“Good business” is good for business, profitability and corporate responsibility aren’t mutually exclusive. James Alderman, HR director at Michelin Tyre PLC explains the strategy behind the tyre manufacturer’s corporate social responsibility, and looks at the impact that CSR can have on a business.
As markets become increasingly competitive, one of the main challenges for businesses around the world is knowing how to meet the ever-changing demands of customers, and central to this is corporate and social responsibility.
In today’s corporate environment, those organisations that are able to adjust their offering to meet changing sector needs are thriving. But increasingly, businesses are revising not just the product or service they offer, but the way they operate, in order to secure real, long term, sustainable success. For some, it may mean donating large amounts of money to charity, while for others, it’s all about spending an afternoon out of the office volunteering once a year. Some may even define it as having a corporate document in place, but not necessarily actively doing anything. The World Business Council for Sustainable Development defines CSR as: “The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.” 1
Since Michelin’s establishment in 1889, it has aimed to develop sustainable business practices, from creating housing programmes to providing welfare services for employees. Back then, the company established three values that remain ingrained in its culture today: respect for people, respect for customers and respect for the facts. As corporate responsibility issues became more obvious and pressing, Michelin sought a way to continue to innovate, develop and remain competitive, while upholding its historical values. As such, in 2002 it developed a framework for action known as ‘Performance and Responsibility Michelin’ (PRM), a more formalised approach to CSR, so called because of Michelin’s deep rooted belief that it can achieve better performance by applying its values to the way it does business.
Today’s PRM programme is based on five values: respect for customers, people, shareholders, the environment and the facts and its purpose is to combine CSR more effectively into the business at every level. Michelin’s aim is to integrate seamlessly into the societies and communities where it is present, in the UK, those sites are Ballymena, Dundee and Stoke-on-Trent. As well as being a strategy that affects the way Michelin conducts business, PRM is also a culture.
The values behind PRM are ingrained in every Michelin employee, who fulfil their responsibilities by striving to integrate their business activities into surrounding economic and social environments. In practice, this means a commitment to improving the living conditions and wellbeing of the communities that each individual operates within.
A key strand of PRM activity is the Michelin Development fund, which provides support to businesses near Michelin manufacturing operations. When other lenders refuse to approve business loans and alternative funding streams have dried up, struggling organisations are able to call upon the Michelin Development fund to help boost business and create jobs. And financial help is just the tip of the iceberg. As part of the programme, Michelin experts are assigned to businesses to provide advice, support and expertise. Outside of Michelin’s funding initiatives, CSR projects, such as painting libraries, landscaping school gardens and delivering road safety programmes to community groups – take place regularly at regional level.
The existence of fairness and trust in the organisation and its leaders and opportunities for employees to enact their jobs in a way that is consistent with their personal values and ethics.
In creating its PRM programme, Michelin recognised that civil society is increasingly holding businesses accountable for their economic and social actions.
When it comes to corporate responsibility, the business landscape is changing and the market is demanding better business practice. But why? There are several key factors that HR professionals should be aware of. In recruitment, employees are often considered an organisation’s most important stakeholder group because, as well as being a key resource, they represent the company with their actions. Increasingly, what motivates an employee to join, engage and stay loyal to an organisation is: A level of synergy between their values of the organisation’s values; being a member of a respected and reputable team, the existence of fairness and trust in the organisation and its leaders and opportunities for employees to enact their jobs in a way that is consistent with their personal values and ethics.2
“Nearly 90 percent of graduates and young professionals factor an employer’s CSR position into a decision about where to work3, so if you don’t have a clear CSR strategy, you risk losing out on talent looking for an employer with a strong corporate responsibility stance”
Recent research shows nearly 90 percent of graduates and young professionals factor an employer’s CSR position into a decision about where to work4, so if you don’t have a clear CSR strategy, you risk losing out on talent looking for an employer with a strong corporate responsibility stance. The implications of having a CSR strategy, or not, also affect those already working for a company. In fact, 86 percent of employees would consider leaving a job if their employer’s CSR performance was no longer credible5. Failing to properly integrate CSR activity into your organisation can lose you the talent you worked so hard to attract in the first place. It’s easy to see a clear link between poor corporate responsibility and low staff morale, which inevitably leads to reduced productivity and high staff turnover.
As the business community warms up to the fact that corporate responsibility is vital to operations, procurement officers, suppliers and customers alike are becoming increasingly influenced by the CSR credentials of potential partners. Put simply, if you don’t have a CSR policy in place, people and businesses will be less inclined to work with you. As such, implementing a CSR strategy is essential in order to be commercially viable in the long term.
The EU Transparency Directive, initially implemented in 2004, is up for review at the end of the year. The drafted amends come as part of a package of measures aimed at encouraging more responsible business, and will bring CSR back onto the news agenda. The increased public awareness that this media attention will bring is likely to result in many companies ramping up their CSR activities, and no one wants to be left behind. It’s easy to talk about putting a CSR strategy in place, but how do you go about it practically? Here are some key suggestions: What are your business’ key values? It’s easier to work out who, or what, you want your CSR activity to support if you have these values clearly defined. For example, Michelin focuses on looking after its customers, local communities, employees and the environment). Its corporate responsibility activities aim to benefit these groups. Don’t see CSR as a ‘tick-box’ exercise. It needs to be woven, intrinsically, into every part of a business in order to be credible. Donating time, rather than money, is a fantastic way to help the local community, and it makes a huge difference. Small projects such as painting a library or helping to clear wasteland may seem trivial, but often mean a lot to local residents. Decide on a charity or project of the year. That way, both your business and the project will see real results after 12 months of CSR focus.
A simple way to ensure your CSR activity is sustained is to set a quota. Michelin allocates a percentage of its annual turnover and a set number of hours to supporting worthwhile projects near its manufacturing operations. If you’re looking to put a CSR programme in place on a budget, you could, for example, assign one day a month for employees to carry out CSR activities, rather than donate money. In summary, implementing a CSR strategy should be a priority for any business that doesn’t already have one. As has been proved again and again, ‘good’ business is good for business. In fact, the latest research from Business In The Community shows that brand value and reputation, operational effectiveness, direct financial impact and organisation growth are the key benefits of responsible business practice6. As such, CSR is vital in order to survive in ever more challenging and highly competitive market conditions.
With more than 111,000 employees and sales organisations in more than 170 countries, Michelin is the worldwide leader in tyre manufacture. Dedicated to the improvement of sustainable mobility, Michelin designs, manufactures and sells tyres for every type of vehicle, including aircraft, cars, bicycles, earthmovers, farm equipment, trucks, motorcycles and even the US space shuttle. Michelin has 70 production sites in 18 countries throughout five continents.
The Company also publishes travel guides, hotel & restaurant guides, maps and road atlases, and offers electronic mobility support services on ViaMichelin.com. Research and development is undertaken in technology centres in Europe, USA and Japan.
1 Making Good Business Sense, 2000
2 Business In The Community: The Business Case for Being a Responsible Business 2011
3PwC: Millenials at Work 2011
4PwC: Millenials at Work 2011
5The Business Case for being a Responsible Business: BITC, 2011