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Where Does Corporate Citizenship Belong?
by Sylvia Ciesluk, Research Associate, Boston College Center for Corporate Citizenship
One of the most pressing questions we hear from our members is where to locate a corporate citizenship function. Companies that are just beginning to include corporate citizenship in their organizational framework must decide who should "own" these diverse initiatives that touch almost all departments, from human resources to operations. Other firms with years of experience in corporate citizenship are now wondering how best to integrate it into all aspects of the business.
Recently The Center conducted the Profile of the Practice study to determine how companies are managing corporate citizenship. We received more than 400 responses to our survey. One question asked companies to report where corporate citizenship could be found in their organizational structure. Of the approximately 220 mostly U.S. or Canada-based companies that answered this question:
- 30 percent indicated the CSR staff sits in corporate/public affairs
- 16 percent have placed it in the communications department
- 12 percent indicated that the department stands alone, reporting only to executive management or the Board
- other locations include human resources, marketing, and legal departments
Public affairs and communications are common home
Our results confirm previous observations and studies that have identified public affairs and communications as a common home for corporate citizenship. One reason for this choice is their external-facing nature. UPS public relations manager Heather Robinson explains that at UPS, "PR is driving change because it can provide an external, 'big picture' perspective from the market."
As the flood of demand for information on corporate citizenship intensifies – from customers, the media, and ratings agencies alike – PR and communication professionals often find themselves serving as gatekeepers and end up leading the citizenship agenda.
These departments are also the location where relationships with stakeholders are built and managed. Public affairs departments have traditionally engaged with government, a key stakeholder to any large business. These professionals can thus naturally apply these skills to getting to know other external stakeholders and their expectations.
Another reason is that much of corporate citizenship strategy today is driven by the reporting process. More and more companies are signing up to the Global Reporting Initiative and issuing detailed documentation of their social and environmental impacts. While data for these reports must come from throughout the company, communication and PR professionals generally control the process and craft the message.
Sending the wrong signal?
Is public affairs/communications the best launch pad from which to drive corporate citizenship? Many companies think it is, as our survey has shown. But The Economist's recent special section on corporate social responsibility disagrees, however, claiming that if the person responsible for CSR sits in the corporate communications department, this sends a signal that the company's real motive is PR, not substance.
We've learned that public relations and communications certainly play an important role and should be involved in all firms' corporate citizenship strategies. It is easy to see, however, that if a disproportionate amount of emphasis is placed on the PR component, corporate citizenship efforts run the risk of being viewed as hype rather than real.
What are the leaders doing?
Nearly a third of our respondents indicated that they viewed their company's progress in corporate citizenship as either "Integrated – part of business strategy," or "Transforming - game changing," what we consider the highest "stages" of corporate citizenship. (Learn more about our Stages of Corporate Citizenship). According to our study, 30 percent of these corporate citizenship "leaders" are driving corporate citizenship from public relations or communications. However, these companies are split relatively evenly among various other options including communications (13 percent), marketing (9 percent), and a standalone department reporting directly to the executive suite (10 percent). This group also reported a large number of unique department homes such as corporate culture, technology and innovation, and operations, processes, and systems.
Location should depend on motive
So where is the best place to house your corporate citizenship staff? It depends on your motive for engaging in corporate citizenship in the first place.
If your company's main objective in this sphere is to improve the environmental sustainability of products and operations, corporate citizenship staff might be more useful in the operations or marketing departments. If your company thinks improvements in employee morale and ability to recruit the best and the brightest is the greatest area of opportunity for corporate citizenship, human resources might be the best place.
Experts have also suggested that the corporate citizenship department should be placed where the risk is. Following this approach requires companies to identify those issues most "material" to the business, that is, the greatest areas of risk and opportunity.
Location varies by industry
Narrowing our survey results by sector reveals interesting dynamics that display this point of view. An equal amount of consumer goods companies, for example, place corporate citizenship/CSR in the marketing department as in the public affairs department. The corporate citizenship activities of these types of companies have focused largely on product innovation and "bottom of the pyramid" product strategies that simultaneously address the needs of the world's poorest while growing the size of their markets. Placing CSR in marketing may make sense in the consumer goods industry. Our survey also showed that most of the retail companies surveyed place their CSR staff in human resources. Without responsibilities for production, the main asset of retail companies is their employees. Consulting and professional services companies may also fall into this category.
It's the people that matter, not the department
Another alternative is a stand-alone department, although care must be taken not to isolate corporate citizenship from the rest of the business. Other options include a cross-functional committee, or an independent senior leader to manage across functional areas.
The Economist observed that the companies it considers CSR leaders "typically have a committed CEO who champions the policy, a chief officer for corporate responsibility…who reports to the boss and a cross-functional board committee to ensure that strategy is coordinated throughout the company." This type of model is attractive, but at a time when most corporate citizenship leaders are still trying to achieve executive buy-in and engagement, it may not be realistic. There is also something to be said for involving the people that are directly concerned with the day-to-day business - designing the systems, meeting the stakeholders, and selling the products. These are the individuals who can identify new risks and opportunities.
Achieving true integration can be a serious challenge, no matter where the function is housed or how it is organized. But in the end, a decision must be made. The bottom line: whatever this decision is for your company, one of the most important factors is to ensure to include the right people who can drive a holistic corporate citizenship strategy for your company.