How HR can drive responsible businesses

This article first appeared as the foreword to the Corporate Research Forum (CRF) paper “Responsible Business: How can HR drive the agenda” in August 2019

The raison d’être of business has undergone a significant transformation since its inception, and is shifting again. It is critical that executives, managers and – most importantly – employees understand why and how their companies may evolve.

The word “company” is derived from the 12th century French term compagnie, meaning a “society, friendship, intimacy; body of soldiers”, in turn originating from the Late Latin companion “one who eats bread with you”. The emphasis was on community and society. However, “company” has shifted to its modern definition as an association for commercial or industrial purposes, the assumption being companies exist to return a profit and provide returns to shareholders. But today this emphasis on shareholder value alone is being challenged by society, companies and the investment community.

Over the last few years, a shift towards values-based purposefulness has developed. Some leading companies are acutely aware of their wider role in the societies in which they do business; hence a focus on “societal return”. This is not to say they don’t care about profits or shareholder return, far from it. Rather, the mindset is that by being socially responsible they will generate sustainable returns as a consequence.

What does contributing to society being socially responsible involve? The first element of common ground is focus on purpose, an authentic purpose often guided by the company’s founding principles and values – the intrinsic, specific qualities that define each company. The second element is greater responsibility towards workers: at the most basic level this means fair, living wage and minimum benefit standards. And beyond the basic level it means employees’ wellbeing, financial emancipation, diversity and inclusion, and eradication of unacceptable working practices. It also extends beyond traditional, direct employees to include gig workers and those working in the supply chain.

For many companies, being a responsible employer is just the start. Companies further along the responsibility journey take a position on how they contribute broadly to the societies in which they operate and then ensure their products, services and customer engagement “walk-the-talk” of their social role. Since 2015, Mercer has been working with some of the companies leading the way. Through our advice and peer-to-peer forums these companies share practices and insights to accelerate efforts towards being a responsible business.

Crucially, Mercer believes that the human resource community is ideally placed to embed the values and workforce behaviours intrinsic to responsible business models. But the CHRO cannot, and should not, act alone. Leadership (as always) matters, as does collaboration with corporate colleagues who are stakeholders in this exciting and profoundly important agenda too. Through collaboration across the c-suite we’ve seen great progress with initiatives, for example, to promote economic development in supplier countries, or to align employee incentives with the drive towards zero carbon emissions.

Mercer is delighted to have supported CRF’s Responsible Business research. It is a “must read, must act” report that speaks to the urgent social and environmental pressures we face: more and more companies are addressing their responsible business agenda and are keen to learn from each other’s experiences. The conclusions about the way forward provide valuable, practical ideas and insights for all corporate stakeholders. As we move into a new decade, we look forward to companies enhancing their capabilities and commitment to make real progress, faster; and to building momentum for the new “company” model of responsible business.

Christopher Johnson
by Christopher Johnson

Senior Partner, Global Business Solutions