Good for people – good for business: mainstreaming corporate responsibility through HR strategy in Asia-Pacific

One of the most important elements of CR is the way an organization treats its people. In addition, the engagement of the people who work for the organization is vital if CR is to become embedded in the company's culture. Effective HR management is therefore one of the key tools for implementing corporate responsibility across an organization – and our deep-rooted total quality culture has the effect of doing precisely this.

As part of our evolving Sustainable Excellence activity, the Rousset manufacturing site in France and the Asia-Pacific region are redefining and refreshing their HR activities within a CR context. Here we focus on how enlightened employment practices go hand in hand with corporate responsibility in ST's Asia-Pacific region. On the next page, we offer some updates on the work ongoing at Rousset.

Lay-Sin Lee, Corporate Responsibility Manager for the Asia-Pacific region, says it is all part of delivering continuous business improvement. Good CR, she says, is good for employees and good for business. "Definitely, there is a business case for corporate responsibility. It provides solutions to issues such as long-term sustainability, short-term risks to the community, cost reduction, and the satisfaction and engagement of our people. All these things are vital parts of our success. CR is also, of course, very important in terms of company image and reputation.

"We want to give our employees the best deal we can in every way, and at the same time we know that employee motivation and satisfaction is a key factor for achieving excellence in the company. It's also the case that when you improve one of these elements, it has a knock-on effect. For example, improving the engagement of our people boosts productivity. Satisfied employees are also good for the image of the company – making it more attractive to shareholders."

In 2005, ST AP region introduced an integrated approach to corporate responsibility and the Employer of Choice (EOC) initiative in each major country. The idea behind EOC is simple – that ST should be seen as the best place to work. Taking CR seriously is a vital part of this.

A CR/EOC committee was set up in each country. An Asia-Pacific executive committee reviews progress at a regional level and is represented at the company level on the Corporate Responsibility Advisory Council. An integrated CR/EOC framework gives the company a platform for evaluating risks, defining strategies, identifying where changes need to be made, and reviewing progress.

This framework is built around five core issues:

• People rights
• Excellence in people management
• Business integrity
• Stakeholder value
• Society and environmental sustainability.

Jean-Louis Champseix, Human Resources Director for the Asia-Pacific Region, says: "We strongly believe that using a common framework across borders helps us to duplicate best practices, educate employees and managers much faster, simplify the assessment of global risks, and provides us with the ability to deploy global initiatives. We believe that the Asia-Pacific model is very pragmatic and can be easily applied elsewhere. The key is using one common framework, whatever that is, and respecting local sites' autonomy to find their own speed and solutions. The culture is the same, but priorities may be different."

The initiative builds on well-established HR processes such as a sophisticated and comprehensive employee opinion survey. The survey covers all ST sites, but the action programs resulting from it are key to local implementation of CR and EOC. In fact, Asia-Pacific's CR/EOC initiative has itself evolved partially in response to employees' changing perception of Total Quality Management (TQM). As Jean-Louis Champseix points out, "TQM, as the culture of ST, needs to renew itself continuously to reflect the most recent direction and focus of the company as a whole. The essence of TQM remains, but it has evolved in 2005 to Sustainable Excellence." So the results of the opinion survey are being used to guide strategic thinking.

Champseix says, "Employees are the main actors of company success. So people engagement is not simply proof of an effective HR/CR strategy; it is also the main enabler for satisfying other stakeholders. It's a kind of 'moral' contract between our people and the company. They help us become a better employer: more responsible, more sustainable, and more effective, which in exchange provides them with a better reference, better employability, and higher rewards."

This high-level, long-term thinking is matched by positive, detailed action being taken in the workplace. Champseix says the CR/EOC initiative is helping the company to focus on taking practical measures that will help deliver significant business improvements. "One of the models we will use is the customized 360-degree feedback tool. In 2006, our aim is that at least half of all managers at job grade 14 and above will have taken part in a 360-degree feedback. This model will help to beef up the competencies of the managers through a journey of self discovery and action plans."

One of the next big challenges is to reinforce the message of corporate responsibility even in parts of the business – such as sales – where, traditionally, results have been everything. The thinking behind this process relates to the evolution of TQM into Sustainable Excellence. Champseix says, "It is a real challenge to continuously apply and live the principles of Sustainable Excellence in the sales environment where billings are of utmost importance. To help engage our sales force into putting their knowledge of Sustainable Excellence into practice, we developed a training package designed to incorporate quality, sales knowledge, and other aspects of corporate responsibility together. This new training package will roll out in May 2006 and it will be used worldwide in all sales regions."

There are, of course, many other significant challenges ahead. Many are areas where, as Jean-Louis Champseix points out, the company has to work with a range of other agencies and organizations. "2005 was a turning point in this regard. For example, we started to work with many partners, including competitors, governments, embassies, and medical organizations to prepare ourselves in case of an H5N1 (avian flu) pandemic. Taking this forward, in 2006 we will have to build stronger external partnerships to bring about required changes especially in the area of the supply chain."

Another challenge is the general issue of human rights, especially where it relates to the company's own workforce. Champseix says, "Working to uphold human rights is an area where the company is looking to work closely with other stakeholders. There are many sensitive issues here – for example the use of subtle forms of 'bonded labor', though we have taken important steps in regard to this. The biggest improvement area related to the high agency fee charged to our workers from China by recruitment agencies. They have to use a large part of their salary to pay back the agency fee. We now use alternate agencies, with ST paying part of the fee incurred by the workers, and reimbursing the rest in the first years. On top of this, since 2005, ST has extended some benefits such as the free medical check-up to foreign workers."

The second big area of improvement, he says, relates to the training bond. ST is transferring a lot of processes from the USA and Europe toward Asia, and some workers may be sent for six months' overseas training. "Training costs become high compared with salaries, and therefore almost impossible to reimburse if the worker chooses to resign," says Champseix. In line with the Employer of Choice initiative, ST has set out to reduce, if not eliminate, this training bond. The Singapore CR/EOC committee has submitted the proposal to stop the practice, and Asia-Pacific EXCO has approved.