Integration of CSR with HRM:

What can we Learn from best

Practice Organisations in the
European Union?
Jawad Syed and Robin Kramar
CSR PAPER 47.2008

DECEMBER 2008
CSRM – Corporate Social Responsibility and Sustainable
Management

Jawad Syed, Kent Business School

Robin Kramar, Macquarie Graduate School of Management, Macquarie University

This paper can be downloaded without charge at:

The Fondazione Eni Enrico Mattei Series Index:

http://www.feem.it/Feem/Pub/Publications/CSRPapers/default.htm

The opinions expressed in this paper do not necessarily reflect the position of
Fondazione Eni Enrico Mattei
Corso Magenta, 63, 20123 Milano (I), web site: www.feem.it, e-mail: working.papers@feem.it
The special issue on Corporate Social Responsibility Papers: The potential to contribute to the
implementation and integration of EU strategies (CORE) collects a selection of papers presented at
the Marie Curie Conference CORE organised by FEEM.
The CORE conferences Series addresses the question of the goals achievement of the EU strategies.
The main EU strategies (Lisbon, Sustainability, Integration) can be successful if their
implementation involves adequately and effectively the business sector, non-profit partnerships and
networks, local communities and civil society. In this setting CSR holds the potential to stimulate
corporate contributions to the implementation and integration of the mentioned EU strategies and
can be tested as a policy tool.
This batch of papers has been presented at the Third Core Conference: The potential of CSR to
drive integration in an enlarged Europe
CORE is financed by the European Commission, Sixth Framework Programme and it is co-
ordinated by Fondazione Eni Enrico Mattei (FEEM).
Further information is available at www.core-project.net

Conferences:

• The potential of CSR to support the implementation of the EU Lisbon Strategy

Milan, June 22-23, 2006
• The potential of CSR to support the implementation of the EU Sustainability Strategy
Milan, June 14-15 , 2007
• The potential of CSR to drive integration in an enlarged Europe
Nottingham, June 19-20, 2008
• The potential of CSR to support the integration of core EU strategies
Darmstadt, June 15-16, 2009

Partners of the CORE network:

• Fondazione Eni Enrico Mattei, Milano, Italy

• Oeko Institut, Freiburg , Berlin, Darmstadt, Germany
• University of Nottingham, Nottingham, UK
Integration of CSR with HRM: What can we Learn from best
Practice Organisations in the European Union?

Summary
Drawing on research on corporate social responsibility and ethical human resource
management, and a review of best practice organisations in the European Union, the
paper argues that an integration of social responsibility and human resource
management can be achieved when there is a multilevel and integrated support for
responsible capitalism. The paper develops a conceptual model of responsible human
resource management which bridges the differences between economic and
responsibility paradigms of HRM.

Keywords: Responsible HRM, Corporate Social Responsibility, Capitalism, Business

Ethics

JEL classification: M14

Address for correspondence:

Jawad Syed
Kent Business School
University of Kent
UK
E-mail: j.syed@kent.ac.uk
Integration of CSR with HRM: What can we learn from best
practice organisations in the European Union?

Jawad Syed
Kent Business School
University of Kent, UK
Email: j.syed@kent.ac.uk

Professor Robin Kramar

Macquarie Graduate School of Management
Macquarie University, Australia
Email: robin.kramar@msgm.edu.au
 Integration of CSR with HRM 2

Integration of CSR with HRM: What can we learn from best

practice organisations in the European Union?

We were mislead [sic] and cheated by senior Enron exec's. Still to this day are dealing
with the consequences. Putting years of your career into what turned out to be one great
con makes you feel pretty rubbish.

(Message posted by a former Enron employee on a public website in December 2006).

Introduction
The purpose of this paper is to develop a conceptual model of responsible human resource
management (HRM) which is based on an integration of corporate social responsibility (CSR)
with HRM. We argue that CSR poses a number of challenges for HRM and for leadership in
organisations. Conventionally, the HRM paradigm is based on a rational strategic management
framework which is consistent with traditional economic analysis. This paradigm is limited in
circumstances where organisations seek to behave responsibly with regard to a range of internal
and external stakeholders and seek to take a longer term perspective. Drawing on research on
CSR and HRM and a review of best practice organisations in the European Union, the paper
argues that an integration of CSR and HRM can be achieved when there is an integrated
institutional support for responsible capitalism.

Theoretical background

Responsible capitalism

In a capitalist system, the owners of capital control the means of life (e.g. land and industry) and
increase their capital simply from granting permission to use them. This they do in exchange for
wages. Critics of capitalism (e.g. Herman & Chomsky, 1988) believe that the capitalists maintain
wage slavery and a divided working class through their influence over states, lows, educational
institutions, nationalist and corporate propaganda, pressures and incentives to internalise values
serviceable to the power structure. These and similar concerns about the exploitative nature of
capitalism resulted in the emergence of welfare capitalism in the 19th century. Welfare capitalism
refers to the combination of a capitalist economic system with an attention to welfare of all
individuals. In the USA, it emerged in the form of businesses providing welfare-like services to
employees. Two important goals articulated by Henry Ford were to reduce turnover and build a
long-term loyal labour force that would have higher productivity. The combination of high pay,
high efficiency and cheap consumer goods was widely known as Fordism (Esping-Andersen,
1990; Sabel, 2003).

However, the notion of responsible capitalism that this paper presents must be distinguished
from Ford's welfare capitalism. Fords' welfare capitalism was designed to reduce the heavy
 Integration of CSR with HRM 3

turnover of his workforce, resulting in practices such as the 40-hour work week and a minimum
wage. It was implemented through the 'Social Department', Ford's version of the corporate
'reformers' who frowned on and disqualified from profit sharing those employees who were
found involved in heavy drinking, gambling, and other 'social evils' (Ford & Crowthan, 1922).
This paper endeavours to develop a broader notion of responsible capitalism which is not
confined to Ford's notion of paying workers well so that they could afford to buy the products
they make in their workplaces. Responsible capitalism can be defined as a company’s
commitment to establishing a responsible approach to business, its relationship with its
employees, customers, suppliers and the society it operates in. It is about decisions for the long-
term benefit of a variety of stakeholders rather than for the selected few within the company's
shareholders and directors. It may involve a more comprehensive regulatory framework for
businesses rather than assuming that 'the invisible hand' will always reward the companies which
act ethically (Pfeffer, 2002).

This paper takes as its starting point a broad definition of responsible capitalism. It is more than
employee and union involvement in decision making or owners of firms and co-ops. It involves a
redefinition of the goals of corporations and its priorities. Indeed, goals such as large
corporations should provide more jobs, pay better wages, compensate host communities for the
burdens of resident corporations, stop polluting, and so on are desirable. However, the goals of
responsible capitalism must not end here (Wolff, 2004). Wolff offers an abolitionist agenda,
arguing that capitalism, like slavery, can be criticised for the adverse effects it has on any hope
for equality — in wealth, income, power, access to culture, and so on — in societies where it
prevails. Capitalism, in Wolff's eyes, is a system in which a relatively small minority of people
offers the majority a stark choice: either accept employment in our companies or else die or live
a difficult, disrespected, marginal existence accepting welfare from relatives, friends, charities or
the state. The adverse implications of capitalism are rather stark for the disadvantaged in society.
An employer will only hire a worker if the wages paid to her are less than the value added by her
labour. The employee must produce more than she is paid, must deliver to the employer an extra
— that famous 'surplus' about which Adam Smith wrote so eloquently — for which an
insignificant amount is paid to the worker. The only way capitalists can take a profit from
production is if they do not give back to the workers the full value of what their labour added
(Wolff, 2004). Profit is thus a kind of social theft that capitalists perpetrate on their employees.
In the formal language of economics, the term for this is 'exploitation', defined very precisely in
terms of a surplus produced by some that is appropriated by others. With their wages thus
constrained, the mass of exploited workers faces a future of constantly needing a job. Given the
profits they extract, capitalist employers accumulate the wealth to offer those jobs. Capitalism is
thus a system of production perpetuating a structural inequality located at its core. This is why so
many critics of capitalism found us the phrase 'wage slaves' to lament the condition of the mass
of working people (see Hallgrimsdottir & Benoit, 2007).

Chomsky (1988: 468-69) suggests that there is no reason to believe that one day humans won't
look back at the days of wage slavery with the same moral outrage with which they react to
chattel slavery. To commit to a society with values such as equality, democracy, and human
solidarity, Wolff (2004) argues, requires us to confront in capitalism a system of production that
blocks the achievement of such a society. Wolff wonders if workers will continue to produce a
surplus delivered to and used by 'capitalists', 'commissars' or 'managers'. Or would societies be
 Integration of CSR with HRM 4

able to reform the structures of production in a way that workers who produce a surplus must
themselves collectively receive and decide on its disposition? The basic problem will therefore
remain so long as the abolition of the capitalist structure of production does not figure explicitly
on the social agenda. Responsible capitalism can be achieved when societies grow out of
'classical' capitalist structures of production and shift to collective systems where the workers not
only produce the surplus (profits) but also collectively decide their disposition.

There is already some evidence of transition from capitalist to non-capitalist organisations of

organisations in certain societies. Wolff (2004) reports the case of hundreds of hi-tech workers in
Silicon Valley who have been quitting their high-paying jobs in capitalistically organised
enterprises. Risking their incomes and job security, they opt instead to set up collective
enterprises where they all participate in the work equally and all collectively control and
distribute the surpluses (profits) they collectively produce. These skilled workers have rebelled
against a capitalist organisation of their production activities and have established something
altogether different. Of course, these skilled workers may not see themselves as abolitionists in
relation to capitalist production. Instead, because they own their new enterprises and sell
products (for example, software programs) as commodities in markets, they may imagine
themselves as within the capitalist system rather than escapees from it. Yet they may be seen as
actual abolitionists in that they have proved more than the viability of non-capitalist, egalitarian
structures of production; they have proved their enormous productivity both economically and
personally.

In summary, what Wolff argues for is much beyond a notion of social responsibility that merely
requires capitalists to treat their workers and the workers' communities better. He believes in a
moral imperative to demand the abolition of the capitalist mode of production. Such imperative
can also speak directly and persuasively to all sorts of workers who already criticise their
conditions of labour. The thoughts and actions of many of them through trade-union activities
and other forms of pro-equality activism are already groping toward a post-capitalist system of
production. It would be inconsistent with social responsibility not to reach out to such workers
by defining social responsibility to include the abolition of the exploitation lying at the core of
capitalist production (Wolff, 2004).

Responsible HRM

HR managers have an important role to play in promoting responsible capitalism. They can take
action at the national level by putting pressure on governments and professional associations.
They can also take action at the organisational level through employment policies. In addition to
a traditional emphasis on improving individual and organisational productivity, the HRM
function would need to espouse principles of social responsibility in order to display both its
'green' and ethical credentials in organisations and societies.

In management schools, there is a trend to return to the teaching of CSR and business ethics.
Recent experiences, such as Enron and WorldCom and other scandals, have laid bare the need of
a renewed attention to CSR. Indeed, it is not enough to mention CSR or business ethics at the
beginning of the semester, or to address it through one required course in the MBA curriculum
 Integration of CSR with HRM 5

(Pidert, 2006). Much more needs to be done to integrate ethics and social responsibility with the
notions and practices of management.

In his discussion of socially responsible corporate governance in post-managerialist era,

Simmons (2004) deployed stakeholder theory to critique the morality of managerialism.
Simmons views managerialism as morally and commercially inferior to 'moral management' in
the new era of stakeholder accountable organisations. His approach centres on the concept of 'the
responsible organisation' with a stakeholder systems model of corporate governance offered as
the means of operationalising this.

Based on his study of the role of HRM in the downfall of Enron, Spector (2003) concluded that
refracted through an enacted value system of high arrogance and low transparency many of the
HRM policies and practices at Enron (e.g. forced-curve performance distribution rankings, lavish
salaries and perquisites, entrepreneurial work system design) may be seen as contributing to the
organisation's failure. Although the extent of this contribution is yet to be determined, however,
it is clear that Enron provides an important case study of the significance of HRM policies and
practices in the ultimate sustainability or fragility of a company’s performance. "We have many
examples of the positive contribution HRM can make; Enron provides a sobering reminder that
the impact can also be negative" (Spector, 2003: 217-218).

Evidence from practice: Institutional support

CSR in the European Union

There is evidence of an increasing attention to structural and legal support for CSR in the
European Union (EU) in the last few years. The EU defines CSR as "a concept whereby
companies integrate social and environmental concerns in their business operations and in their
interaction with stakeholders on a voluntary basis" (CSR Europe, 2008: para. 4). The EU
acknowledges that global governance and sustainable development are key issues in today's CSR
debate.

In March 2006, the European Commission announcing its support for a European Alliance for
CSR stressing the potential of CSR to contribute to the European Strategy for Growth and Jobs.
The Alliance is aimed at mobilising the resources of large and small European companies and
their stakeholders in and around a number of priority areas. It marks a new political approach on
CSR based on a double commitment. On one hand, the European Commission will strengthen a
business friendly environment. On the other, enterprises will voluntarily focus their efforts to
innovate their CSR strategies and initiatives in consultation with their stakeholders (CSR Europe,
2008).

However, legal policies are not likely to have much effect unless there is a wide ranging socio-
political support for responsible capitalism. For example, the Conservative Party in the UK has
recently launched a report on Responsible Business that looks at ways their future government
could encourage business to play a central role in securing a better future for British society. The
 Integration of CSR with HRM 6

report, entitled 'A light but effective touch', examines a wide range of areas, including obesity,
drinking and climate change. It calls for the introduction of Responsibility Deals, which would
enable companies to work with other groups in society to address important issues. David
Cameron, head of the party said: "I want the modern Conservative Party to be not just the party
of business but of responsible business." (The Conservative Party, 2008: para. 5) Although the
party insists that the measures will be voluntary, David Cameron has said he would be prepared
as a 'last resort' to introduce legislation forcing companies to consider the social implications of
their decisions (Prince, 2008).

Responsible HRM in action

In this section, we will offer examples of best practice organisations in the EU which are
attempting to integrate principles of CSR into their HRM practices. These practices include the
protection and improvement of labour and social rights, the promotion of equal employment
opportunity and diversity within a context of social cohesion and the enhancement of
‘employability’ during times of redundancy.

Supply chain labour at Inditex

In 2007, Inditex, the world's second-largest clothes retailer, signed the 'international framework
agreement' with the International Textile, Garment and Leather Workers' Federation (ITGLWF),
an agreement committing it to guaranteeing workers' rights throughout its supply chain
worldwide. Inditex, which is headquartered in Spain, manufactures, distributes and sells clothing
and accessories under brands such as Zara, Massimo Dutti, Bershka, Oysho, Pull and Bear, and
Stradivarius. It runs over 3000 stores worldwide and employs a total of 69,000 workers in 68
countries (EER, 2007). The agreement aims to ensure that basic labour rights standards - based
on International Labour Organization (ILO) conventions - are observed throughout Inditex's
supply chain. This covers all workers, whether directly employed by Inditex or by its external
manufacturers and suppliers, and includes workplaces not represented by ITGLWF-affiliated
trade unions. The two parties will collaborate to ensure the application of labour standards
throughout Inditex's supply chain.

The parties have committed to work together to secure full compliance with ILO-based standards
and with Inditex's own internal 'code of conduct for external manufacturers and suppliers'. All
external suppliers are required to comply with this code, introduced in 2001, and its
implementation is verified through 'social audits'. The agreement lays down a set of workers'
rights and CSR provisions under the following headings: no forced labour; no child labour; no
discrimination; respect for freedom of association and collective bargaining; no harsh or
inhumane treatment; safe and hygienic working conditions; wages are paid; working hours are
not excessive; environmental awareness; and regular employment.

The agreement acknowledges the 'central role' of freedom of association and the right to bargain
collectively in ensuring the 'sustainable and long-term observation of all other international
labour standards' throughout the supply chain 'because they provide workers with the
 Integration of CSR with HRM 7

mechanisms to monitor and enforce their rights at work'. Inditex and the ITGLWF will review
developments relating to freedom of association and the right to collective bargaining throughout
the supply chain. Where any problems are detected, they will cooperate in finding solutions,
including collaborating on training programmes for the managers and workers concerned.

The agreement establishes a committee, made up of three representatives each of Inditex and the
ITGLWF, which will undertake an annual review of the application of the agreement. To
facilitate the annual review, and the ongoing review of freedom of association and collective
bargaining developments, Inditex will provide 'reasonable information' about its supply chain to
the ITGLWF (ERR, 2007).

Commenting on the agreement, Inditex expressed its commitment to improve the development of
labour and social rights as well as living conditions. Neil Kearney, the ITGLWF general
secretary, commended Inditex on being a 'trailblazer' in promoting compliance with international
labour standards throughout its supply chain in innovative ways. He said: "It [the agreement] is
an approach based on the employment relationship where the employer directly takes
responsibility for those employed and where the exercise of that responsibility is regulated by a
mature system of industrial relations at workplace level involving management and trade union
representatives" (ITGLWF, 2008, para. 8).

Diversity management at PSA Peugeot Citroën

In 2004, management and trade unions at PSA Peugeot Citroën signed a groundbreaking accord
on diversity and social cohesion (EIRR, 2004). PSA Peugeot Citroën employs 200,000 people
worldwide, including more than 75,000 employees from culturally diverse backgrounds. The
company has sought to manage workforce diversity within the framework of its social cohesion
policy and to ensure that diverse employees receive equal treatment in their career progression.
The accord follows a similar equality agreement of 2003 which was designed to improve the
position of women at the company. The new accord relates to cultural diversity at the enterprise,
and the company has pledged to enhance this by means of a variety of measures. These include
recruiting a quota of non-French workers as well as facilitating the recruitment of secondary
school graduates from inner city zones near its production sites. The company has also
undertaken to establish a joint observatory that will monitor how the diversity policy is working
and make proposals and recommendations as it deems necessary.

The company also has a policy of recruiting up to 90% of its personnel at concerns in other
countries from the national workforce, which it sees as benefiting its long-term activities in these
countries and aiding local employment levels. In 2003 the company recruited 129 non-French
engineers and management-level employees (of which 35% were women) out of 1,216 people in
its French subsidiaries.

In terms of age diversity, approximately 60% of the company's new employees are younger than
30. The accord also notes that the company will continue to recruit older people, so as to ensure
that the workforce comprises a 'balance between the generations', thereby enriching the skills
 Integration of CSR with HRM 8

level. In 2003, the group recruited more than 2,700 people aged 35 or older at its concerns across
the world; and 13% of new staff were over the age of 40, compared with 1% in 1999.

The accord sets out the company's recruitment methods, noting that it works in close partnership
with the national employment service, Anpe. In particular, it has come to an agreement with
Anpe on the recruitment of young people from inner city zones who have obtained their school
leaving certificate (baccalaureate), and completed either two or five years of further study. From
2004, the company undertakes to recruit at least 10 young people a year who fulfil these criteria.

The company has committed to work together with the EU EQUAL programme (aimed at
combating all forms of discrimination and inequalities in connection with the labour market) at
national level to produce anti-discrimination leaflets, which will be distributed to employees. The
company has also stated its commitment to integrating people who would otherwise have
difficulty in finding employment, by offering them day-release schemes or apprenticeships.
Additional measures include ensuring that all employees are informed about what posts are
available, by advertising all vacancies on the company intranet and posting them at sites where
employees do not have access to a computer. The accord also allows for an annual evaluation of
all these measures, which will be presented to the newly established diversity observatory.

The head of human resources at Peugeot Citroën, Jean-Luc Vergne, described the accord as a
positive development for the company that demonstrates its social engagement. He also said that
the accord seeks to manage diversity within the context of social cohesion, while guaranteeing
the equal treatment of employees and fighting all forms of discrimination. He pointed out the
leading role being played in these areas by his company as a pioneer among the industrial groups
in France or in Europe.

As for the union signatories, the CFDT (Confédération Française Démocratique du Travail)
welcomed the accord noting that the document makes significant advances in equal treatment
and non-discrimination and that it contains concrete procedures to facilitate diversity
management that translate words into practice. The CGT (Confédération Générale du Travail)
initially delayed signing the agreement because it wanted to establish for itself whether it
represented progress for all employees or if it was a cosmetic exercise carried out by the
company (EIRR, 2004).

Restructuring at Deutsche Bank

Deutsche Bank, one of Germany's largest banks, has reportedly put into place a range of options
to help employees whose jobs are being cut or are at risk as a result of restructuring. The stated
aims of the model are to improve employability and increase internal job market flexibility
(EIRR, 2003).

Deutsche Bank employs almost 70,000 people worldwide, of which around 40% are located in
Germany. The group has traditionally had the reputation of a lifelong employer, in keeping with
the traditional practices of the German banking sector, offering employees careers spanning the
whole of their working lives. However, an increasingly competitive corporate environment has
 Integration of CSR with HRM 9

resulted in restructuring at Deutsche Bank, is reflected in successive downsizing and staff

redeployment exercises. The number of Deutsche Bank staff decreased from 89,800 in 2000 to
69,308 in 2003.

Deutsche Bank has developed a system entitled 'Deutsche Bank Mosaic for Employment'
comprising a number of initiatives designed to help employees who are losing their job, such as
partial early retirement, tele-working, part-time working, flexitime, on-the-job training, reskilling
and job coaching, placement activities, transfers and help with starting a business. The aim is to
assist them in finding alternative employment, either within or outside of the group.

The Mosaic for Employment has been drawn up with the involvement of the works council
(Betriebsrat) at Deutsche Bank. The plans were initially considered by a working group
comprising human resources representatives, business representatives and works council
representatives. The Mosaic is included in the organisation's social plan, which is a package of
measures dealing with the social aspects of redundancy.

The Mosaic comprises a detailed procedure to help a laid off employee in her or his future
career. When an employee first learns that they are to lose their job, they are offered a 'job
coaching' workshop lasting a total of three days, in stages. During the first day, which takes place
two weeks after the announcement, an analysis of the situation is carried out, followed by an
analysis of the individual employee's competences and skills. The professional objectives of the
employee are then reviewed and a job market analysis is carried out. Training possibilities are
then considered, depending on what skills are required. The second day, which takes place
within one to three weeks of the first workshop, gives the employee help with job applications
and guidance on how to choose appropriate opportunities. A further day is available, after a
further two to three weeks, during which individual coaching is given in how to make job
applications. An individual coaching hotline is also available to employees. The coaching
includes elements such as creating awareness of an employee's particular strengths, advice and
encouragement, training for a particular application and preparation for a job interview. This
process is carried out via the Deutsche Bank JobCenter. This should then culminate in a job
interview and eventually a new job. In 2003, the success rate - people finding alternative
employment – was reported to be quite high, i.e. between 80% and 90%.

Furthermore, an internal temporary work agency - called Bankforce - has been in place at
Deutsche Bank since 1998. Through the agency, employees can be relocated internally to work
on specific projects, to work as support workers or to provide substitution cover for absent
workers.

For those Deutsche Bank workers wishing to find employment elsewhere, a further option exists,
in the form of an external temporary work agency called Bankpower GmbH Personnel Services.
This is a joint venture between Deutsche Bank and the temporary work group Manpower
Deutschland. It is a legally independent temporary work agency that is specifically designed for
financial service providers. Deutsche Bank offers former employees taking up employment
through Bankpower severance pay in accordance with its social plan and also pays the difference
in former and new gross monthly pay for between 12 and 30 months.
 Integration of CSR with HRM 10

Deutsche Bank has a specific structure in place in order to aid employees in setting up their own
business. It supplies people with a range of information in the form of a starter kit. Where
possible, Deutsche Bank becomes a customer in the start-up phase of the new business. Deutsche
Bank has created a consulting subsidiary, DB Management Support, which employs experienced
professionals specialising in consulting, interim management and coaching. This subsidiary
offers employment to specialists and executives from Deutsche Bank who are aged 55 or over. If
accepted, these employees will become partners of DB Management Support, working on
specific projects. The aim of this project is to ensure a smooth transition to retirement for older
workers and/or employment beyond the age of 65.

Deutsche Bank offers a range of retraining opportunities to employees faced with redundancy.
Professional vocational training is offered, in accordance with Germany's dual system of
training, leading to a chamber of industry and commerce qualification. Under this dual system,
vocational training is organised partially in the employer's establishment and partially in a
vocational training school. This opportunity, which Deutsche Bank calls the Berlin Model,
usually lasts for two years. During this time, the company guarantees the trainee's former net
monthly earnings by topping up trainee pay. Within the Deutsche Bank group, specific retraining
opportunities include training to become a bank clerk, information technology specialist,
commercial office communications specialist, insurance specialist or foreign trade specialist.

Recognising that change and restructuring can be stressful for all concerned, Deutsche Bank
offers a 'life crisis' counselling service. It offers counselling in a range of areas including stress in
the areas of family, work, health (including addiction) and financial problems. It also offers
information on a range of psycho-social topics and tips on how to deal with conflicts, in order to
prevent areas of stress arising. The counselling services offer support to management in times of
restructuring by advising on how to recognise and deal with psychological problems. They are
also in touch with a network of internal consultants such as company doctors and human
resources advisers, in addition to external sources of help and advice.

The Mosaic is viewed as a best-practice policy by the rest of the banking sector in Germany and
indeed across the German economy. Deutsche Bank stresses that the focus is on changing
traditional thinking within the group, moving away from the idea of job security and more in the
direction of employment security within the group, but not necessarily in the same job, and
ultimately towards improved employability within the wider jobs market (EIRR, 2003).

Building theory from practice

Drawing on practical examples offered in the preceding section and also informed by our
theoretical knowledge of responsible HRM and responsible capitalism, we develop in this
section a conceptual model of integration of CSR with HRM. This three stage model bridges the
differences between economic and responsibility paradigms of HRM. Its various stages have
been described below (see Table 1):
 Integration of CSR with HRM 11

Stage 1- Responsible Capitalism:

1. A responsible HRM is hard to achieve in the absences of responsible capitalism. In other

words, responsible HRM practices (such as responsible staffing or responsible
performance management) are hard to realise in the absence of a macro-level institutional
support for responsible business management, e.g. support for social responsibility and
responsible business management in national and international laws, social and political
policies, and cultural traditions. Within the EU, projects such as European Alliance for
CSR and EQUL represent an institutional support for CSR.
2. At the organisational levels, responsible capitalism will need to be enabled through
employers' and investors' support for CSR, as witnessed in missions, values, and
objectives of organisations, investors, and financial institutions.

Stage 2 – Responsible HRM:

1. The second stage would entail that a mechanistic treatment of employees as human
capital is expanded to their treatment as complex, diverse and dynamic human beings.
This means that instead of being treated as a static resource, to be exploited to achieve
organisational strategic objectives, employees will be valued and their agency recognised
as dynamic stakeholders in organisations. The cases of best practice organisations
discussed in this paper (Inditex, PSA Peugeot Citroën, Deutsche Bank) suggest that
companies can formulate and implement policies and procedures to manage their human
resources in a socially responsible manner.
2. A responsible HRM system will be based on developing trust between employers and
employees, achieved through transparency and consultation. Employees' perspectives
will be incorporated in important decisions in organisations. This can be achieved
through frequent consultations between management and employees, which will also
result in improved employees' commitment to their organisations.
3. Diversity of employees will be considered so that the voices of women, ethnic minorities,
indigenous people and other historically marginalised groups do not remain dissolved in
the mainstream notion of management and CSR.

Stage 3 – Integrating CSR with HRM:

1. In addition to their training on management of productivity and quality, employees will

also be trained on social responsibility to improve their capacity to understand and
participate in CSR.
2. Responsible CSR will be integrated with HRM by developing a management-employees
partnership in developing social responsibility policies and programs in organisations:
Employees' perspectives will be incorporated in organisational approaches to CSR. This
may be achieved through employee participation in decision making, which will result in
their commitment to and ownership of CSR programs. This paper has argued that the
integration of CSR with HRM will be much more likely when there is not only an
institutional support for responsible capitalism at the EU level but also within each
company to manage their human resources in a socially responsible manner. For
example, the case of Inditex suggests that the organisational CSR approach towards
 Integration of CSR with HRM 12

supply chain labour was among other factors also driven by the ILO conventions on
workers' rights.
3. CSR will be included as a key component of performance management (appraisal,
reward, and promotion) in organisations. Adequate incentives will be provided to
encourage managers and employees to participate in and achieve CSR objectives.

Table 1. A conceptual model of responsible HRM

Level Description Variables

Responsible Institutional support for social responsibility Laws; social policies; political manifestos;
capitalism cultural traditions; explicit objectives and
targets.
Employers' and investors' support for social Organisational missions and values; investor's
responsibility values; explicit objectives and criteria.
Responsible Employers' treatment of employees as dynamic Allocation of resources to HRM; formal
HRM stakeholders HRM policies; investment in training;
employee turnover.
Development of trust between employers and Employee councils; meetings and decisions;
employees through transparency and disputes and resolution; explicit procedures.
consultation
Organisational support for principles of Diversity policy; diversity monitoring;
diversity and inclusion benchmarking; evaluation; explicit objectives
and targets.
Integrating CSR Management-employees partnership in Joint meetings and decisions; participation of
with HRM developing CSR program diverse employees; explicit objectives and
targets.
Managers' and employees' training on CSR Investment in training; needs analysis;
frequency; evaluation.
Inclusion of CSR as a key component of Productivity versus CSR balance; evaluation;
performance management (appraisal, reward, incentives
and promotion)

Conclusion
The paper has argued that responsible capitalism requires the integration of CSR and HRM into
responsible HRM. A conceptual model of responsible HRM was developed. This was done by
drawing on research on CSR and HRM and a review of best practice organisations in Europe.

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