Business and People Strategy and Performance

HRD Briefing 2021: Role of Organisation in Society

  • January 15, 2021
Jennifer Duvalier | Non Executive Director and Chair of Remuneration Committee | Mitie Plc

As much of the UK endures another coronavirus lockdown, the national conversation encompasses diverse topics of wellbeing and mental health, remote working, online schooling, support for businesses and aid for those at risk of financial or health insecurity. These seemingly disparate dimensions are connected by an invisible thread – the question of the role of the organisation in society.

‘VALUE’ AND ‘VALUES’

The line between corporate ‘value’ and ‘values’, in the past sharply delineated as ‘hard, measurable financial value’ and ‘softer, intangible values’, has blurred over the past few years. Companies have taken a broader view of their stakeholders, recognising the inter-dependency between businesses and their employees, customers, shareholders, suppliers and communities. The events of 2020, including Black Lives Matter, Covid-19 and Brexit, have brought these interdependencies into sharper focus and have challenged leaders to review their approach to engaging with an extended universe of stakeholders.

In the Boardrooms of the organisations where I am involved, the time devoted to consideration of wider stakeholder interests has grown and deepened. It has shifted from a periodic consideration of Corporate Social Responsibility, often in the run up to the publication of the Annual Report and Accounts, to an active, ongoing exploration of how corporate purpose is delivered in a way that benefits broader society. This pronounced change from a compliance mindset to a view of stakeholder engagement as an important driver of short and long-term success is set to become an important factor for leadership teams, and HR, to embrace.

Increasingly, investors are asking Boards and executive teams to prove how the businesses they run on behalf of shareholders are acting as a positive force in society, across environmental, societal and governance (ESG) dimensions. Some large investors are directly linking their voting policies on corporate resolutions to corporate policies and disclosure on ESG dimensions. As Chair of a plc Remuneration Committee, my recent experience consulting with shareholders in the US and UK on proposed changes to executive remuneration arrangements showed a far greater interest in corporate culture, equality and diversity, and environmental considerations than in the past. This trend is of course positive and set to grow, not least because of the requirement under section 172 of the UK Companies Act for enhanced corporate disclosure of stakeholder engagement mechanisms.

While companies such as Unilever are well advanced in demonstrating their positive contribution to society, for most this is a work in progress. In a recent report on ‘Navigating the New World of Stakeholder Governance’ by Board Intelligence, 50% of Boards surveyed believe that Covid-19 brought their commitment to stakeholders into focus. The survey found purpose-driven organisations nearly three times more likely to focus on their stakeholders as a result of the Covid-19 crisis than companies who didn’t identify as purpose-driven.

HR’s ROLE

HR has an important role to play in linking corporate purpose with contribution to society, enabling dialogue across the organisation to define key internal and external stakeholders and areas for exploration. For example, the opportunity for the company to review its suppliers and support local communities to access under-represented employees and customers, or the chance to redefine its leadership capability frameworks and programmes to emphasise purposeful business. Beyond shareholder metrics, consider what stakeholder metrics (employee, supplier, community, environmental) the company tracks and how often are these discussed by leadership teams. How are these factors incorporated into key people processes, such as performance management, reward and promotion?

Moving beyond words to action, measurement and impact is key, and those companies that embrace their role in society as a source of competitive advantage will be those whose reputations, values and value are enhanced in the post-Covid-19 world.

This article is part of our 2021 HR Directors’ Briefing Paper. Continue to the next article: The Future of Corporate Learning.

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