Brooke Clarke, Corporate Mandate - It's not what's on the outside

Companies need to do business with integrity if they want to win public trust - and attract talent.

The old adage - 'it's not what's on the outside, but what's on the inside, that counts' - can apply to corporations as easily as to individuals. At a time when companies are coming under intense scrutiny from stakeholders, organisations need to be thinking about their internal as much as their external reputations.

The current economic climate has clearly increased the need for greater efficiency and cost-effectiveness, but also for greater responsibility and accountability. However, a McKinsey survey conducted earlier this year showed 85 per cent of senior executives across the world say public trust in business has deteriorated. This suggests the way businesses are conducting themselves is perceived to have worsened.

Against this backdrop, the 'war for talent' is poised to become hotter than ever as globalisation continues to shift human capital needs across the world, and the skills required to deliver value become even harder to come by. According to another McKinsey study, despite the millions who have recently been made redundant, the most important corporate resource over the next 20 years will be talent and it will also still be the resource in short supply.

With the economic challenges coinciding with growing environmental issues, there is mounting pressure for companies to better demonstrate their value to the communities in which they operate. Many are now looking at their corporate responsibility activities as a key lever to underpin and enhance their brand and reputation.

But is corporate responsibility being used to its full reputation-enhancing potential? A study by one of the world's leading business schools, MIT Sloan School of Management, concluded that 'with many global companies investing millions of dollars in corporate responsibility initiatives, it has never been more worthwhile to assess the return in terms of improved connections with employees'.

Enlightened organisations have recognised that corporate responsibility can and should be one of their most powerful weapons in the war for talent.

Companies that can successfully parlay their corporate responsibility strategies into talent management tools that promote organisational citizenship will find themselves with a unique advantage in their ability to attract and retain the most talented employees. The financial crisis has exposed the need not only for competence, but for character too, and effectively communicating CSR strategies to current and future employees can help assess whether roles are the right cultural fit.

For new graduates in particular, a company's corporate responsibility profile has a major impact on organisational commitment. One of our clients, Coca-Cola Enterprises (CCE), has found that the first question asked by many of its graduate applicants is about corporate responsibility. 'Our communications and HR team have had to work together closely to build our messaging and make sure everyone internally understands the great story we have to tell,' explains Patrick McGuirk, European communications director at CCE.

In today's world, how companies do business is perceived to be as important as what they do. There are fewer hiding places, with vocal criticism of those who fall short and enhanced reputations for those who take bold actions to improve the environmental and community aspects of their business.

Those who communicate their corporate responsibility strategies in ways that are transparent, verifiable, measurable and meaningful will stand out from the crowd. They will have a powerful magnet to engage employees in transformational change and become the place to which talent gravitates.

Views in brief

- Give an example of how an enhanced corporate reputation has boosted sales/profits/another corporate objective.

Now in its third year, Marks & Spencer's 100-point, five-year eco plan, Plan A, has become cost-positive mainly as a result of cost savings made on climate change, waste and energy initiatives. In addition, the brand continues to score extremely highly in independent surveys assessing which brands are trusted by consumers.

Brooke Clarke is managing director of Corporate Mandate

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