. Now in the UK, we have a great organization called Blueprint for Better Business, which has been championing this idea of organizations thinking about their purpose. It's the first thing really is organizations identifying why really are we here? And a purpose statement isn't just a few kind of words picked out of the source. It is if it's going to be worthwhile, something which has to be inspiring, it has to be authentic. And it must also be practical in helping boards and management teams to make the difficult decisions. That's the first thing. But then a purpose on its own is is a necessary thing, but it's not sufficient. You then need to give effect to that in terms of having a really effective strategy. And I think, again, the leading companies are now increasingly recognizing that you do not have a strategy around responsible business and sustainability over here whilst they were there. You have the general business strategy. The good companies are recognizing that you've got to get them aligned. Don't do that overnight. It takes time. It takes a lot of effort.


Prof David Grayson [00:09:39] But that's there has to be the direction of travel and the research we talk about built in mother and bolt on that certain lucidly.


Prof David Grayson [00:09:45] Absolutely fundamental to all of this. And of course, in order to be able to make a purpose live and to deliver on on on on an ambitious strategy or plan, you've got to have the right kind of culture. And this is where I think the human resources professionals, the people who are thinking about what kind of leadership competencies do we need for the twenty twenties and the 20 thirties who are looking at what's our high flyer development program going to going to look like? What are the key things that they need to have thinking about how they're advising their organizations about recruiting for values rather than just for technical skills? All of those kind of things which help an organization to really deliver and create and sustain a culture which is affirming and which is engaging and empowering is responsible and innovative and so on. Those are all core things where a human resources professional can have a bigger impact. Not saying that human resources professionals are going to run this responsible business approach, but they can play a much bigger role if they do it right.


Gillian Pillans [00:10:56] Are there particular examples that you could share of what some of the more enlightened organizations can do to sort of bring these these ideas of the key steps to life?


Prof David Grayson [00:11:08] So I think I mean, one of the companies was Unilever. I have to say as next, Procter and Gamble. Man, I have to really fix my smile very early before I say nice things about Unilever, but they have been a fascinating case study for that for the last few years because it didn't start with Paul Polman, TNG Man instantly. It actually goes back to the original heritage of Lord Lieber and the way in which he envisaged a business that would make cleanliness commonplace. And particularly, certainly my experiences working with people in Unilever around their responsible business approach goes back to the mid 1980s. So I've seen a modern evolution of the way in which a company like Unilever has been getting more and more the built in rather than the the bolt on. But I think what Paul Polman did when he went in in 2019 and was that he then provided a real focal point in terms of of what he called the Unilever Sustainable Living Plan with some big, hairy, audacious goals, doubling the size of the business and halving the environmental impact, the reach that they would have in terms of of small scale farmers around the world and so on.


Prof David Grayson [00:12:34] And what he then did was to get each part of the business to think through, and particularly for a business think through the implications in terms of this Unilever stable, sustainable living plan, in terms of how the business would need to change what it would need to do in order to deliver this strategy.


Prof David Grayson [00:12:52] And I think what was particularly interesting for a brand led business was the way in which they have been getting each of their brands think through. So what is our social purpose and how do we then deliver on that? That social purpose? And also looking to see do we have any brands in the portfolio which can't actually really define a societal purpose? If that's the case over the medium term, can such brands be part of the Unilever portfolio? And Alan Jape, who's of course, Paul Polman successor, has been talking recently about the fact it may well be that some of their brands don't actually make it in terms of being able to be part of the portfolio going forward. I think from an H.R. perspective, what they have been doing then is thinking through. So what are the kind of changes in in our people development programs that we need to make? And I think all the most fascinating things they don't wear. Having done the revision of what is the purpose of Unilever from the original making cleanliness commonplace to making sustainable living commonplace.


Prof David Grayson [00:13:58] Brilliant update of the purpose. And then starting to get each of the starting with the global brands. Getting them to have their own societal purpose. Within that Unilever purpose. Then to give each employee the opportunity to run. To go through a personal purpose workshop. To help them to think through what is my personal purpose generally in life. And how then does the work I'm doing in Unilever fit into that? Or maybe in some cases it doesn't fit in. And maybe I'm not therefore in the right kind of firm. And it was really interesting talking to some of the young employees in Unilever, Israel, about how this had helped to empower them to take the take the initiative in terms of coming up with new sustainable ideas for the business that would be commercially attractive, but we'd also help the environment, help society and so on. That's a win win.


Gillian Pillans [00:14:57] Coming up in the second part of the series cast, David Grayson and I will be discussing how the right kind of leadership can make or break your responsible business strategy. The essential features of organization culture is that enable sustainability and the extent to which reward strategies can support efforts to build responsible businesses.


Gillian Pillans [00:15:22] If you're enjoying the series cast, please subscribe to our channel by searching for the Corporate Research Forum on iTunes or Spotify. You can sign up to get the latest editions automatically and to share with your colleagues and leave us a review.


Gillian Pillans [00:15:39] We've talked about some of the key features of responsible businesses and leadership is a word that has come up multiple times. And again, one of the findings of our research was absolutely critical. Enabler of having a built in responsible business strategy is is having the right sort of leadership buy in and the right sort of leadership behaviours. What role does leadership play here and what do you do? Sanchez As an H.R. leader, if you don't today have the right level of leadership commitment to this.


Prof David Grayson [00:16:14] So you're absolutely right about leadership and ultimately tone from top is important.


Prof David Grayson [00:16:22] And so making sure that the board of a big business or indeed any and any business absolutely gets this, buys into this, understands the implications.


Prof David Grayson [00:16:34] And there's some very interesting research that came out earlier in this year, this year from measles and from from INSEAD Business School, which looked at European boards and suggested that whilst European boards that they had surveyed understood the importance now of responsible business and sustainability. But then they were much weaker on understanding the so what's and how to then implement a lot of this. So there is a question about not so much. I think today the will part of skill will, but there is still a question mark around the skills side in terms of company boards. So it does start from the top. But we in the U.S., the business ethics are about to publish some interesting research with junior to middle managers in businesses. And of course, for most employees, particularly employees in very large companies, when you talk about tone from the top, that's not the global CEO. It's probably not even the country manager or the strategic business unit head or the functional chief technology officer or chief marketing officer. It's the first line supervisor or the first line supervisors boss. That's where a team from the top comes from, from most employees. So it's important what I think we're talking about leadership that we're thinking about leadership not just of love, very top people that you see in the newspapers, on television and and so on. But we're also thinking about how to organizations really train first line managers really well. And if you want an example of a place that I think has done this brilliantly for more than a quarter century, it's it's the unit part group of companies who transformed the business.


Prof David Grayson [00:18:27] And they have played huge, huge emphasis on first line manager training and equipping people with the right kind of mindset and skill set.


Gillian Pillans [00:18:38] And that absolutely chimes with with our researchers here. So we've looked into the broader question of how you develop culture, but it doesn't really come alive unless you have a consistency. And at the at the middle management level and reality, the experience of employees is dependent on who they interact with on a day to day basis. And that's really where culture gets formed. So can we talk about culture specifically in relation to creating an impetus for responsible business? You highlighted earlier on that leadership is important. Culture is essential. So how how does the right culture that really supports and sustains the is the responsible view of business get formed?


Prof David Grayson [00:19:29] So, again, a really, really fundamental question.


Prof David Grayson [00:19:32] I was reading something by one of my great heroes, Charles Handy, at the weekend. And Charles has just got a new book out. Twenty one lessons to his grandchildren.


Prof David Grayson [00:19:47] And one of the points that that he makes in in this new book is about the fact that things like purpose can't just be imposed top down, but they also have to be the result of kind of percolating up.


Gillian Pillans [00:20:03] Got to meet somewhere in the middle or me.


Prof David Grayson [00:20:05] Exactly. And the really clever, successful organizations, I think the ones that really do in the end find that they're built to last are those that get that combination. A good friend of mine, Julia. Talks about this as the cafeteria and the percolator.


Prof David Grayson [00:20:24] So it's both the cafeteria, the cut of the direction and tone from the top end zone, but it is also the discretionary, the voluntary activity percolating up from the frontline, from frontline experiences and so on. And particularly this is the case with a new generation who are much more expecting that they will be able to make their contributions earlier. Old style, hierarchical, do, as I say, is not the way to create this kind of sustainable culture today. I did a book with with a couple of Canadian friends called All Aim, where we talk about what a stable culture looks like. And we thought that there were four kind of critical dimensions of a sustainable culture. Interesting.


Prof David Grayson [00:21:17] Nike very, very well represents this first dimension around the idea that innovation is all about sustainability. Sustainability is all about innovation. So that that kind of sweet spot is really important. But the critical dimension of a sustainable culture is one which is genuinely engaging and empowering. And this, again, is an area where H.R. professionals have got so much that they can practically do. That's around. How do you really engage and empower employees so that they want to come up with ideas, not just come up with the ideas, but champion ideas, drive them forward, things that will help the business, but which at the same time will also improve society, improve the environment and so on. So for a good few years now, I've been an external judge for the better part, Google companies for something that they've been doing for years and years and years. Call them Mark in. Awards and their recognition of people going way beyond what might be realistically expected of them in terms of taking the initiative. Finding a solution when that when there is some crisis for a customer, when something has gone wrong with a piece of machinery or whatever it may be. And I think when you can create a culture where employees don't wait to be asked, they want to be told, but just spot that that something needs to be improved, needs to be sorted out and so on. They take the initiative and they take the initiative because they've got sufficient training and capacity building that they have the tools to be able to do that. And they know that they've got the tools, do something. But they also feel genuinely empowered that this is is something that the organization will encourage them to do rather than actually suppressing them and turning them off because they've taken the initiative.


Prof David Grayson [00:23:17] And the other things I think about a sustainable culture and what we said in All In was that in addition to being a culture where innovation equals sustainability, stable equals innovation and where it's engaging, empowering the culture is also ethical and responsible. So people do understand how to behave and particularly people often talk about sort of ethical behaviour is is how you behave or how you know, how the organization hopes you will behave when no one's watching you. And in order for all of that. The other dimension of stable culture is around being open and transparent. That's not just providing information about what the business does, not providing information about what's in this, what ingredients are in this. This meal. We've got lots of debates now around allergies and our restaurants and fast food chains and so on, making enough information available for people with allergies and so much more awareness about all that. That's one part of it being being transparent in very practical ways, but also being transparent about how much taxes we paid in this jurisdiction where we have made this amount of money as a company and in the last year or last five years or almost ten years and so on.


Prof David Grayson [00:24:42] But also being open in the sense of being open to ideas and suggestions from within the business. So that's the employees, the the the percolator point. But it is also about being open to ideas and potential collaborations from outside. So go on the Unilever website, for instance, and you will see identification of some of the areas where they would welcome proposals from start-ups, from social enterprises, from NGOs, from established businesses where those organizations think they've got some technologies. Some solutions for things that Unilever are struggling with at the moment on their sustainable living plan. Hmm.


Gillian Pillans [00:25:26] Yeah. So it's it's really taking a systems view and getting the whole system to try and solve what are essentially system wide problems.


Prof David Grayson [00:25:34] And this is the fundamental point, I think, and I said if I had any hair left. And obviously, thank goodness this is a podcast, because if you could see me, you'd realize that I'm a bit politically challenged. But if I had any hair left, I would be tearing it out. Every time people talk about we've got our CSR initiatives or our CSR program or what have you. We're not talking about the bolt ons that these these kind of nice works things. They don't get me wrong.


Prof David Grayson [00:25:59] They have their place, but they need to be strategic to what we're talking about here is the responsibility that an organization takes for everything that it does. And does it do it responsibly and fairly and sustainably or doesn't it?


Gillian Pillans [00:26:16] It's interesting going back to this point about how you define ethics and it's the sort of behaviour that people exhibit when no one else is looking. So there's this sense of an inner compass that is required, whether that's something that can be developed or is innate. And the culture that you create within the organization will will give it a strong sense of of what that inner compass is. One of the other things that H.R. can influence are things like rewards and the motivators that encourage the right sort of behaviour. And we know from motivation theory that intrinsic motivation is is clearly much more effective than that external motivators. But I wonder, is there a role for the rewards and recognition side of a really, really, really important.


Prof David Grayson [00:27:11] We we're recording this podcast in the immediate aftermath of Thomas Cook going into receivership.


Prof David Grayson [00:27:19] It does seem that there are some really interesting questions, important questions to be asked about the the bonus system that must have been presumably signed off by the REM CO and the and the main board of the company.


Prof David Grayson [00:27:34] I think it's not just the role that bonuses play for the individuals who might qualify for the bonuses, but it's also the signals that it sends to other stakeholders.


Prof David Grayson [00:27:49] You just imagine that you're a holiday makers stranded in the Canary Islands and you read these stories about the top leaderships bonuses and so on. You probably aren't going to be giving them the benefit of the doubt. So I think the the role that benefits and compensation colleagues can play in, obviously they don't ultimately set these things. But in terms of giving really strong advice and stairs and getting the whole benefits and comps field to be thinking much more creatively and sharing experiences and emerging practice around how do you build the right long term incentives, because all that we're talking about is predicated on an idea that we're not thinking about. Can you massage the figures for the next quarter or the next quarter's results and things? But how do we build a business that at least has a fighting chance of continuing into the indefinite future?


Gillian Pillans [00:28:53] So, David, any final thoughts, advice, inspiration that you would share for H.R. leaders in particular who are really keen to support in advance their responsible business agenda and their organizations?


Prof David Grayson [00:29:07] So I think really important message is that for those H.R. professionals who want to play a bigger role and why on earth wouldn't you? Because this is an incredibly exciting agenda. Quite a lot of the the big items in terms of responsible business are right in the heart of the H.R. field anyway, in terms of employee well-being, mental health and in the workplace, in terms of being able to encourage employees with with with with long term employability, some of the new ideas or new ideas around midlife M.O., tease on your careers and so on for a much longer working life. All of those things right in the heart of the H.R. domain. But there's a potential to play a bigger role if you have the understanding about what do we really mean by responsible business and sustainability and therefore, how can I actually play that bigger? Well. I think the first thing to do if you're not already working really, really closely with the chief sustainability officer or the director of corporate responsibility or. Whatever is the the job function descriptor in your organization is rarely to be seen to be sitting down with them and to be looking at what is our common agenda. How together can we really drive this and make this much better through our organization?


Gillian Pillans [00:30:41] Let's take a moment to summarize the key messages of my conversation with David Grayson. First, the interaction of various trends, including changes in society, technology, the environment and perceptions around the rule of business is leading to a much greater interest in sustainability and corporate responsibility as critical issues for organizations. Companies that are investing in responsible business strategies are finding not only that it's the right thing to do, but it can also be good for business. Second, a good place to start is by clearly defining the purpose of the organization. Having an inspiring, authentic and practical sense of purpose that goes beyond simply making money can provide a compass to help boards and management teams make good decisions in turbulent times and can also be highly engaging for employees, customers and partners of the organization. Third, the right leadership attitudes and behaviours are essential. Setting the right tone at the top is necessary, but not sufficient. It's how employees and lay managers interact day to day. That really makes the difference in terms of sustainability strategies gaining traction.


Gillian Pillans [00:31:55] Finally, the organization culture will be pivotal to other responsible business strategies, succeed or fail.


Gillian Pillans [00:32:02] Cultures that support sustainability tend to have common features, including an empowering context where employees are encouraged to take the initiative on new business ideas and ethical culture, where people do the right thing even when no one is looking and open and transparent communications. If you'd like to find out more cigarettes, report responsible business. How can H.R.? The agenda is available on the CRF website at w w w dot.


Gillian Pillans [00:32:31] See our forum dot co dot UK. Also, David's most recent book All N is available at all good booksellers. My thanks again to Professor David Grayson for taking the time to talk to us today.


Gillian Pillans [00:32:49] You've been listening to the CRF cast with me, Gillian Pillans, research director at CRF. You can find out more on our Web site at W W W Dot C R Forum dot co dot UK. Follow us on Twitter at C underscore our underscore forum or join the serious group on linked in by tonight. And thanks for listening.

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