Aligning voluntary benefits with corporate social responsibilty

Greater awareness of ethical issues is pushing employers to align voluntary benefits with a corporate social responsibility strategy, says Katrina McKeever

Many employers have begun to capitalise on the growing awareness of ethical business practices by adopting a corporate social responsibility (CSR) strategy. This can help to offset any criticism the organisation may face from investors, customers and stakeholders about its business, by demonstrating its commitment to society, including the wellbeing of its workforce, as well as the environment.

Recognising employees as stakeholders in the business is a key part of any CSR strategy. This will involve acting responsibly towards staff by providing decent working conditions and support where needed, including the provision of benefits. For example, promoting family life through voluntary benefits such as flexible working and childcare vouchers, as well as enabling employees to take part in initiatives such as community volunteering programmes and pledging to reduce carbon emissions helps contribute to an organisation’s CSR strategy.

Dr Stephen Brammer, senior lecturer in business and society at the University of Bath, says CSR has become a strategic management issue in the past 20 years. “This is due to a number of things, for example, the growth of socially responsible investments, ethical consumption, a whole range of social and environmental issues, and growing media interest in these issues,” he says. “Organisations that have strong CSR, particularly in a context where staff have a strong voice and are involved, will have a more committed workforce. Consequently, they have lower turnover rates, and don’t have to re-hire and re-train. There are very sound financial reasons to want to engage CSR meaningfully with the workforce. That is what employees want. If they perceive and experience that this is a responsible organisation, they will want to stay there.”

Employers are increasingly seeing the value of engaging employees with their own CSR agenda by adding appropriate voluntary benefits to their reward package, such as bikes for work that enable staff to do their own bit for the environment, but also demonstrate that the employer has staff wellbeing at heart.

Jon Bryant, regional director of benefits and communication at JLT Benefit Solutions, says that if employers already have a voluntary benefits scheme in place, additional perks that fit in with the CSR agenda can be added. This can also work well where voluntary benefits are included as part of a wider total reward strategy, says Bryant.

“Linking CSR to the benefits platform as part of a total reward scheme is a critical part of the scenario and CSR fits tremendously well within the total reward framework,” says Bryant. “[This approach] allows the organisation to have a total perspective on reward, as opposed to managing pay or managing benefits, and then to look at the wider intrinsic motivators in the workplace.”

Linking voluntary benefits to CSR within a total reward strategy may also enable employers to better communicate to staff how the two interlink. Some may go a step further and use the information held on payroll systems to segment employees in order to target CSR-related voluntary benefits communications to certain groups.

When introducing ethical benefits for the first time, employers have a number of options to consider offering on a voluntary basis. Payroll giving, or charitable donation schemes, for example, enable employees to donate to a chosen charity directly from their salary.

Some perks are linked to topical issues, such as reducing an individual’s carbon footprint. Carbon offsetting schemes enable staff to calculate their carbon emissions and purchase credits to offset these. The Carbon Trust can provide workplace tutorials that encourage staff to cut their carbon emissions at work and home. Staff can take the information back to their own homes, providing a wider advantage for the community. According to research carried out by the Carbon Trust with YouGov in March this year, 70% of employees want to cut their carbon emissions but would like more guidance from their employer on what to do.

In response to the increasing focus on the link between CSR and ethical benefits, a number of providers have launched products to meet demand. People Value, for example, has added a green shop to its voluntary benefits platform to allow employees to buy ethically-sourced products from firms such as Abel & Cole and, as well as a carbon calculator.

Environmentally-friendly travel schemes have also become more prominent in the workplace, primarily in the form of salary sacrifice arrangements on bikes for work and bus passes. P&MM, for example, has launched a Green Travel to Work product, which it developed in association with Nottingham City Council, providing bus passes through salary sacrifice.

In consultation with the Carbon Trust, meanwhile, KPMG has issued Oyster cards for staff to use for travelling to business meetings in London, in a bid to encourage them to help cut workplace emissions.

Family-friendly benefits, such as childcare vouchers, are also a good way to link voluntary benefits to an organisation’s CSR strategy. In addition, perks such as employee assistance programmes can be linked to the CSR agenda as they support employee wellbeing. Darren Nugent, business development director at P&MM, says: “It is about doing the right thing for employees, because staff feel more loyal to an employer [which] is more caring.”

When drawing up a new voluntary benefits strategy, CSR will not automatically be a priority for employers. And with the economic downturn, it is likely to slide even further down the scale.

However, this could be short-sighted. Many employees, in particular graduates, want to work for an organisation that has strong CSR credentials and will be looking for this to be demonstrated throughout the business, including in its benefits provision.

But those organisations that think they can get away with just introducing the odd ethical perk here and there will have to think again. For example, if employers implement a carbon offsetting benefit, then employees will expect the organisation to take concrete steps to cut its own carbon emissions, otherwise it will risk coming across as hypocritical. Clive Cripps, a partner at Hewitt Associates, says: “If they set up a benefit like this, employers have to show how [staff] will take part, or they will see right through it.”

It therefore makes sense to look at introducing ethical voluntary benefits as part of a CSR strategy for the entire organisation.

Key Facts
* Corporate social responsibility (CSR) agendas recognise the workforce as key stakeholders in the business and aim to treat them with fairness and respect.

*Voluntary benefits packages that include socially-responsible products, such as carbon offsetting, payroll giving and childcare vouchers, can enhance an employer’s CSR strategy.

*One way of highlighting the core values of an organisation is through a total reward strategy, including voluntary benefits.

*The advantages of linking voluntary benefits to an organisation’s wider CSR strategy can include lower turnover rates, and higher levels of employee engagement and productivity.

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