Corporate Social Responsibility: Barratt Developments Plc


 


            As contemporary organizations move into a more ethical global business environment, trickling down of corporate social values and mission to the greater public is now deemed a requirement. Regardless of corporate beliefs and culture, the economic or productive value of modern organizations is nonetheless derivative from its worth and its extension of organization’s profundity for wealth-profit index by which serves as the competitive measure to sustain its very existence (Henriques, 2003). In simpler terms, corporations are now perceived in the forefront to promote sustainable social development by sharing its resources for the projects, programmes and initiatives which have a social cause. Dubbed as corporate social responsibility or CSR, companies at present are obliged to act responsibly and expected to be sensitive about ethical issues (Carroll, 1979, p. 500). Barratt Developments Plc is not an exemption. As Britain’s largest house builder, Barratt is committed in enhancing the relationship and confidence of stakeholder, protecting the corporate image, bolstering internal communication, streamlining responses to ethical dilemmas and increasing integration and alignment of CSR strategies.


 


The question now is why CSR is relevant today for companies like Barratt. The answer lies in the four identifiable trends of CSR, which seem likely to continue and grow in importance: increasing affluence, changing societal expectations, globalization and free flow of information and ecological sustainability. As customers are increasingly endowed with the access to various products and services, responding to affluence is now a strategic objective hence putting a premium to a trusted brand was realized. These customers expect more from the companies where they would afford products and services, implicating public trust and public confidence in the ability of companies to restrict and control own corporate excess. Media, further, are empowered in bringing the public the information of the lapses in CSR. Such situation also empowers activist groups and like-minded people in spreading messages and providing the means to coordinate collective action. Evidenced proved that earth has ecological limits with impacts on the environmental responsibilities that are likely to be criticized and penalized when not performed thoroughly (Werther and Chandler, 2006, pp. 19-20; McComb, 2002, p. 5).     


 


Barratt’s organizational aim echoes the commitment to communal development as it purports to “maximise value for shareholders by creating outstanding places to live and work for our customers and their communities.” Likewise, Barratt is serious when it states that corporate responsibility means to build homes and not houses, create communities, not individual dwellings and build for tomorrow not for today. As what Werther and Chandler (2006, p. 8) put is, an organization’s legitimacy over the long-term is evidenced by CSR whereby without economic interface, it could lose its mechanism of accountability. Realizing this matter, CSR therefore could be both critical and controversial. Critical because a for-profit organization such as Barratt is the largest and most innovative part of any free society’s economy: It drives social progress and affluence. Important to note is that companies are intertwined with the societies in which they operate in mutually beneficial ways. On the other hand, controversy about CSR prevails with the perennial question: What is the purpose of business within a society? Having thought deeply of such a question, striking a balance between corporate and social responsibilities should be a strategic focus. Packard (as cited in Handy, 2002, p. 54) relates that:


 


“I think that many people assume, wrongly, that a company exists only simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably conclude that a group of people get together and exist as an institution that we a company so that they are able to accomplish something collectively that they could not accomplish separately – they make a contribution to society, a phrase which sounds trite but is fundamental.”  


 


            True enough, Barratt approaches its corporate responsibility (CR) by means of embracing the principles of CR and publicly stating such commitment via a Corporate Responsibility policy. Associated with CSR are economic, legal and ethical responsibilities that Barratt must also engaged into. Not only that Barratt has to make profit in order to survive, the organization is obliged to its shareholders to maximize earnings, and operate efficiently. Sims (2003, p. 55) asserts that this forms the foundation on which all else is built. Barratt is obliged to comply with the rules and regulations that the government imposes as well with ethical responsibilities that obliged it to do what is right, just and fair (Carroll, 1991, p. 41). Barratt is governed by seven strategic CR objectives: governance and management systems, stakeholders and community, creating value for society, managing environmental impacts, procurement and design, occupational health and safety, and employment and diversity (CR Report, 2006, p. 9). As such, Barratt developed six charters with reference to these strategic objectives which include community, customer, environment, supply chain, health and safety and people. Coupled with this CR charters are key CR risks. Sims (2003, p. 44) highlights that an organization should engage in activities that protect and contribute to the welfare of the society especially those who are affected by the organizations actions. With this said, Barratt puts emphasis on how they can provide a quality, sustainable living to both internal and external stakeholders.


 


According to Epstein (1987, pp. 99-102), corporate social responsiveness focuses on the individual and organizational processes for determining, implementing, and evaluating the firm’s capacity to anticipate, respond to, and manage the issues and problems arising from the diverse claims and expectations of these stakeholders. The moral argument for CSR, which holds true specifically for Barratt, states that CSR ‘broadly represents the relationship between a company and the principles expected by the wider society within which it operates’ (Werther and Chandler, 2006, p. 16; Lea, 2002, p. 10). CSR assumes that Barratt does not exist in a vacuum and that a large part of the company’s success comes from actions which are congruent with societal values as from factors internal to Barratt. At Barratt, a risk-based approached was developed. For the community charter, for instance, Barratt aspires to ensure that the built communities should have positive economic and social impact not just for the dwellers themselves but also for who live around them. CR risks, however, are community dissatisfaction with development, quality of design and layout, failure to maximize local and economic social development through schemes and increasing requirement to build affordable housing. Barratt respond to such dilemmas through community consultation, design guide, urban regeneration schemes and partnerships with registered social landlords and affordability initiatives, respectively (CR Report, 2008, pp. 8-9).


 


            Continuously, in order that Barratt could respond to identified customer CR risks which included quality of work and service, control of subcontractors, training for staff and failure to maintain communication with customers, what the company did was established Customer Service Charter, Code of Practice and Code of Conduct as well as conducted customer-focused training. Through an online communication system, there had been a constant, ongoing interface with the customers. Providing highest levels of service to customers, in addition, implicates acquiring the highest quality people and so Barratt made a vow to continuously develop its manpower to meet and exceed the demands and expectations of the customers (CR Report, 2008, pp. 10-11). Economic argument for CSR clearly embodies such endeavour as CSR adds value to Barratt as the company reflects the needs and concerns of not just the primary stakeholders but also the secondary stakeholders such as the customers (Sims, 2003, p. 41; Werther and Chandler, 2006, p. 18; Carroll, 1979, p. 500).       


 


            Progressively higher standards shall not only focus on the internal affairs of Barratt, instead must also deal with the environmental effects of the operation. Barratt is well aware that reducing own and the customer’s environmental impacts is a necessity if it means to improve the quality of the built environment. There are environment CR risks, however, such as government legislation including waste legislation, climate change, water supply and use, pollution incidents and sustaining biodiversity. Barratt acted upon these risks through planning applications to Code Level 3 and Barratt Green House (CR Report, 2008, pp.12-15). Code Level 3 is Code for Sustainable Homes’s (CSH) provision for materials where concern issues are environmental impact of materials and responsible sourcing of materials both for basic elements and finishing elements (Department of Communities and Local Government, 2006). Where individuals and activist organisations to enact changes, CSR represents a means of anticipating and reflecting environmental concerns to minimise operational and financial limitations on business. Rational argument for CSR is summarised by the iron law of social responsibility, stating that in a free society discretionary abuse of societal responsibilities eventually leads to mandated solutions (Werther and Chandler, 2006, p. 18; Carroll, 1979, p. 500); CSH is one among the many regulations that support the conduct of builders and developers, that is. 


           


            To incorporate CSR into operations offers a potential point of differentiation and competitive market advantage upon which future success can be built, besides avoiding moral, legal and other sanctions (Werther and Chandler, 2006, p. 18; Porter and Kramer, 2002, p. 67). In lieu with this, Barratt also aims to continually improve its standard of procurement and design despite the supply chain CR risks as environmental impact of materials, sustainable timber procurement, packaging waste and product development to meet government targets. For Barratt, it could effectively reduce its environmental and social impacts by means of working in partnership with the suppliers and subcontractors. Aside from this, Barratt created an Ethical Procurement and Sustainable Timber Procurement policies (CR Report, 2008, pp.16-17). Werther and Chandler (2006, p. 18) also has an explanation for these actions as the rational argument for CSR goes to show that modern businesses seek to maximise their operation on the basis of minimising restrictions on operations by which when not implemented effectively could lead to the loss of societal legitimacy. Likewise, the economic argument of CSR also supports Barratt supply chain charter’s undertaking (Carroll, 1979, p. 500); CSR is a way of matching corporate operations with societal values at a time when parameters are constantly changing while also maximising its financial viability over the long term.   


 


            Health, safety and welfare of its workforce and its public as well is a priority for Barratt whereby policies center on reducing accidents and fatalities in the workplace while spontaneously achieving continuous professional development. Barratt performs management system, risk identification and performance monitoring and adheres to IEMA certification, CSCS target and training matrix (CR Report, 2008, pp.18-19). Moreover, for the purpose that the workforce will have the opportunity to climb the corporate ladder, Barratt develops the talents of its employees, maximising their career potential while also providing rewarding careers embedded on an environment that ensures equal opportunities. Nevertheless, Barratt needs to combat people CR risks consisting of access to skilled workforce, staff retention, sickness absence and building a diverse workforce. Four strategies are being utilised for addressing such risks: leadership development, graduate programme, engagement index and diversity strategy (CR Report, 2008, pp.20-21). Barratt follows the principle that the social responsibilities of construction businesses must begin at its core; that is, by adapting values that its employees can relate to (CIOB, 2008, p. 4).  These aspects of Barratt are best explained by proaction and defense aspects of corporate social responsiveness.


 


            Proaction is considered as the highest level of responsiveness to social issues where companies actively seek to improve and contribute to society. Companies with proactive philosophy will try to carry out discretionary responsibilities (as cited in Harila and Petrini, 2003, p. 32). Proaction is an approach to corporate social responsibility that includes behaviors that improve society. Organizations that assume a proaction strategy subscribe to the notion of social responsiveness. Proaction according to Carroll (1979, p. 501); Joyner and Payne (2002, p. 298) involves actively addressing specific concerns of stakeholders and anticipating social problems before they arise or are officially recognized, and developing strategies to deal with these issues. Barratt recognises that its workforce as a primary stakeholder contributes significantly with the broad objectives of the company, seeking to develop good relations with them through regular communications and consultation. Aside from practicing equal opportunities, Barratt continues to encourage diversity of its workforce. Employee training and development at all levels succession planning arrangements and a management development and support programme are also inexistence as part of the ‘Forward through Quality’ initiative.


 


              A defensive philosophy will only fulfill its legal responsibilities in relation to the social issues including labour relations that a company faces (Harila and Petrini, 2003, p. 34).  Inside Barratt, there are four primary activities intended for the workforce: engagement, training and development, encouraging success and recruitment and retention. Barratt management introduced the Engagement Index so that the people will understand and follow the company’s strategic aims, objectives and ways of working. Improving the calibre, capability and leadership of the people is accomplished by developing robust succession plans and ensuring that talent development is embedded within the organisation, and is being measured through a Capability Index. People Key Performance Indicators are also well-established in order that Barratt could develop a strong performance culture. Finally, Barratt has a clear reward and recognition structure via the implementation of comprehensive HR policies, the provision for flexible and aligned benefits and the recognition of great performance through awards, instant recognition and incentives (CR Report, 2008, p. 20).     


 


            Moving into the broader context, despite the model of corporate governance a firm employs, it assumes a certain social responsibility that is widely recognised as CSR. Corporate governance within the building and construction industry has a specific physical nature of the product, structure of the industry and organisation of the building and construction process (Petrovic-Lazarevic, 2004, p. 3). Products of the industry are located in specific geographic area are not generally transportable, aside from being usually made to meet the requirements of each customer. More specifically, the process of building is known as either bespoke or off-the-peg process. For companies belonging to this industry including Barratt to remain competitive must have to be highly innovative not only in providing their effective and efficient building and constructing services but also in managing their business and in doing it responsibly, lawfully and ethically (Price and Newson, 2003, p. 190). A consequence is that companies are keen in achieving excellence in terms of safety, cost, quality and value with increasing concern relating to social integrity and supporting a healthy environment (Petrovic-Lazarevic, 2004, p. 4).


 


            O’Meara (2003, p. 30) argues that the majority of corporations of today apply a corporate governance structure that allows key executives to jeopradise business ethics. Oftentimes, construction companies have communication problems with their community, and as exacerbated by inter-stakeholders which impose goals that endanger social values. Conflicts are also realised in what corporate leaders understand as community requirements in treating employees, suppliers and customers without prejudice and acting ethically minus the necessity to respond collectively (Petrovic-Lazarevic, 2004, p.5). As such, the key in solving ethical problems as an ethical reasoning which is mirrored by organisational ethical behaviours is central to the concept of CSR, by which in return significantly affects the organisational competitive advantage. In a simplified aspect, CSR is implemented in the building and construction industry for the purpose of maintaining an image of good corporate citizenship. Petrovic-Lazarevic (2005, p. 93) relates that CSR relevant to the construction industry is defined including the following activities: moral obligation to be a good citizen; sustainability; reputation; relationship with employees and unions; relationship with suppliers and community representatives; and commitment to reporting on CSR. A socially responsible business, companies shall strive at applying a corporate governance structure that takes into consideration working environment concerns and improving their sustainability, occupational health and safety measures, relationships with suppliers and commitment to local community protection and engagement.      


 


            The Chartered Institute of Building (CIOB, 2008p, 2) narrates that there are several areas that construction companies should be addressing in becoming more socially responsible including ethics, human rights, community, environment and employee relations. The institution contends that “within the construction industry, companies have long been aware of the need to consider the environmental impacts of a building. Community relations have also been an integral part of construction since buildings usually have a large impact on society, on a local, national and even international scale.” However, there are instances that being socially responsible can no longer assumed to be covered by standard construction procedures. Within the industry, CSR means taking a fresh approach to the construction company’s objectives but that does not mean to compromise business standards or values. In the industry, as well, the reputation of the business and the quality of the work are inherently subjected to public and media scrutiny. Thus, having a competitive edge is crucial for the survival of any construction firm, and that CSR provides an opportunity for companies to demonstrate industry leadership.   


 


Considering the case of Barratt, these issues are already ingrained in the conduct of the business as evidenced by the seven strategic CR objectives. On the other hand, this does not mean that maintaining a successful financial bottomline could be in tradeoff of reducing environmental and social impacts of the business; strking a balance is thereby important. A fact is that the approach in becoming a CSR leader in the building and construction industry is built upon the awareness of social and environmental needs stakeholder demands and expectations and responding to these in a prompt and effective manner while also remaining lucrative and competitive while doing so. CIOB (2008) also stipulates potential benefits of CSR to construction companies; while for Barratt, these benefits are already being reaped off. Barratt, as a matter of factly, already had an enhanced reputation, competitive edge, better risk management and a more committed workforce despite the ongoing construction industry blunder worldwide. As an integral part of the operations of Barratt, commitment to CSR is clearly manifested in the quality of workforce, quality of processes, quality of management and quality of products and services.    


 


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Reference:


 


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