Last week, I moderated what marked the first of eight panels on the increasing role of CSR in recruitment.

My mission, along with host Vault.com and sponsor IE Business School, is to help recruiters understand why – and how – a company’s work culture and values-oriented mission can be an immensely valuable recruitment tool.

Of course, there is a lot of resistance to what I am proposing.

For the longest time, human resources professionals have shoved the relationship between the promise of corporate social responsibility and hiring the “right candidate” under the carpet for fear of “more work” as well as a real fear of muddling what is an already complicated process at most large companies.

Perhaps it has something to do with the way CSR is perceived. For the longest time, we have associated responsibility with giving money or collaborating with a nonprofit organization on a set of causes. Now, we are saying CSR is inwards-facing, that it’s about employee empowerment and development. So, how does this new approach change the job description of an HR manager?

Not by a lot really.

By ensuring a diverse pool of candidates, you are being responsible. By discussing the company’s mission, values and commitments you are being responsible. By advocating for engagement, leadership development and opportunities to give back, you are practicing responsibility.

So why is CSR so hard to understand?

Organizational Design: Divide and Rule

Because we love working in silos. Silos give us structure, deadlines, parameters, measurement.

For example, when I say, “retention is an important recruitment function,” I am told I’m barking up the wrong tree because that’s the responsibility of the HR manager, not the recruiter.

As one recruiter said, “Our job is to get the client the best qualified candidate. It’s a very linear objective.”

It’s a lot like saying that “CSR has nothing to do with me.”

However, if recruiters aren’t examining candidates for cultural fit, there is a much higher chance that the employees won’t stick around. As for you, HR director, there go your efforts at sprucing up your benefits offerings.

It’s a tried and tested concept that a workforce’s loyalty is closely linked with brand perception and aligning professional growth with company success.

The Zappos Employee

During one of his book tour stops last year, Zappos CEO Tony Hsieh discussed the rigorous process all the company’s potential candidates have to go through. I reported then:

“Failure to contribute to company culture, whether by being uncommunicative, a high achieving loner or simply not a people person, are all reasons for dismissal, he said.

That’s why every new employee at Zappos receives five weeks of training. “If you’re not a good fit, you don’t make it to the end of those five weeks,” he added.”

For Zappos, this ensures that retention rates, engagement levels, and personal growth goals all remain high.

What’s the Return on your Recruitment Strategy?

It’s simple really. If you invest in recruiting the right fit for your company culture, the return will be in your favor as well as the candidates’. They will be your brand ambassadors for life.

Do you realize how many checkmarks that can get you in your performance evaluation?

Employer branding: Check.

Retention: Check.

Volunteering efforts: Check.

Employee Resource Group participation: Check.

That list can go on and on because a responsible culture pays dividends for years to come.

Aman Singh (@AmanSinghCSR) is a journalist and advisor on CSR and communication strategy.  She blogs at In Good Company: Singh on CSR.

No, I don't mean green as in money.  I mean green as in environment. At Kimberly-Clark, sustainability is not only discussed in the C-suite; it's also on the board of directors' agenda. At the Corporate Eco Forum (CEF) annual meeting held last week, Kimberly-Clark announced its Sustainability 2015 goals built on a framework of People, Planet and Products. Suhas Apte, Vice President, Global Sustainability, shared with me his experience in presenting the plan to the K-C board of directors and their feedback.

K-C's 2015 plan "commits to reducing the company's environmental footprint, building healthy work environments, innovating products and business models to reach new consumers globally, focusing K-C's social programs on global issues and in the company's communities, and addressing broader global commitments such as the U.N Millenium Development goals." The company has also released metrics that the company will measure and track related to these goals.

Apte told me that not only did the board endorse the plan, but the board asked how the plan could be accelerated. Under the leadership of K-C Chairman and CEO Thomas J. Falk, the board asked Apte for an annual review including discussions of longer-term aspirations, impediments, and ways in which the board can help. K-C also has an external advisory board for sustainability that meets with the company's C-suite executives twice a year to ensure that K-C is fully engaged in current thinking and discuss "what K-C should be worried about."

Apte defines the full scope of the company's interests in terms of sustainability. "K-C is not only looking at the supply chain - looking backwards at sourcing, procurement, design, and manufacturing," explained Apte, "but we are also interested in matters of safety and environment after our goods are produced. We define the entire continuum as the 'value chain,' thereby including marketing/selling and also disposal."

The business case

"Our tissues and paper towels are manufactured from trees and water, and our super absorbent materials are made from oil based polymers. It's in our company's interest to make sure that essential resources are available to the company well beyond 2015," explained Apte.

Furthermore, the younger generation of employees understand sustainability, so in order to attract the best talent, and engage the people who will be our future leaders, our company needs to be at the forefront.

Apte said that Sustainability 2015 is the "Right to Play" plan, ensuring that K-C has an opportunity to stay in the game with the resources it will need. The next sustainability plan for the board will be the "Right to Win," defining how K-C will gain the long-term advantage.

When the board of directors recognizes that sustainability is not only essential to the company's future, but also the key to the company's competitive advantage, then the company wins. So does the world.

Alice Korngold is CEO of Korngold Consulting LLC and a blogger for Fast Company, where this article was first published.  She has been a consultant to global corporations on CSR, training and the placement of business executives on nonprofit boards for 20 years. She also consults to nonprofit/NGO boards.

I heard a CEO recently say that his company has had a compound annual growth rate for sales of 29% since 1978 and an employee turnover rate of about 5% compared to an industry average of 110%. Those are numbers that get your attention.

When the same CEO talks about the trust that has been built in business relationships and characterizes the energy felt in the company as “joyful,” it is pretty evident his company isn’t Toyota, Goldman Sachs, Massey Energy, BP or a number of other companies that have recently been working out of crises.

Actually, he is talking about The Container Store. While many companies tout the importance of their people, Chairman and CEO Kip Tindell explains that for the Container Store “putting employees first is a profit strategy.” Employees are the #1 stakeholder. Paid 50% to 100% above industry average, Tindell says they receive about 240 hours of training compared to the industry average of seven hours. “You have to have a high level of service,” he explains, “to sell empty boxes.”

At the heart of his comments is the importance of the Foundation Principles Tindell created when Container Store was 10 years old and expanding. He wrote the principles so that new employees could better understand the culture. One of the principles is “communication is leadership.” He uses words like “consistent, reliable, predictable, effective, thoughtful, compassionate and courteous” to describe what communication looks like in the company. He says unabashedly, “We tell employees everything.”

Tindell characterizes the relationship with employees, suppliers and customers as being fun for everyone, where everyone is engaged. A byproduct, he feels, is that people identify with the brand so much they feel a part of it, passionately interested in helping the Container Store succeed. That was evident, for example, during the worst of the recession when suppliers gave the company better deals than they did others.

Tindell shared his stories at a conference on Conscious Capitalism at the end of May 2010 sponsored by the Conscious Capitalism Institute (CCI)  and Bentley University. He was joined by Gary Hirshberg, founder and CE-Yo (yes, that’s the title) of Stonyfield Farms,  which is the world’s largest organic yogurt producer, and Doug Rauch, who served as president of Trader Joe’s for the last 14 years of his 31 years with the company.

Stories about how purpose drives the business, how customers connect with the emphasis put on saving the environment, and how customers and employees are treated begin to create a different definition of “business as usual” for these companies.

Hirshberg tells those in attendance that he started Stonyfield 27 years ago with a question: “Is it possible to create an enterprise where everybody wins?” Stonyfield’s compound annual growth rate of over 24% in the last 18 years has successfully blended the company’s social, environmental and financial missions, he says. Trader Joe’s, explains Rauch, operates a purpose-driven business where employees know their opinions, as well as their advancement, matter; customers have made it more profitable than Whole Foods.  (John Mackey, Whole Foods Co-CEO, is also one of the leaders of the Conscious Capitalism movement.)

CCI, established a year ago, needs a broader array of stories going forward from leaders in other industries to illustrate the principles of companies driven by more than profit making a difference in the world. CCI wants to be the “knowledge hub” for the movement offering collaboration between corporations, research faculty at business schools, and thought leaders from consulting organizations.

Obviously, the idea behind a purpose-driven company didn’t start with Conscious Capitalism. Decades ago companies like the ones mentioned and others like Johnson & Johnson, Levi Straus, the Body Shop, and Ben & Jerry’s created strong brand loyalty around the quality of their products, loyalty to their customers, and the commitments they made to the world in which they lived. Fathers and mothers of operating with clearly expressed values and modeling the benefits of corporate social responsibility, they created a higher playing field for business.

However, as James O’Toole of the Daniels College of Business, University of Denver pointed out at the conference, a virtuous company is hard to sustain over time and especially if leaders change. Companies like Johnson & Johnson, Xerox, and Herman Miller are still around and their commitments regarding how they want to operate are intact even if interrupted or watered down at various times.

O’Toole, Daniels Distinguished Professor of Business Ethics, raised a critical question CCI and others will need to address: How can a “virtuous company” be made to last beyond its founder’s involvement with the company?

Conscious Capitalism is emerging at a time when how business operates is at a crossroad. It advances an approach by which a company can be profitable while also safeguarding trust, reputation, and credibility with stakeholders. It supports leaders in achieving their human potential and through that their business potential.

Raj Sisodia, co-founder and chairman of CCI and a professor of marketing at Bentley University, observes that traditional leadership models have outlived their usefulness. “The more self-actualized people become, the more we’ll need self-realized leaders who demonstrate mastery of serving some higher purpose and choosing right action.”

Conscious Capitalism is also at a crossroads. If it can learn from the success and missteps of other movements its voice will have more weight. It will need to determine what is a realistic bar for companies to measure themselves against as CCI seeks to change the way companies do business.

It will also need to address how founders pass on their purpose-driven passion to successors, and beyond that, how, from CEO to the next leader, cultures can maintain the focus on operating from a purpose bigger than delivering profit to shareholders, while keeping employees engaged, customers loyal, trust high, and reputation and financial strength intact.

In developing relevant research and providing a credible forum for the stories that demonstrate what is working and what isn’t, CCI has the opportunity to shape the future of the movement. It is a tall order but more than most people the leaders of Conscious Capitalism subscribe to the notion that the greatest opportunities emerge from the biggest challenges.

Gael O’Brien joins Business Ethics as a columnist. Gael is a thought leader on building leadership, trust, and reputation and writes The Week in Ethics, a weekly column at http://theweekinethics.wordpress.com

Whistle-blowing by employees and insiders is a “useful mechanism” for uncovering corporate misbehavior, with clear economic and governance impact on the companies involved, according to a new academic study.

“Whistle-blowing allegations had an immediate negative economic consequence for target firms,” the study found.  On average, the stock price of a target company fell 2.8 percent in the five days around the day an allegation became public and even more severely – an average of 7.3 percent - when the whistle-blower alleged “earnings management.”

The paper – Whistle-Blowing: Target Firm Characteristics and Economic Consequences – was written by Robert Bowen and Shiva Rajgopal, Professors of Accounting at University of Washington, and Andrew Call, Assistant Professor of Accounting at the University of Georgia.  Highlights of the paper were first posted on the Harvard Law School Forum for Corporate Governance and Financial Regulation.

In the wake of scandals at Enron, WorldCom and other companies, the Sarbanes-Oxley Act of 2002 incorporated provisions to encourage and protect whistle-blowers, including requirements for whistle-blowing “hotlines” that facilitate employee reporting.  The paper addresses critics who have argued that whistle-blowers often misjudge a situation and “indulge in trivial or frivolous complaints.”

“Our results suggest whistle-blowing is far from a trivial nuisance for targeted firms,” the paper reports, and provide “indirect evidence on the efficacy” of whistle-blowing protections in the Sarbanes-Oxley Act.

The researchers found that whistle-blowing generally led to more earnings restatements, more shareholder lawsuits, and “relatively poor operating and stock return performance” compared to other firms.  “Whistle-blower allegations appear to be an early indicator of future negative economic consequences for targeted firms,” the study found.

On average, whistle-blowing targets exposed in the press “improved several dimensions of governance relative to the year before the whistle-blowing event” and relative to a matched sample of control firms.   Those governance improvements were not apparent for firms subject to whistle-blowing allegations that were not widely disseminated, the researchers said.

High-growth companies and those with strong stock market performance are more likely to encounter whistle-blowing, according to the study, as are those that have recently made reductions in work force.  “Employees, especially former employees who have been let go, are more likely to make public allegations following layoffs,” the paper says. “Further, layoffs can increase the animosity between the firm and existing employees, and if existing employees perceive their job as being less secure, the potential cost of blowing the whistle decreases.”

.

McDonald's Corporation released a 2009 Corporate Responsibility Report focusing on the company's practices in "sustainable supply chain, nutrition and well-being, environmental responsibility, employment experience, community and corporate governance and ethics."

.

The company said highlights include:

• Sustainable Supply Chain – In 2008, 98% of the whitefish sourced for McDonald's Filet-O-Fish sandwiches originated from fisheries with favorable sustainability ratings
• Nutrition and Well-Being – All nine of McDonald's largest markets* offer a fruit and/or vegetable option for Happy Meals, such as fruit bags, cherry tomatoes, corn cups and Apple Dippers
• Environmental Responsibility - In McDonald's Europe, more than 80% of used cooking oil is converted into biodiesel fuel
• Employment Experience – More than 80% of company-owned restaurant employees in McDonald's nine largest markets say they would recommend working at McDonald’s to a friend
• Community – Since 2002, McDonald's and its customers have raised nearly $150 million to support the work of Ronald McDonald House Charities through our annual fundraiser, McHappy Day, to help children and their families in need around the world

The full report can be downloaded here.