Employees' Satisfaction and CSR practices: case study
Transcript of Employees' Satisfaction and CSR practices: case study
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Employees' Satisfaction and CSR practices: case study
Dr. Khaled Ibrahim Attia
Arab Academy for Science and Technology and Maritime Transport
Dr. Mohammed Wahba
Arab Academy for Science and Technology and Maritime Transport
Mr.Eslam Ahmed Hussein
Arab Academy for Science and Technology and Maritime Transport
Abstract:
Corporate social responsibility becomes more important for corporate survival, at
the same time the manpower represents the most valuable asset/resource that creates
value for modern firms, the present study attempts to investigate and modeling the
relationship between Corporate Social Responsibility (CSR) practices and overall
employee satisfaction which represents a compound mental process. The authors
examined the impact of five dimensions of Social Accountability Standards (SA8000)
practices on employee satisfaction: Health and safety, unions and bargaining right,
discrimination, work life balance and sufficient wage. As CSR is a social concept,
case study was used to involve and understand the concept action, and data gathered
through a survey. A proposed model was tested on a sample of 199 employees, that
represents 49% response rate, within an Egyptian firm that is operating within the
textile industry. Results showed that all internal CSR dimensions are significantly and
positively related to satisfaction. In addition, the findings of the present study provide
evidence to suggest a model can be developed to enhance satisfaction based on CSR
practices. Limitations of the study, directions for future research, and implications of
the findings are highlighted.
Keywords: CSR, Employee Satisfaction, SA8000 practices.
1. Introduction
There is a real growing trend that includes Consumers and employees to become
aware of the social consequences of their behavior and intangible attributes of
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companies and they are increasingly attracted to brands and companies that are known
for developing cause-related relationships and social responsibilities (Cone Case
Evolution studies, 2013; SAI,2015c).
Corporate reputation and social activities accomplished by any firm that is operating
with any society turned to be more important, durable and resistant to competitive
pressures than product and service attributes (Illia and Balmer, 2012; Casado-Diaz, et
al, 2014).
Different types of pressures are being exerted on all types of firms. Pressures from
employees for better working conditions, others from local communities for a
healthier environment… etc., are always maintained.
History of business provides evidence to suggest that researchers,scholars as well as
practioners be also very much concerned with the impact of CSR practices on the
overall firms' performance.
As far as the present study concerned with CSR practices and their impact on the
employee satisfaction,the researchers are going to examine the impact of five
dimensions of Social Accountability Standards (SA8000) practices on employee
satisfaction: Health and safety, unions and bargaining right, discrimination, work life
balance and sufficient wage.
Literature Review:
Economic and social changes enforced policy makers to recognize that poverty
alleviation and sustainable development cannot be achieved through government
alone, and that the pursuit of economic growth through employment creation and
income generation should be balanced with protection of the basic rights of workers
(Craig, 2011). In the past two decades, standardization imposed by multinationals on
their subsidiaries operating in developing countries, that initiated conceptual and
legalization changes (Dunning, 2003). Many developing countries launched plans for
economic, social and environmental development that emphasis improvements of
lifestyle, social protection and labor markets. For example, the social protection
expenditures in Egypt and Tunisia raised to 9% and 5% of GDP respectively (Silva et
al., 2012).
A growing number of companies have aligned to the idea of Companies’
Responsibility (CR), which challenges the institutional model of corporations where it
incorporates the social and environmental impact of business practices into CR (Li &
Geiser, 2005; Windell, 2006; Hiscox et al., 2008). For example, at the beginning of
2014, 3388 organizations were socially certified, whose headquarters are located in 71
different Countries and with a total of 2,019,193 employees (Merli et al., 2015). Civic
and value driven social and environmental standards, such as Fair Trade, Organic,
Hazard Analysis & Critical Control Points (HACCP) and International Organization
for Standardization (ISO) standards, are becoming more and more like industrial
conventions (McEwan & Bek, 2009). Practitioners and scholars proposed that CSR
management issues should be indispensable to business strategy and CSR
management should be part of the overall management strategy (Porter and Kramer,
2006; Katamba, et al, 2012; Lee, 2008; Casado-Diaz, et al, 2014). International bodies
supported such efforts, for example; United Nations Global Compact, issued The 10
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Principles (UNGC, 2002), Organization of Economic Co-operation and Development
(OECD), issued its Guidelines for Multinationals to Engage in CSR, and ISO,
released the ISO 26000 standard In 2010. Such development issues complemented
with core concerns of international business ethics (Kline, 2005).
CSR is a ‘business-driven' initiative. It is the voluntary contribution of business to
sustainable development which takes into consideration the interests of stakeholders
(Stamm, 2004; Zafar et al., 2014). CSR has been described as the extent to which
organizational outcomes are consistent with social values and expectations (Lerner
and Fryxell, 1988), ‘sensitizing concept’ and ‘interface management’ (Jonker and
Pijkeren, 2006), and as 'the responsibility of enterprises for their impacts on society'
(European Commission, 2012; Ayuso, et al, 2013). The CSR concepts and
foundations, such as Carroll's CSR pyramid and Social Exchange Theory (SET), have
become a necessity that emerged from changes such as; globalization, empowered
social societies that associated with developed social values, government initiatives,
codes and standards, CSR goes beyond philanthropy and charity; it is about ethics,
religion moral, caring, culture, philosophy and values which will ultimately translate
into good business sense, good practice, good governance, transparency saving from
recycling, energy and water use and better resource material management and better
profit (Rosamaria Moura‐ Leite & Robert, 2011; Zizek and Mulej, 2013; Fombrun,
1996; Fombrun and Van Riel, 2004; Russell and Marie, 2005; Cropanzano and
Mitchell, 2005; DeConinck, 2010; Karanges et al., 2014; Carroll, 1979; Carroll, 1991;
Zabin, 2013 and CEBCglobal, 2005). Integrating CSR into the value chain is a source
of competitive advantage (Porter and Kramer, 2006) and enhanced reputation With
better financial performance, and the ability to attract foreign investors and greater
customer satisfaction and employee commitment (Bayoud and Kavanagh, 2012).
Because the most important recourse is the human resource through which companies
can gain nonrecurring competitive advantage, the importance of social responsibility
towards employees is paramount. CSR information reflects an important side of ethics
within a company that helps legitimize corporate behavior and contributes in
generating a positive corporate reputation (Colleoni, 2013). More than 80 percent of
Fortune 500 companies address CSR reports on their web sites (Lii and Lee, 2012).
2.1 Social accountability SA8000
There are standards that partly or fully covers CSR and social accountability, such as;
AA1000 series, Global Reporting Initiative (GRI), Business Social Compliance
initiative (BSCI), Sedexglobal, SA8000 and ISO 26000. ISO 26000 and SA8000
covers the same scope with different purpose; ISO standard is a guidance standard,
whereas the SA8000 could be used as a management and operational standard that a
company may be certified against (Hemphill, 2013; Bazillier and Vauday, 2014).
SA8000 and similar codes are voluntary requirements to improve workplace
conditions, especially in nations that lack robust enforcement of regulatory standards
(Hiscox, et al, 2008). SA8000 expands on the eight conventions of International
Labor Organization (ILO's) Declaration of Fundamental Principles of Rights at Work
which covers child labor, forced labor, discrimination and free association and
collective bargaining to include standards on health and safety, working hours, wages,
and discipline.
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2.2 Job satisfaction & SCR
Sustainable competitive advantage could be obtained by building resources that are
both valuable and hard for competitors to imitate. Workers tasks are complicated and
much harder to quantify, therefore, employee's satisfaction and engagement represent
an intrinsic motives that have valuable effect on productivity, corporate returns and
repetitions (Saks 2006; Shuck and Wollard, 2010; Eikhof, et. al., 2007; Rania, et al,
2011; Luthans, 1998; Colquitt, 2009). Social exchange relationships play a critical
role in shaping work environments and employees' satisfaction (Bartunek and Dutton
2000; Masterson et al., 2000). Employee attitudes relating to job satisfaction and
organizational commitment are of major interest to the field of organizational
behavior and the practice of human resources management (Ohiwerei, et al, 2011;
Shujat, et al, 2011). The estimation of job satisfaction, which includes both physical
and psychological factors, is a compound mental process, which starts from the
evaluation of one‘s own expectations on the ideal job and ends with the general well-
being of the employee, it (Depedri, et al, 2010).
To understand the adoption and influence of standards, it is important to study
specific situations in which standards evolve. Adopting SCR results in Key benefits
and a successful CSR strategy has to be context specific for each individual business
(Brunsson & Jacobsson, 2002; Van Marrewijk, 2003), i.e. the institutional context.
2.3 Health and safety requirement
Studies have found that Occupational Safety and Health (OSH) that has been
performed by company not only provide a sense of security to employees, but also
could provide satisfaction to employees (Yusuf et al., 2012). Safety climate is a series
of actions and a coherent set of perceptions and expectations that workers have
regarding safety in their organization (Gyekye, 2005). SA8000 seeks to ensure that
workers have a safe and healthy workplace, where adequate preventive measures are
taken to minimize, and where possible eliminate health and safety risks both in the
short and long term. At the enterprise level, especially in the developed world, there is
increasing concern of the need to provide a safe and healthy work environment, to the
degree that employers should seek to eliminate risk where possible and provide
training about the potential hazards of the workplace. Such recognition is driven by
tougher penalties and higher costs of non-compliance, as well as cost savings,
efficiency and employee retention gains. Interviewing workers and open-end
questions are critical for an evaluation of OSH conditions.
2.4 Freedom of association and the right to collective bargaining
Workers have the freedom to form and join any trade union they choose, free of any
form of interference from employers or competing organizations set up or backed by
the employer. Collective bargaining is the voluntary negotiation between employers
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and organizations of workers in order to establish the regulation of terms and
conditions of employment by means of collective agreements. In the absence of
coverage, workers may benefit from union membership (Bryson and Freeman, 2006).
SA8000 requires that employers permit, without any direct or indirect impediments or
negative consequences for any workers, non-violent efforts towards worker
organizing, trade union membership, and collective bargaining. Examples of issues
that should be considered are legal challenges or discrimination against trade union.
Annual Survey of Violations of Trade Union Rights, which is published by the
International Confederation of Free Trade Unions (www.icftu.org), keeps watch on
updates concerning unions and associations
2.5 Discrimination
It refers to any distinction, exclusion or preference, which has the effect of nullifying
or impairing equality of opportunity or treatment. Studies examined employees'
perceptions of discrimination that affect their work-related attitudes revealed that all
three types of perceived discrimination have an effect on organizational commitment,
job satisfaction, and organizational citizenship behavior (Sanchez & Brock, 1996;
Ensher et al, 2001). SA8000 seeks to ensure equal and respectful treatment for all
workers in all matters. Employees should be employed, trained, promoted and
compensated solely on the basis of their job performance and they should be free from
all types of indecent verbal, physical and sexual harassment and other discriminatory
practices. Positive discrimination could be exist and required, for example; women
engaged in hazardous work, night work, underground work and work during
pregnancy and/or nursing period. Discrimination may cause vital consequences, a
clear example of employees' discrimination was in 2000, where Coca-Cola company
paid 192.5$ million as a settlement for discrimination against African-American
employees. According to gender gap index in 2010, issued by UNICEF, Egypt rank is
125 of 134 countries.
2.6 Work life balance
For those in employment, and especially dual-income households, the challenge
posed by reconciling the growing demands of work with caring responsibilities
outside the workplace. It is one of the dominant issues facing family life in modern
societies. Apart from career life, work life balance is that segment which includes
family, personal growth, fitness and health, community relations and friendship
(Raisinghani and Goswami, 2014; Greenhaus et al., 2003). Work life balance is an
escalating issue, for example; in the EU as a whole, part-time working accounts for
only 6% of male employment and 33.3% of female employment (EU-LFS). Job
satisfaction is one of the factors diminishing work life conflict (Saif, et al, 2011;
Maren et al. 2013). SA8000 deals with methods and ways to reach harmonious
balance between work responsibilities, private responsibilities and personal interests.
2.7 Numeration
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The compensation and rewards received for workers' work consist of all the economic
benefits supplied by the organization, as pay, promotion, and other benefits, including
verbal recognition and responsibilities. Satisfaction with pay and job security are the
most important job satisfaction categories (Clark, 1997). The most studied reward is
wage; the wage is the central focus of the incentive scheme, which aims at inducing
workers to exert the optimal effort level (Depedri, et al, 2010). The differences in
wages among co-workers, which is an index of distributive fairness, negatively affect
job satisfaction (Benz, 2005) and consider a critical violation of employee' social
rights.
3. The Study Research Objective:
This research attempts to assess the relationships between some of SA8000
perspectives with employees' satisfaction. The research uses case study technique
within textile industry in Egypt. It comes in three parts, starting with a presentation of
employee satisfaction as a dependent factor with five SA8000 perspectives as
independent factors, then, assessing factors within a case study and analyzing results.
Finally, presenting conclusions, recommendations and further research.
4.Research Methodology and Design:
4.1 Research Approach
To realize the objectives of the present study, the following methodological
techniques have been adopted.
4.2 Research Variables & Measurements:
A number of variables were considered for this study. The Independent variables of
this research were Good conditions of Health and Safety, the right of Unionization
and bargaining power, Non Discrimination, Work life balance and Fair and Sufficient
Wage pay. The dependent variables used were measures of employee satisfaction.
4.3 RESEARCH HYPOTHESIS:
Hypothesis 1: There will be a significant relationship between Good conditions of
Health and Safety, and Employee Satisfaction.
Hypothesis 2: There will be a significant relationship between the right to create
Unionization and having bargaining power, and Employee Satisfaction.
Hypothesis 3: There will be a significant relationship between Non Discrimination,
and Employee Satisfaction.
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Hypothesis 4: There will be a significant relationship between Work Life Balance,
and Employee Satisfaction.
Hypothesis 5: There will be a significant relationship between Fair and sufficient
Wage Pay, and Employee Satisfaction.
4.4 Research Framework:
The framework utilized for this research was model consists of the five practices of
SA 8000 Standard that are believed to achieve employee satisfaction. The five
practices are Good conditions of Health and Safety, the right of Unionization and
bargaining power, Non Discrimination, Work life balance and Fair and Sufficient
Wage pay. The dependent variables used were measures of employee satisfaction.
The study model is illustrated in figure (1.1).
Figure (1) Study Model
INDEPENDENT VARIABLES DEPENDENT VARIABLES
Employee Satisfaction Non Discrimination
Unionization Right and bargaining power
Work Life Balance
Fair and sufficient Wage Pay
Good conditions of Health and Safety
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4.5 Sampling Size and method
The main goal of this study was to develop the conceptual model to measure the
direct effects of the five SA8000 practices on General Employee Satisfaction in one
of Multinational Textile Companies in Egypt. The specific sample was comprised of
199 out of 800 employees working in one of Multinational Textile Companies in
Egypt. The Sample includes different employees groups classified basing on;
Department, Current position, Level, Gender, Age, years of Experience.
4.6 Data Analysis Techniques:
To accomplish the main goal of this study, three sub-objectives were investigated.
The first sub-objective was to develop a valid and reliable measurement model. The
second Sub-objective was to investigate the direct effects of the five practices of
SA8000 on Employee Satisfaction. The third sub-objective of this study was to
investigate the different effects of the five practices of SA8000 on different employee
groups in the organization.
To test validity and reliability of the measurement scales, factor analyses were
conducted. The results of Cronbachs Alpha and Internal Consistency showed that the
measurement scales were indeed valid and reliable. Correlation analysis was
employed to examine the direct effects of the five SA8000 Practices and General
Employee Satisfaction. Simple Regression Analysis was further conducted due to the
existence of Multicollinearity effect among independent variables. To investigate the
different effects of Talent Management on different employee groups ANOVA
analysis was conducted.
5.Research findings:
The salient findings realizd through the present study can be highlighted as follows :
First ,Analysis:
Gaps in official statistics, and the limited availability of administrative statistics on
flexible working arrangements, make it imperative to gather data and generate
statistics from independent research methods, such as surveys.
To explore the organization's effort to promote their social mission statement,
involving the employees and the way its gaining competitive advantage, the
researchers used both qualitative as well as quantitative methods of research.
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In 2014, a structured interview throughout self-administered questionnaire was used
to collect the necessary data. The questions were mainly inspired by KILIÇ & SELVİ
(2009) and Mukururi,Ngari (2014). A total of 400 questionnaires were distributed, out
of which 199 were returned back. Most of the respondents were collected from
production sections (44%), maintenance section (18.5%), quality section (7.5%) and
accounting (5%). Female constituted only 3.5% of total respondents. All statistical
analysis was performed using SPSS (release 20.0). Scale reliability was assessed
using Cronbach's α. The α values ranged from 0.87 to 0.92 (higher than 0.70
recommended by Nunnally (1978) & Malhotra (2004)) (Table-1). The validity of the
variables reflects their robustness; the variables within this research are global
measures of social accountability.
Table (1): Cronbach's alpha of Study Variables
SA8000 dimensions Cronbach's alpha
(composite reliability)
Health and Safety 0.920
Unionization 0.892
Discrimination 0.871
Work Life Balance 0.901
Wages 0.889
Employee Satisfaction 0.907
Between employees' satisfaction and SA8000 variables, a bi-variate Pearson
correlation was carried out and results were reported in table (2). By examining the
table, significant correlation exists between satisfaction and SA8000 variables.
Table (2 ) Internal consistency of the study variables
Employee
Satisfaction
Pearson
Correlation P
Employee
Satisfaction
Pearson
Correlation P
Work Life
Balance .803** 0.0001
Health and
Safety .599** 0.0001
Wages .847** 0.0001 Unionization .823** 0.0001
Discrimination .849** 0.0001
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Univariate ANOVAs were performed as post hoc analysis (table-3).
Table (3-b) ANOVA test of the study variables
ANOVA
Model Sum of
Squares df
Mean Square
F Sig.
Regression (between groups)
9314.11 5 1862.823 390.124 .000
Residual (within groups) 921.565 193 4.775
Total 10235.7 198
ANOVA test of the study variables which equal 2-tailed T test is the technique used
to determine the equality of means. The results indicate significant difference between
groups and that the model can predict the dependent variable (satisfaction).
The multivariate and regression analysis indicated the relationships between
dependent and independent variables and their strengths and directions.
Table (4): Regression analysis of different factors affecting on employee
satisfaction
Model Summary
Model R (R2)R Square Adjusted(R2)
R Square Std. Error of the Estimate
Dimension 01 .954a 0.91 0.908 2.18517
R2 indicates the proportion of the variance in the dependent variable (satisfaction)
that is explained by the combined impact of the independent variables (SA8000
perspectives).
Table (5) Multi Variation and Regression Analysis
Coefficients
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Model
Unstandardized Coefficients
Standardized Coefficients t Sig.
B Std. Error Beta
(Constant) -4.690 1.468 -3.195 0.002
Health and Safety -0.143 0.028 -0.187 -5.106 0.0001
Unionization 0.685 0.063 0.437 10.824 0.0001
Discrimination 0.820 0.075 0.452 10.874 0.0001
Work Life Balance
0.351 0.091 0.171 3.866 0.0001
Wages 0.420 0.117 0.167 3.597 0.0001
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Second:findings,discussion & conclusions:
The analysis supported the association between variables and could be used to
develop a model that predicts the management efforts to affect employees’
satisfaction and hence their productivity. As adjusted (R2) is preferred when there are
many independent variables, the (R2) R Square (goodness of fit) which means that
practices within the scope of the study, predicted the employees' satisfaction by 90%
with only 2.18 percentage of error. On the other hand, the analysis coefficients (table-
5) tell us the weight and direction (positive or inverse) of the relationship of each
independent variable with the dependent variable. The unstandardized coefficients are
useful to compare each variable between the regressions and its 'B' can only be
compared with other variables measured in the same units as the case under study. 't'
value and significance of variables indicated that all variables Work together
(associated) and that Unionization and Discrimination have the Strongest and Most
significant Impact on Satisfaction. The negative sign of the developed model, indicates
that both the constant and Health and safety variable are negatively associated/correlated with
employee satisfaction.
Based on R2 and coefficients values, the relationships between study variables could
be modeled as follows:
Dependent variable:
Y= employees 'satisfaction
Independent variables:
H= Health and Safety
U= Unionization
D= Discrimination
WL= Work Life Balance
W= Wages
Y= -4.690 + (-0.143 *H) + (0.685 *U) + (0.82*D) +(0.35*WL) + (0.42*W)
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For the case under study, the model generated, provides insights about degree and
direction of relationships between employees' satisfaction and study variables. The
constant value reflects that the employee is not satisfied when all variables presented
equal zero or have no effects. Moreover, health and safety precautions or procedures
have negative impact over employees ' satisfaction. Such impact could reflect
reluctance behavior due to improper safety and healthy procedures.
5.Recommendations and study implications:
This study and the model developed attempted to provide a causal relationship that
benefits managers in Textile industry in Egypt (as a case study) with insights
concerning employees' satisfaction in relation to the deployment of SA8000 practices.
The outcome of this research enables administrators to develop and monitor specific
initiatives to increase employee satisfaction through focusing on specific practices,
thereby improving performance of their organizations. Ultimately, the study results
would help academics and practitioners, especially in developing societies, to
understand how social Practices affect an employee Satisfaction in specific industry.
Social responsibilities and practices are contextual issues that differ according to
many variables, such as culture, governance and education. However, the results
generated are still limited and could not be generalized. Nevertheless, for developing
countries, the influence to adopt standards is primarily made up of external
requirements from foreign buyers because there is a lack of local governance,
relatively weak enforcement of national laws and a low level of union affiliation. In
addition, there are competing actors and standards, which make it difficult for a labor
standard like SA8000 to have an influence throughout the supply chain of this
industry.
6. Further studies
Buyers may require similar standards to SA8000, such as WRAP (World Responsible
Accredited Production), which points to the fact that the standard SA8000 have yet
not reached acceptance by all actors and been institutionalized (Brunsson &
Jacobsson, 2002). Since the buyer has a central role in integrating the standard with
the purchasing policies; thus, more research is needed on buyers’ perception of
obstacles and opportunities with adapting the business practices to the conditions of
the supplier.
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