The Next Step in HR Outside-In: Social Citizen Stewardship

Over the last decade, my colleagues and I have shown that HR is not about HR but about delivering value to all stakeholders. Traditionally, HR focused on internal stakeholders (employees and organization). We have expanded this view with an outside-in focus (HR from the Outside In) to emphasize how HR work can be used to better serve customers (Leadership Brand) and investors (Leadership Capital Index).

In any stakeholder map, the community and context in which an organization operates is an additional and increasingly important external stakeholder. Daily headlines proclaim the challenges facing our world: climate change, political nationalism (trade wars, immigration, refugees), resource scarcity (water, carbon footprint, pollution), social justice issues (#metoo movement, diversity), political divisiveness, and so forth.

In this context, leaders and HR professionals need to be socially accountable for how their organizations respond to these challenges. Organizations need to be good citizens, not only of their country but the planet. Leaders and organizations need to accept stewardship to not only make money but to create meaning; to balance profit and planet; to do well and to do good; to give today’s employees a positive experience at work and to create opportunity for tomorrow’s employees. We have called this emerging agenda social citizen stewardship as a way to capture HR’s contribution to the community stakeholder.

In the RBL Institute (https://rbl.net/institute), we held a two-day think tank session to review the why, what, how, and who questions related to social citizen stewardship.

Why Social Citizenship?

Zach Rogers, a Stanford PhD and McKinsey Consultant, has studied impact of firm social activities.[1] While he acknowledges a strong moral rationale for engaging in social citizenship, he also found that 92 percent of studies on the financial effects of corporate social responsibility (CSR) firms show a net financial benefit or no loss and a 1.8 percent average increase in market value through various means (e.g., higher labor productivity or sales) for implementing new CSR initiatives. Investing in social citizenship is worth it.

What Is Social Citizenship?

Attention to social citizenship has led to ever-increasing initiatives or audits including Global Reporting Initiative (GRI); Sustainable Development Goals (SDGs); environmental, social, governance (ESG); Carbon Disclosure Project (CDP); socially responsible investing (SRI); and so forth. The increasing divergence of such initiatives makes knowing where to start taking action difficult. So as we examined these (and other) elements of this broad topic, we converged them into five broad domains (see figure 1).

We believe that these five domains capture the audits listed above and give leaders a rather comprehensive, yet simple and memorable, set of social citizenship domains.

How to Make Progress in Social Citizenship?

Leaders and HR professionals can assess, intervene, and take action in each of the five domains to become better stewards for the community stakeholder.

Planet. Many have acknowledged that the planet offers a fixed set of resources that enable plants, animals, and humans to coexist and flourish. When planet resources are depleted through misuse or abuse, the natural world will be less able to sustain our future, as evidenced through climate change, extinction of species, depletion of natural resources (e.g., coal, oil), and so forth. By following the guidelines of initiatives like the United Nations 2020 Sustainable Development Goals or ISO 26000 International Standards, leaders can prepare their organizations to better respond to planet sustainability. [2]

People. How an organization handles people-related issues is becoming symbolic of an organization’s core human values. Some of the people focus includes a focus on humankind (e.g., reducing poverty, ensuring justice, providing access to healthcare and education, and mutual respect). More specifically, auditing the way that an organization treats employees —particularly around diversity, decisions, and discipline—signals the social conscience of the organization. An organization’s policies and practices trigger employee commitment (or experience) which in turn shapes customer experience and then investor experience.

Philanthropy. Corporate giving has become an industry. High-net-worth individuals (e.g., Bill and Melinda Gates, Warren Buffett, Michael Bloomberg, George Soros, Walton family, and more) have formed foundations to use their wealth to solve global problems. There are numerous not-for-profit, non-governmental organizations (NGOs) that spend their full time addressing social citizenship issues. Even more, most organizations encourage philanthropy, or charitable giving, through financial support, employee volunteer time, or in-kind offering. By being stewards of charitable giving, organizations become settings where employees want to work, customers want to shop, and investors want to invest.

Political. The political domain offers a visible setting where an organization’s social citizenship becomes evident. Some of these political challenges come from national and country debates (immigration, for example). Other political challenges come from a host of legislative policies that govern citizens in both personal and organizational lives including gender rights, religious freedom, taxation policy, health care, education, and spending priorities. Within organizations, a host of situations—such as decisions about hiring, compensation, transparency, communication, diversity, and so forth—bring out political overtones. Leaders and HR manage this array of political issues by establishing fundamental principles, navigating paradox, and being transparent.

Performance. Sustained financial impact increases when social citizenship shows up in investor value. In recent years, a number of efforts have been made to link the social citizenship agenda to investor value, including ESG, socially responsible investing, and conscious capitalism. In our work, we have created a leadership capital index (see book) that investors can use to value the qualities of individual leaders and the capabilities of the organization leaders create. Social citizenship can be woven into the leadership capital index.

Who Is Responsible for Social Citizenship?

Delivering on the why, what, and how of the social citizenship agenda requires clear accountability. In our work, we continually declare that primary accountability lies with the line manager who is the ultimate “owner” of all business endeavors and that the HR professionals are partners in this effort. As social citizenship partners, HR professionals help build the business case, form teams, articulate outcomes, audit the current status, and create and deliver plans for accomplishing results.

So when thinking and acting outside-in, the why, what, how, and who of social citizenship adds another dimension of HR value-added and includes efforts that can be made for the community.

Dave Ulrich is the Rensis Likert Professor at the Ross School of Business, University of Michigan and a partner at The RBL Group, a consulting firm focused on helping organizations and leaders deliver value.

[1] Rogers, Zachariah. 2016. “Looking Good by Doing Good.” Stanford Social Innovation Review.

Margolis, Joshua D. and Elfenbein, Hillary A., and Walsh, James P. 2009. Does it Pay to Be Good . . . And Does it Matter? A Meta-Analysis of the Relationship between Corporate Social and Financial Performance. SSRN. Available at SSRN: https://ssrn.com/abstract=1866371 or https://dx.doi.org/10.2139/ssrn.1866371.

[2] (https://www.un.org/sustainabledevelopment/sustainable-development-goals/)  (https://iso26000.info/iso26000/)