Leadership and CSR

Leading companies around the world are demonstrating an unwavering commitment to the lives of their employees, local communities and the world at-large - through philanthropy, civic involvement, and environmental stewardship. In today's increasingly competitive business environment and global labor market, these organizations see such initiatives, broadly called "corporate social responsibility" (CSR), as a strategic weapon in the war for talent as well as a vehicle to fuel business growth.

The Top Companies for Leaders know that having the right leadership is a competitive differentiator in the marketplace-one that can singlehandedly influence business success (or failure). They also know that having a steady supply of leadership talent is not a random outcome, but the result of a rigorous and disciplined approach to attracting, grooming, and motivating leaders. One way that leading companies do that is through a corporate social responsibility (CSR) strategy. According to our Top Companies for Leaders study, 100 percent of the Top Companies for Leaders have a CSR strategy in place (compared to only 70 percent of other companies). Increasingly, CSR is being employed by leading companies as a strategic weapon to win the war for talent, advance the leadership agenda, and drive business growth. More specifically, leading companies have discovered that CSR directly helps them to attract, develop, and inspire leaders - at a time when concerns for social responsibility, ethics and integrity, and the public good are at a record high. About the research Initiated in 2001 by Hewitt Associates, the Top Companies for Leaders study is the most comprehensive longitudinal study of leadership around the globe and continues our efforts in the research and understanding of the discipline of leader building. In our most recent survey of 563 companies, we found a strong link between companies that excelled at leadership and their commitment to corporate social responsibility. Eighty-five percent of Top Companies report corporate social responsibility as a significant component of their corporate brand and 75 percent report it as a significant component of their leadership brand. As we spoke with these companies, we learned that this link is not accidental; in fact, leading companies deliberately use CSR to help them advance their leadership agendas This year, Hewitt is excited to be working once again with FORTUNE magazine, our global media partner for this research, and The RBL Group, a firm founded by Dave Ulrich and Norm Smallwood and dedicated to helping clients deliver strong leadership and strategic HR capability. Advancing the leadership agenda with CSR Our research reveals that Top Companies are very strategic and deliberate in how they use CSR to help attract, engage, and retain leadership talent. These organizations ensure their overall CSR strategy, as well as specific initiatives, help support their leadership and critical talent priorities. For example, while most companies may provide corporate grants and loosely directed volunteer efforts to non-profit organizations, Top Companies reinforce the commitment by integrating such efforts with leadership development programs or employment branding initiatives.   Not only do 100 percent of the most recent Top Companies for Leaders have a CSR strategy in place; they deliberately leverage CSR to advance the leadership agenda. That is, Top Companies are highly strategic when it comes to planning their CSR approach and identify specific outcomes for their efforts-not least of which is attracting, grooming, and engaging leaders. Based on our study and interviews with leading companies, we examine three ways in which this is being done: enhancing the external brand for leadership, developing leaders with a broader mindset, and creating a culture of trust and integrity within the organization. Enhancing the external brand for leadership For leading companies, building an external reputation for attracting and developing strong leadership is vital. In our study, 85 percent of Top Companies, compared to just over 50 percent of all other companies, reported deliberate efforts to build a reputation for strong leadership. They recognize that having a strong leadership brand is an organizational asset-one which attracts top talent and helps to ensure a steady supply of leaders. According to our study partners Dave Ulrich and Norm Smallwood, "a company with a leadership brand inspires faith that employees and managers will consistently make good on the firm's promises."1 Developing leaders with a broader mindset Top Companies have a maniacal focus on identifying, developing, and "stretching" their best leadership talent, and they understand the long-term value of such an investment. Studies have consistently shown that top performers deliver significantly more value than their peers. In the past, leadership development tended to focus more on the selection and grooming of "most like me" talent through traditional classroom training. This has changed immensely over the years. Today, on-the-job development is often the preferred approach, providing leaders and high-potentials with stretch assignments directly tied to the needs of the business and the development objectives of the individual. Furthermore, having a set of defined metrics and objectives that pertains to the organization as a whole and not simply individual leaders ensures leadership development is part of the day-to-day organizational fabric. According to our research, 100 percent of the Top Companies for Leaders respond that their organizations have a strong corporate focus on and commitment to leadership development (versus 39 percent of other companies).   1 Smallwood, N., & D.Ulrich (2007). "Building a Leadership Brand," Harvard Business Review (July-August): 92-103

Creating a culture of trust and integrity Recent corporate scandals and the economic downturn have contributed to a discernable rise in public distrust and employee dissatisfaction with companies. Today's workers are seeking something beyond work and profits. In today's world, employees increasingly want to be part of an organization that provides and promotes stronger values, ethics, and even spirituality. Furthermore, the next generation of employees reflects a fundamental shift in terms of work expectations and values. Increasingly, these workers are seeking more meaning in the work they do, and are not content to simply sit at a cubicle and earn a paycheck. The Generation Y or Millennial generation-those born between 1978 and 1994-are known for their outspokenness, and willingness to challenge traditional forms of authority. A recent survey by Cone, Inc. described millennial as the most "civic minded consumers to date" and found that 79 percent "want to work for a company that cares about how it impacts and contributes to society" 2. When more than 50 percent of employees are extremely likely or very likely to look for a new job, and with one out of every two employees around the world disengaged at work, companies are taking these trends seriously.3 The Perfect Match-Leadership and CSR reinforce key values and each other The trend is clear. More and more organizations are embracing the concept of CSR and incorporating CSR strategies into their day-to-day business operations. As Porter and Kramer have stated, when done strategically and deliberately, CSR "can be much more than a cost, a constraint, or a charitable deed - it can be a source of opportunity, innovation, and competitive advantage".4   ". the link between leadership and corporate social responsibility is not only firmly established, but also deliberately managed among Top Companies" Among the Top Companies for Leaders, leadership is inseparable from the concepts of values and service. Whether it's modeling the right behaviors, developing businesses that serve a broader purpose, or participation in CSR initiatives, leaders are in the spotlight when it comes to "doing the right thing." Their messages and actions have a cascading and indelible impact on how employees behave and, ultimately, the success of their organizations. As our research demonstrates, the link between leadership and corporate social responsibility is not only firmly established, but also deliberately managed among Top Companies. In today's environment, where the demand for ethics and integrity is more persistent than ever, the value of ethical leaders leading ethical companies is immense. CSR is not the panacea for all our leadership challenges, but it is a solid step in the right direction. As more and more leading organizations leverage CSR to advance the leadership agenda and to win the war for talent, its value and impact can not be ignored. This article was adapted from "Leadership and CSR - a Perfect Match: How Top Companies for Leaders Utilize CSR as a Competitive Advantage," published in the Fall 2008 edition of People and Strategy, the Human Resource Planning Society's quarterly journal containing the most current theory, research, and practice in strategic human resource management. For more information on the Top Companies for Leaders 2009 study, please visit www.hewitt.com/topcompanies or contact Pushp Deep Gupta at pushp.gupta@hewitt.com

2 Cone, Inc. (2006, October 24). "The Millennial Generations: Pro-Social and Empowered to Change the World," http://www.solsustainability.org, obtained February 5, 2008. 3 Sperion (2003). Emerging Workforce Study. 4 Porter, M.E. & M.R. Kramer (2006). "Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility," Harvard Business Review (Dec): 78-92