CSR and beyond: Damage limitation

Annie Hayes

Sift

Editor

CSR and beyond: Damage limitation

By Annie Hayes

In this article we look at responsible business practices towards customers. These issues are important for the HR community because irresponsible behaviour by sales employees can be catastrophic to a company.

In previous editions of this column we have focused on the HR aspects of corporate social responsibility (CSR). We have argued that CSR is only sustainable when it is focused on responsible business practices towards all stakeholders and it is not just about community involvement or corporate philanthropy.

The first issue that we look at when considering responsible business behaviour with customers is how the contract is drawn up. This is the contract in the loosest sense of the word, because in many marketplaces there is not much in the way of a written agreement between buyer and seller, especially in regard to end-consumer markets.

The fairness or otherwise of contracts covers much of the territory of responsibility, but fairness is a foxy concept and difficult to always pin down.

For example, we regularly see when assessing examples of businesses that say ‘well they signed the contract …’ implying that a willing buyer and seller must equate to a fair agreement.

What we then find when we interview confidentially the other party is that they think the agreement they (willingly) signed is actually unfair. This might be in regard to the unfair use of power in the relationship when setting the terms of the contract (including the suppliers to supermarkets experience). It might also be around a lack of clarity of the contract which only emerges as unfair once trading begins.

The second issue that we are concerned about is data protection, both in terms of personal data and in terms of intellectual property. While these issues might at first seem dull, the rise in identity theft in the UK highlights why personal data protection is so important.

The recent case of a bank that has lost the credit card transactions of a huge number of its customers illustrates the point. For HR professionals, one of the key issues is about who has access to company information and how they are checked. We have come across cases in the retail sector where in order to cut costs, franchised outlets have employed people without checking their identity or right to work in the UK and this has led to fraudulent behaviour and damage to the brand.

The misuse of intellectual property is also a high-profile issue. The Napstar debate about charging to download music highlights that public attitudes towards intellectual property can often be at odds with legal rights. Companies need to ensure that intellectual property is protected and respected. We have come across numerous cases of petty theft of intellectual property such as illegal copying and use of software sometimes even with the company’s tacit knowledge.

The next issue that we focus on is being clear about the specification of goods and services. This issue clearly links up to the contracts issue discussed above. What we find is that customers often complain about mis-specified products or services for example because of small print, hidden charges, misleading advertising and so on.

It is all too obvious how these types of practices can damage reputation, but it is also concerning how many companies seem to believe that they can get away with small-scale deceit.

How goods and services are sold is also important. The fines for mis-selling on the doorstep for the gas and electricity companies are well known. What is more astonishing is that a number of phone companies have now followed up using exactly the same door-step tactics as the gas and electricity companies did.

My own experience left my chin nearly on the floor.

Picture the scene, the doorbell rings and the person says, “Hello I’m from BT (this was a lie he was from a competitor), we are just doing some maintenance in this street which is allowing us to cut the costs of your phone bill.” His real intention of course was to get me to switch provider. He also refused to leave any company literature or the offer in writing, it was either sign now or loose out. I complained to the company in question and received a trite response.

It seems astonishing that a company with a household name like this one is prepared to risk a fine and serious damage to its reputation. I imagine that the HR professionals inside the company know exactly what is happening, but believe that they are powerless to stop it. The culture of commission only payments can obviously lead to serious damage to business reptuation.

The next issue that we look at is the protection of potentially vulnerable people in the marketplace. We divide these issues into three. The first is the protection of young people with regard to sales of tobacco, alcohol, pornography, firearms, dangerous chemicals and so on. This is the least contentious issue but again reputation damage can follow from lax controls.

The second is the consideration of disabled people and what should be done to adapt sales to meet special needs. This is much more complex and involves more than physical access to buildings for people in wheelchairs.

There are considerable reputation gains to be made from some basic thought about how the organisation treats disabled customers. We work with the Employers’ Forum on Disability which has provided detailed guidance for our assessed organisations to help with these issues.

The third issue is about poverty and access to basic services. This affects banks and utilities. In these areas we look to see what processes are in place to provide services to poor households and in particular the processes employed for cutting off a household because of bad debt. Clearly these are very sensitive issues but again, handled well can be a source of enhancement for a companies reputation.

For customers, we consider product safety and the protection of both them and the general public if something goes wrong. We look at issues including processes to recall goods if necessary. We also look at matters including the accurate and safe labelling of goods. We find the most useful auditing activity for us is to speak directly to the public health authorities to obtain their perception of the company that we are assessing. Many companies who work with potentially dangerous goods could also benefit from seeking this basic type of feedback on how their procedures are perceived.

We also review customer complaints and comments to see how they are handled. It is one of the most revealing insights into a company to phone up some of the customers who have complained and to see how they think it has been handled.

It is true that a complaint handled well provides an opportunity to enhance reputation, but it is astonishing how often we find that customers are still fuming when we speak to them and how often they have received boiler-plate responses and feel brushed-off.

The issues that we have touched upon, illustrate the nuts and bolts of corporate social responsibility. They hopefully show why it is pointless to give money away to charities with a big fanfare while getting these ‘fundamentals’ wrong. For HR professionals the most important job in relation to building good CSR is nurturing and training sales colleagues to recognise the importance of these issues.

Leo Martin is director and founder of GoodCorporation, the corporate responsibility standard and is the principal character in the BBC’s series, Good Company, Bad Company.

Other articles in this series