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Abstract
The correlational study made use of a quantitative research design to evaluate the perceptions of employees towards CSR programs in Thailand. A descriptive survey approach was utilized in this particular research. The study had been informed by several intricate factors; key among them the fact that ethical concern and behavior have become a fundamental requirement in the increasingly intertwined corporate world of modern times. The findings were interesting and insightful. They helped to reinforce the argument that peoples development and CSR are the two most important aspects that attract top employees to their present positions at the workplace.
Findings suggest that CSR can effectively be used to improve the quality of human resources in addition to reducing recruitment costs and improving employee retention levels. Through the study, it has been revealed that CSR is beneficial to the organization in terms of HR management as it facilitates employer-employee relations in regards to recruitment, retention, satisfaction, morale, trust and loyalty, motivation and productivity. To attract the best talents, organizations must therefore comprehensively invest in CSR strategies such as workplace health and safety, performance-based reward system, open communication channels, employee feedback, and training and career development
Introduction
Background
The history of corporate social responsibility (CSR) is almost as elongated as that of companies. Many organizational historians will readily agree to the fact that CSR as a business and ethical strategy has been around ever since commerce was introduced into the global scene (Welford 2005). However, the past few decades have witnessed the exponential growth of CSR within organizational frameworks. Presently, directional signals within companies increasingly point towards corporate giving, corporate reporting on CSR initiatives, creation of corporate social values to assist communities, and a noticeable shift from corporate giving as a requirement to giving as a strategy (Kotler & Lee 2005).
According to Jamali & Sidani (2008), this transition has been necessitated by an interplay of factors, which include increased public awareness, the emergence of strong interest and professional assemblies, legal and government concerns, and versatile media coverage. Consequently, these factors have put many companies on notice to act in a socially responsible manner.
CSR is about how companies align their norms and behavior with the prospects and requirements of stakeholders, not just investors, and consumers, but also employees, local populations, suppliers, contractors, vendors, regulators and society as a whole. Hoskins (2005) is of the view that CSR describes an organizations obligation to be answerable to its stakeholders. Adams, Hill, & Roberts (1998) postulates that CSR practice makes business entities to become more productive, innovative, and competitive.
According to the author, CSR activities enhance organizational efficiency, improve risk management, support constructive associations with the investment community, and enhance employee relations. CSR has attracted worldwide interest and acquired a new meaning in the global economy mainly due to the arrival of globalization and international trade, which has ultimately enhanced business complexity and brought new demand for improved transparency and corporate citizenship (Jamali & Mishak 2007).
The global development of CSR has been neither linear nor uniform. The concept has become a mainstream activity in developed countries, where it has been existence since the 18th and 19th centuries (EIU 2005). During the early period, CSR was demonstrated in appeals from anti-slavery interest groups for the general public to buy commodities such as sugar from nations that were free from slavery. Corporate practices in the 1900s, invariably viewed as socially responsible, took diverse approaches such as philanthropic contributions to charity, social service to the community, improving employee welfare, and supporting religious conduct (Banerjee 2007).
A growing tendency towards CSR has also been noted in emerging economies, though to a lesser extent. The big variations in the growth of CSR strategy between developed and developing countries can be attributed to disparities in the economic and cultural environment, ethical judgment, national legislative requirements, and alternative functions played by companies in each country (Adams, Hill, & Roberts 1998).
A 2005 online survey conducted by Economist Intelligence Unit (EIU) in conjunction with Oracle came up with important insights for the CSR strategy. According to the survey, the most important features of CSR include the ethical behavior of employees, good corporate governance, and transparency of corporate transactions (EIU 2005). From a business perspective, the study proved CSR had unrivaled benefits of brand enhancement and enhanced employee morale. Still, organizations with high CSR standards are clearly able to display responsibility to investors, government regulators, shareholders, employees, consumers and the general public (Kotler & Lee 2005). These aspects permit individual companies to manage risk and enhance their corporate reputation (Jamali & Sidani 2008).
Ethical concern and behavior have become a fundamental requirement in the increasingly intertwined corporate world of modern times (Meehan, Meehan, & Richards 2006). It is beyond doubt that ethical corporate behavior reflects positively on the reputation and long-term accomplishment of a business organization. Researchers accentuate the fact that ignoring fundamental issues of business ethics can have far-reaching effects on a business entity of any nature and size (Sims 2003).
As such, a concerted effort to incorporate business ethics with corporate governance must be undertaken by forward-looking business organizations If recent corporate failures involving huge conglomerates such as the Lehman Brothers, Enron, Tyco International, Parmalat, Salomon Smith Barney, among others, is anything to go by (Sims 2003; Koh & Boo 2004). In retrospection to the humiliating accusations that rocked some of these organizations, it is only imperative that companies engage in CSR strategies that will guarantee ethical working relationships (Kotler & Lee 2005).
A Brief Overview of CSR and HRM
From its inception, CSR has fundamentally concentrated on environmental and social health issues (Kotler & Lee 2005). More often than not, it has been guided by the realization that sustainable business accomplishments cannot be realized sorely through capitalizing on short-term profits, but instead through comprehensive market-oriented yet conscientious behaviour (Sims 2003). Business has also realized that nurturing a formidable corporate culture which ultimately emphasizes CSR values and competencies is absolute necessity if they are to achieve synergistic benefits (Sharma, Sharma & Devi 2009). In this perspective, CSR strategies have recently expanded to cater for the human resource management (HRM) component of organizations (Strandberg 2009).
Previous researches have drawn a correlation between CSR and HRM practice. For instance, Greening and Turban (2000) postulated that Job applicant and employee perceptions of a firms CSR determines their attractiveness towards organizations (Sharma, Sharma & Devi 2009, p. 209). Galbreath (2006) found out that investing in employees affirmatively and significantly influences the performance of companies.
In yet another study, Cropanzano et al (2001) aptly established that employee attitudes, behaviours, and value systems are profoundly prejudiced by the fairness of organizational behaviour and actions towards them. Other studies have revealed that good relationships with members of staff facilitates a company to achieve further benefits, including enhancing their public image, improving employee confidence, and support from the community.
The role of CSR in embedding employees to an effective corporate culture can never be underestimated (Sharma, Sharma & Devi 2009). A corporation can demonstrate a better image in the minds of potential or current employees by presenting itself as an outstanding employer which cares for its employees and engages them in the ambit of social responsibility. The continued interest employees have on CSR strategies indicates the strategic importance of social responsibility programs in HRM initiatives of an organization (Kotler & Lee 2005). In the same vein, HR policies create an active responsiveness towards the need to achieve the organizational goals and objectives in the best possible and ethical manner (Agrawal 2007). Below, a conceptual model developed by Jonker & Witte shows the interrelationship between CSR and employee behaviour.
The Study Context
The Kingdom of Thailand is an independent nation that lies in the heart of Southeast Asia. Geographically, Thailand is bordered to the North by Burma, to the south by the republic of Malaysia and Thailand archipelago, to the east by Laos and the Kingdom of Cambodia, and to the West by Andaman Sea and the Union of Myanmar (Oxford Business Group 2008). It has a population of 64 million people, who are predominantly Buddhists.
By size, Thailand is the 50th largest country in the world, measuring approximately 513,000 Km2. The capital city of Thailand is known as Bangkok, which also sums up as the countrys epicentre of political, economic, industrial, and socio-cultural activities. It is imperative to note that Thailand is a newly industrialized nation, thanks to the rapid economic expansion witnessed in late 1990s and its world-famous and glamorous tourist sites such as Pattaya and Phuket (Henderson 2007).
Although CSR in Thailand is often perceived as a western ideology, there exist formidable roots for social responsibility in cultural beliefs and corporations (Wedel 2009). However, the CSR strategies practiced around the country are sometimes hard to delineate from religion and royal dogmas. As a matter of fact, over 90% of the population practice Buddhism, a religion that requires the faithful to care for the communities around them. Models for CSR have penetrated the country through concerted efforts from multinational corporations such as Coca Cola, Intel, Shell, Chevron, Nike, and Dow Chemical (Henderson 2007).
A previous survey conducted by Kenan Institute Asia (KIA) revealed that multinational and local companies operating in Thai concentrated more on internal facets of CSR such as corporate good governance, treatment of employees, and reasonable operating standards at the expense of external features such as community engagement, environmental issues, and human rights.
Problem Discussion
The human capital is the most fundamental asset of any organization. As such, recruitment, motivation, retention, and development of competent and talented staff are primary to any organizational success. With the emergence of regional and international trading blocks coupled with the escalating globalization process, doors are opening for experienced labour to search for employment in diverse parts of the world (Murphy 1995). Indeed, employees are increasingly having the opportunity to work in diverse cultural backgrounds and relocate to where there expertises are most needed.
A significant way of executing CSR strategies in any business setting would be to develop an ethical corporate culture through the inclusion of CSR in the objectives and mission statements, in addition to integrating CSR efforts into the strategic goals of the organization (Strandberg 2009). However, this is not done in many organizations. Further a field, although CSR as an organizational strategy have become a recognizable phenomenon, very few studies have been done on the relationship between CSR strategies on one hand and employee attraction, motivation, and retention on the other.
A massive online survey postulated that people development and CSR were the two most important aspects that attracted top employees to their present positions at the workplace (DTI 2004). Indeed, it becomes difficult to talk about CSR without making reference to employees as stakeholders of an organization. But as already mentioned, this subtype of stakeholders has received comparatively little consideration in existing CSR literature especially in Asian countries such as Thailand. This is significantly surprising considering the fact that attraction of talent, recruitment, loyalty to the organization, retention, and motivation has been considerably used elsewhere to explain why CSR can be used to analyze the competitive advantage of an organization (Castelo & Lima 2006). It is this gap that the study sought to fill.
Study Objectives
The general objective of this study was to evaluate the perception of employees towards Thai listed companies. The study aimed to achieve this purpose by undertaking a critical evaluation of a cross-section of Thailands listed companies, mainly in the agro & food business, financial, industrial, technology, consumer products and service sectors. The following were the specific objectives:
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To develop a better understanding of Thai listed companies use of CSR approaches to retain their best employees.
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To develop a better understanding of how internal and external CSR strategies affects employee recruitment, retention, and motivation in selected Thai listed companies.
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To outline the role of religion in the development of Thai CSR strategies and its effects on employee retention.
Key Study Hypothesis
The study was guided by the following propositions:
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H1: CSR strategies are positively correlated to employee recruitment, retention and motivation.
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H2: potential employees concentrate more on internal CSR aspects than external CSR aspects when making important employment decisions.
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H3: High-end employees scrutinize CSR policies more than low-end employees.
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H4: Companies with comprehensive CSR strategies often performs well due to the positive evaluation they receive from society.
Value of Study
The value of this study can never be underestimated. Many conscientious and assiduous managers are spending sleepless nights trying to come up with strategies of how to prevent their best employees from leaving the organization. According to Kotler & Lee (2005), a motivated and creative workforce is the best gift that an organization can get since it ensures productivity and good reputation. This particular study came up with a body of knowledge that could be used by managers in reviewing their CSR strategies to enable them retain the best workforce while gaining admirable reputation from the communities living around the organizations.
The study also filled the information gap that existed in most corporations about whether to pursue internal or external CSR, or a mix of the two strategies in relation to attracting the best crop of employees to the organizations. A study conducted by KIA had previously revealed that most Thai companies concentrated more on internal CSR at the expense of community-based CSR strategies (Wedel 2009).
If this was the case, what implications does such an arrangement have on the strategies employed by organizations to retain employees and motivate others to join them? Are employees overly concerned about which type of CSR approach an organization uses in purely ethical terms? Through this research, these and many other questions about the relationship between CSR approaches and employee retention were answered.
Study Delimitations
Other than the usual limitations of time and resources, the study was unable to engage local corporations since much lack an active CSR strategy in addition to the fact that many local organizations are not listed at the stock exchange. As such, the study mainly dealt with multinational corporations as they are uniquely the largest players and consumers of CSR related benefits in Thailands business scene. The study was also limited in scope since it could only concentrate on knowledge-intensive industries. The basic idea that informed this line of thinking was that high quality workforce is much more needed in high-end industries than in low-end organizations.
Thesis Outline
The dissertation will comprise five chapters, namely: Introduction, literature review, methodology, study findings and discussions, and finally conclusions, recommendations and future research areas. Chapter one, presented above, discusses the background, problem discussion, study objectives and key research hypothesis. Chapter two concerns itself with the review of related literature for this particular study, including an evaluation of relevant theories related to the key study hypothesis. Chapter three, the methods section, covers the conceptual framework and variable description, research design, data collection techniques, data analysis, and issues of validity and reliability. Chapter four contains the research findings and discussion, while chapter five presents some important conclusions and recommendations arising from the study findings, and future research areas.
Review of Related Literature
Introduction
The business and ethical case for CSR is compelling (Kotler & Lee 2005). Repetitive studies conducted over time, especially in the US and Europe reveals that organizations become more competitive and profitable by making CSR a part of their core business processes. According to the studies, the non-financial component of the organizations works positively to improve the financial component. During the past few decades, the function of CSR in informing crucial organizational strategies such as labour relations and community-based partnerships has immeasurably expanded to not only affect the organizations profitability, but also influence its human capital and employee retention strategies (Bhattacharya, Sen, & Korschun 2008).
Indeed, a 2002 survey conducted by DePaul University revealed that organizations with a clearly stipulated corporate commitment to CSR registered elevated sales and revenues than their counterparts that did not. A Harvard University Study spanning 11 years similarly revealed that stakeholder-balanced organizations exhibited four times the growth rate when compared with shareholder-centred organizations.
In the latter set of organizations, employee turnover was found to be eight times more than the former organizations (Kotler & Lee 2005). These are interesting findings that further helps to reinforce the fundamental role of CSR in shaping business processes. However, to understand the interrelationship better, a comprehensive definition of CSR is needed at this stage since the notion of CSR is sometimes blurry and riddled with indistinguishable boundaries and controversial legitimacy (Lantos 2001).
Definitions of CSR
The proposition that organizations do have a social responsibility has been comprehensively discussed in various literatures for over 50 years now. However, as explained above, the concept of CSR is still predominantly ambiguous and vague (Lantos 2001). In a span of a few decades, several diverse names such as Corporate social Responsibility (CSR), Global Citizenship (GC), Corporate Citizenship (CC), and Corporate Accountability (CA) have been advanced to similar or significantly diverse aspects of the CR practice (EIU 2005).
Adams, Hill, & Roberts (1998) defines CSR as open and transparent organizational practices and activities that are predominantly based on ethical norms and respect for employees, societies, the environment, and resoundingly aimed at delivering sustainable value to the community at large as well as to all shareholders. Ghauri & Cateora (2006) argues that CSR as &social responsibility means that a company plays a role in society that is beyond its economic goals and that makes a constructive contribution towards societys well being in the long term (p.469). These definitions clearly reveal that organizations bear a fundamental obligation to constituent clusters in society and to their employees beyond what is commonly prescribed by law, regulations, and the union contract.
Theoretical model: the Ideological Theory of Social Responsibility
This theory presupposes that an entity, either a government agency, organization, or an individual, has an overriding responsibility to the community (Barth & Woiff 2009). The theory also assumes that such responsibility can either be negative in as far as it is perceived as a responsibility to abstain from acting (negative stance), or it can be perceived as positive in as far it gives the particular entity a responsibility to perform an action (proactive stance).
This theory makes several interesting arguments. First, there exists a large disparity in the means and functions of diverse entities to accomplish their stated responsibility. This implies that different entities have diverse functions to play in the web of social responsibility. Second, the entities should respect the rights and aspirations of their stakeholders in as much as the stakeholders respect the rules and regulations governing the entities. For instance, organizations should respect and enhance the collective rights of their employees in equal measure as the employees should abide by and respect the written laws of the organization.
The ideological theory of social responsibility also argues that social responsibility must be voluntary as it is all about going above and beyond what is normally required of the entities by legal establishments (Barth & Woiff 2009). The theory is informed by the basic notion that it is much more preferable to be proactive towards any given situation rather than to be nonchalantly reactive. Consequently, the notion means that social responsibility should be able to amend the problem or situation before the damage is done.
The theory also argues that in todays modern society, organizations must strive to maintain ethical principles if they are to become successful (Barth & Woiff 2009). Organizations must then use ethical decision making processes to boost their businesses. For instance, ethical decision making can be utilized to facilitate productivity and performance by coming up with CSR programs that directly improves the benefits received by employees from the organization.
This may include better healthcare strategies and enhanced pension programs. In this perspective, organizations must always remember that their employees are fundamental stakeholders in business. According to the theory, employees have a vested interest in what the organization does and how it is run. Consequently, when the organization is perceived to feel that their members of staff are a precious asset and the staff members in turn recognizes they are being treated with respect, productivity increases.
Aspects of CSR
With globalization, CSR has matured to an important theme around the world. Organizations are becoming increasingly confronted with this theme from a variety of angles (Kotler & Lee 2005). For instance, CSR is increasingly being discussed in the press, while consumer and rights organizations are progressively demanding information about production situations and routes to the market. In modern times, NGOs are increasingly approaching organizations to demand for explanations about their commitment to society, and politicians have suddenly realized that CSR is a good area for policy making.
Internal Aspects
An organizations Internal CSR aspects manly deals with how it treats its employees. These aspects include written policy frameworks on non-discrimination in the workplace; statements of equal employment opportunities and implementation plans; statements on average working hours, highest overtime hours allowed, and fair wage structures; policy frameworks on employee development, on-the-job educational programs and vocational trainings; policies on various basic rights while in employment such as freedom of association, complaint processes, and collective bargaining; and the upholding of human rights in the organizations fundamental operations (Welford 2005).
External Aspects
A companys CSR external aspects mostly deals with the interrelationship between the organization and an array of external influences such as governments, regulators, businesses, and local communities (Kotler & Lee 2005).
To mention them in brief, these aspects include policy frameworks on adopted labour standards; policies on constraints and uses of child labour; obligation to safeguard human rights within the organizations sphere of influence; commitments to safeguard health, safety and environmental concerns of all stakeholders including the local community; policy frameworks on the resolution of complaints among all stakeholders; regulations on equitable trade and end-price auditing; policy frameworks on safeguarding the rights of indigenous populations; and the code of ethics (Welford 2005).
CSR and Stakeholders
A stakeholder can be described as any group, process, or individual that can affect or is significantly affected by the accomplishment of organizational objectives (Freeman & Evan 1993). CSR puts its emphasis on stakeholders since organizations do have a responsibility to all groups or individuals that they influence either positively or negatively. According to Kotler & Lee (2005), an organization assigns diverse concerns to dissimilar stakeholders based on their salience in regards to power, necessity and legitimacy. The stakeholder management theory is based on the concept that organizations comprise of interdependent interactions with stakeholders and need to operate within this framework of stakeholders who can impact the organization directly and indirectly.
Ghauri & Cateora (2005) are of the opinion that companies affect and are affected by a wide array of stakeholders, including owners, investors, employees, management, legislators, suppliers, customers, regulators, and the local community. It is up to the company to initiate strategies aimed at dealing with the interrelationship between the organization and the stakeholders in a socially responsible way. The owners and investors want significant returns on their investments. In this perspective, the company has a responsibility to administer the assets bestowed upon it by the owners. The company must therefore strive to return some fair and competitive rewards to the owners and shareholders, in addition to disclosing pertinent information and respecting their suggestions and opinions (Ghauri & Cateora),
In the stakeholders chain, employees expect a fair salary to effectively manage their own affairs and those of their families, in addition to some reasonable degree of security and other benefits arising from their positions of employment (Ghauri & Cateora 2005). In return, employees are expected to follow the instructions given by management, and represent the organization with positive ethical behaviour inside and outside the firm. The relationship between an organization and its suppliers is often viewed as mutual and reciprocal. While the suppliers materials and components impacts the quality of products and the reputation of an organization, the organizations performance impacts the suppliers success either positively or negatively.
The customers are the backbone of the company since they are directly involved in the actual exchanged of goods and services, and the payments that follows (Ghauri & Cateora 2005). This payment is the lifeline of the organization as it provides it with the much needed revenue to pay the owners and employees. The better an organization can satisfy its customers, the more successful it becomes in serving the needs and requirements of other stakeholders.
The immediate community benefits from the activities of the organization due to the taxes paid and employment opportunities presented. From the local communitys point of view, the organization is expected to behave in a responsible manner and must not endanger the community by engaging in anti-social behaviour such as polluting the environment or tax evasion.
CSR and Human Resources
Various studies have noted a significant correlation between the level of CSR and the nature of human resources available within organizations. For instance, Maignan & Ferrell (2001) found out that workers with higher income, education, and cognitive moral development are readily supportive of the CSR practice. According to various studies, CSR is indeed profitable to the human resource capital of organizations practicing it. The positive attitudes exhibited by prospective employees when it comers to evaluating the companys image and reputation are fundamentally critical in ensuring that organizations get the right mix of skills and professionals for future business expansion (Strandberg 2009).
Consecutive studies have also revealed that companies may be in a position to recruit top employees through the use of CSR as it enables potential employees to evaluate their self-identity against the organizations own self identity as reflected in the CSR practice (Maignan & Ferrell 2001). Similar identity matches between the employees and the organization have often resulted in formidable organizational bond.
According to Hoskins (2005), the match of organizational values with those of current and prospective employees results in higher employee retention rate. Employees exhibiting the same organizational values as stressed out in the CSR programs are also likely to express high levels of dedication to the companys success and performance. It is indeed true that benefits accrued by engaging in high external CSR leads to greater organizational commitment from the employees even though such benefits are not meant for the employees.
A study conducted by Albinger & Freeman (2000) revealed that high-end prospective employees are much more likely to consider and evaluate the performance of CSR in prospective organizations than low-end employees. According to the researchers, this could be occasioned by the fact that high-end job seekers are more exposed to information sources and are therefore much more likely to make well informed and comprehensive choices.
This not withstanding, the point is already made that comprehensive CSR strategies have the potential to attract high-end employees into an organization, translating into improved performance for the company. According to Castelo & Lima (2006), CSR has the capacity to influence the financial performance of an organization due to the intangible resources it introduces to the company such as employee know-how, corporate culture and positive reputation.
It is beyond doubt that organizations must therefore introduce CSR strategies that will motivate and retain employees in addition to offering them a fair treatment (Hoskins 2005). This can be achieved by introdu
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