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Strategic CSR for Employee Retention In IT Businesses B.Zia1, Dr.F.

Zafar2
1

Mphil Business Administration Kinnaird College for Women, Lahore Pakistan 502 G Block Johar Town Lahore Pakistan bushrazia65@gmail.com 2 University of Derby currently working in GCU Lahore, Pakistan Dr.F.Zafar@gcu.edu.pk dr.f.zafar@gcu.edu.pk

Abstract
In this study an attempt is made to identify the role of strategic CSR on employee retention in an organization. The concept of CSR is becoming stronger and increased awareness about it is influencing organizational policies and practices. Firms are employing strategic CSR efforts to enhance their employee retention plans. Various trends of CSR are emerging and these trends are imposing vital consequences on employee retention in an organization. One of the foremost trend is that CSR is growing at a steady pace which is affecting the HRM of a firm and employees prefer to associate themselves with organizations who have moderate to high commitment to CSR. Similarly the trends of corporate ethics and environmental issues in CSR are influencing employee retention in an organization. Organizations while using CSR should be strategic in approach so that they can retain qualified and skillful employees. Cases of companies who are using CSR strategically are provided and their implications on employee retention are being observed. Further the paper provides insights to organizations that how organizational performance is facilitated through the utilization of strategic CSR which helps in employee retention. Advantages and 1

disadvantages on the role of strategic CSR influencing employee retention are examined as well. The study will provide a guideline to organizations that how they can employ strategic CSR effectively for increasing employee retention which in further would increase the organizational performance in the short term as well in long term. Index Terms: CSR, employee retention, organizational performance and corporate ethics

1.0 Introduction
CSR is increasingly becoming an important aspect of todays economies. Organizations one way or the other are integrating CSR in their business practices. With the integration of CSR an organization has to strive to align this integration with its HRM practices favorably. Employee retention is one of the significant goal of HRM which can be accomplished through tailoring CSR strategically in the business model. 1.1 CSR CSR not just entails providing social services to the community. Moreover a great concern has being highlighted for the share of CSR in the corporate world. CSR is

crucial for enhancing the long term sustainability of organizations all over the world. (1) the focal point of CSR is the creation of shared value. Although CSR has faced criticism but still increasing number of firms are embracing and adopting CSR in multiple forms. CSR reveals the human part of entities and a desire for favorably contributing to the community and the society. There might be some CSR schemes which may not be able to contribute to the organizations goals but these efforts will channelize in formulating a strategic CSR for the company (2)

A shortage of qualified skillful labor in the market is prevalent. Employee retention is one of the key issues of HRM which has a strong concern for firms. Across the world there are numerous firms who are trying to retain employees as there is immense cost associated with employee turnover.(3) employee retention techniques should be focused which will boast up organizational performance. Employee retention is of key importance to any organization as it impacts numerous organizational concerns for example training time, lost expertise, new employees search and it will also create insecurity among present employee of the organizations. (4)

Employee retention is the responsibility of the team leaders and the top management. A company should use procedures and policies so that employee retention becomes a permanent management outcome. Only the HR department in the firm cannot increase retention but several aspects are involved. (5)

2.0 Aim of the study


The research paper aims to explore the relationship between strategic CSR and employee retention. Companies are integrating strategic CSR programs in their organizations so the aim is to find out that whether strategic CSR increases or decreses employee retention in organizations?

Figure:1 Strategic CSR Programs


1.2 Employee Retention

Employee Retention Strategies


Growth

Environment

3.0 Literature Review


Relationship

Support

Compensation

Limited literature exists in terms of establishing the relationship between strategic CSR and employee retention. Most of the available literature attempts to provide insights about the benefits of CSR 2

Figure 2 Employee retention Strategies

and HRM related activities. Still it is essential to consider the important pieces of scattered facts available on the topic. Initiatives of CSR showcase the worth of a company and it can be regarded as a lens which the management can utilize for management of talent these days. (6) Three kinds of moral and ethical aspects exists which have heightened business responsibility. Some serious breaches of corporate ethics have resulted damage to the environment, shareholders, employees and communities. Customers due to these ethical breaches have developed mistrust on corporations. (7) Competitive advantage and CSR strategy are important aspects of society in terms of environmental and social impacts. CSR strategies have a link with competitive advantage for instance hiring skillful employees and polishing the reputation of the company. (8) For improving employees retention corporations are exploring new ways in an innovative manner so that employee can be engaged. One tool for engaging employees is through the use of CSR. (9) Much research has been conducted on overall broad topic of CSR but the role of HR in CSR spectrum is novel and unrevealed area of study. (10) CSR strategies and programs are of significant importance to organizations as it helps in improving the perceptions of not only customers but also the perceptions of employees about the company in which they work. If an employee believes that his or her organization is more devoted to CSR initiatives then he will be more committed to the organization. (11) 3

Trends influencing Employee retention


4.0

CSR

and

There are various trends which influence CSR which in further cause implications for employee retention and organizational performance. Knowledge of these trends will help the firms to develop strategic CSR efforts for enhancing employee retention. Key trends influencing CSR and employee retention are discussed: 4.1 Steady progress of CSR

CSR in the business sector is in the steady process and CSR is regarded as a paradigm shift. CSR along with its steady progress is facing another feature that the industries are giving varying levels of commitment for the application of CSR. In the steady progress of CSR a continuum is described. (12) TABLE: 1 Continuum of CSR at varying levels in Organizations 1. CSR Lite Firms will not change their business model at all.

2. CSR Complaint

Companies will follow CSR to maintain their operating licenses. Various facets of CSR will be dealt strategically.

3. CSR strategic

4. CSR Integrated

Companies decision making will be influenced by CSR

5. Deep CSR

Industries with business models based on improving CSR

responsibilities. Any scandal of a firm regarding corporate ethics can de-motivate skillful employees and can cause them to quit the organization.(15) Hence firms while following CSR should meet and comply ethical standards to retain their pool of talented employees. 4.3 Environmental issues across the globe Climate change is one of the key concerns in CSR. Environmental sustainability goes hand in hand while applying CSR in business practices (16). Businesses are facing increasing challenges regarding health impacts due to the degradation of environment.(17) Employees who work in environmentally degraded environment are more likely to quit their jobs.(18) as more awareness about the climate change is taking place and more emphasis is being made on environmental constraints that might trouble the health of employees. Employee retention is affected due to the environmental issues across the globe with an increasing emphasis on CSR.

From the above table it is evident that organizational resources vary in terms of application of CSR in business model. The applied CSR in any organization will impact HRM in several ways and especially causing an influence on employee retention. When employees view that their organization is extensively or moderately involved in CSR they generate positive attitudes which boast up their satisfaction level with the organization. Employees recommend that their organization is an ideal place to work and hence employee retention increases. (13) 4.2 Ever-increasing corporate ethics concerns for

Organizations operating around the globe have a responsibility towards the society in which it works. Companies should move to a strategic state for the identification of issues pertaining to ethics and CSR. The new globalized world demands that there should be an increased level of ethicality which should be portrayed in the corporate behavior of firms. The level of ethics in CSR varies from one part of the globe to the next. (14) An organizations important stakeholder is its employees and ethics is a requisite for employee retention. Firms for the true application of CSR should educate employees about corporate ethical 4

Figure 3 Trends of CSR

The emerging trends of CSR are influencing the various aspects of an organization. HRM is the most crucial facet of an organization as they provide the pool of talent for accomplishing corporate business strategies. Employee retention is a fundamental goal of any entity. Thus the trends of CSR should be dealt strategically so that they can cause favorable influence on employee retention and organizational performance.

Stakeholders hold a top priority in Cisco and they have a comprehensive CSR program which has driven proven results of employee retention in the organization. (19) Cisco utilize the expertise of its employees for promotion of responsible business operations. All the partners affiliated with Cisco are expected to comply with the ethical standards which Cisco tries to retain. (20)

5.0 Employing strategic CSR for employee retention across the globe
Numerous companies are employing CSR strategically with an aim of expanding their employee retention scheme. As the emerging trends of CSR are exercising an important influence on employee retention so the organizations need to understand the significance of the strategic CSR role. 6.0 Analyzing companies strategic CSR in IT

TABLE:2 EMPLOYEE SATISFACTION, PERCENTAGE OF INJURIES AND FEMALE EMPLOYEES AT CISCO

Performance Summary Employee satisfaction (average percent of employees who consider Cisco a great place to work Rate of injury and illness (per 100 full-time employees) Percent of female employees

2011

2012

IT is a vast industry which includes multiple firms so this paper will consider two major companies of the IT industry Cisco and HP. An attempt to analyze their strategic CSR programs in reference to employee retention will be made and a trend will be tried to drawn on the basis of secondary data available. 6.1 implementation of strategic CSR at Cisco Company Although the markets are evolving and changing still Cisco has sustained its CSR program by keeping their corporate culture same. Ciscos mission is to make the world a better place and its aim is to facilitate the world by giving technology with ease.

79%

82%

0.30

0.22

22%

22%

Cisco has followed strategic CSR efforts and it has achieved better employee retention rate than other organizations. In the above table it can be noticed that regarding CSR recognition maximum number of achievements are associated with the employees category and this is due to better employee retention rate as a resultant of employing strategic CSR. TABLE: 3 CISCO COMPANYS WORLDWIDE RECOGNITION OF CSR (2013 NUMBER OF AWARDS & RECOGNITION 7

at workplace which shows that CSR efforts strategically are effectively integrated in the workplace too. From the case of Cisco it is evident that strategic CSR can act as a competitive tool and can facilitate the business practices. Employee retention is a key concern for any organization and by means of CSR it can be managed efficiently. TABLE 4: GLOBAL 500 COMPANIES Rank
231

Companies
GlaxoSmithKline

Revenue
43,907

CATEGORY

232

Safeway

43,630

233

China Resources National

43,440

Environment Governance and Ethics Our People

234

Shenhua Group

43,356

7
235 GS Caltex 43,280

13

236

Tokio Marine Holdings

43,264

Society

237

Cisco Systems

43,218

238

China South Industries Group

43,160

Supply Chain General CSR Awards

2
239 Sumitomo Life Insurance 43,086

6
240 ACS 42,655

Due to the strategic CSR efforts at Cisco the employees are satisfied and they consider Cisco a great place to work. Similarly the rate of accidents are negligible 6

Hence it can be evaluated that through the integration of strategic CSR not only the

company is able to achieve employee retention but it has earned huge profits too.

Cisco

CSR Programs

HP Company has a comprehensive strategic CSR program which entails several components. The major chunks of HP strategic CSR are society, governance and environment. (21)

Employee Retention Rate(after 12 months)

90%

Environment Corporate ethics Public policy Global citizenship strategy Figure 4 CSR Programs of Cisco

Governance Supply chain environment al management Carbon footprint calculator Material safety data sheets Product return and recycling Eco solutions

Society Supply Chain Privacy Social Innovation Goals and Data

Hence it can be seen that those firms who have utilized strategic CSR are more successful in terms of employee retention and increased profits. So strategic CSR is a powerful weapon which the firms should adopt to achieve favorable employee retention and it also results in satisfied employees. The productivity of the firm will enhance and the organizational outcome will enhance.

Figure 5 CSR Program of HP

6.2 Strategic CSR in HP Company


The core principle of HP strategic CSR is to create a sustainable world where people are facilitated and the economy becomes stronger.

TABLE: 5 HP KEY PERFORMANCE SUMMARY( Hewlett Packard Company Statistics, Statistic Brain)

7.0 Analysis of relationship of strategic CSR and Employee Retention in Cisco and HP Companies Although the ranking of the companies varies in terms of profitability but it can be analyzed that due to the application of strategic CSR both companies are having a positive influence on their employee retention rate for instance HP is experiencing 90% retention rate while Cisco 82% employees regard the company as the best place to work. Although the employee retention rate are varying of both companies but still they are showing a positive result. From the company analysis it can be expressed that a positive relationship exists between strategic CSR and employee retention in a company. With the increase in retention rate the market share of companies is also enhanced. The findings can be summed up as:

Hewlett Packard Statistics Fortune 500 Rank Total Number of Employees 11 324,600 126 Total Annual Revenue (2010) Billion Number of HP computers sold each 120 minute of each day

Total number of HP Laser Jet Printers sold

102 Million

Cisco

Strategic CSR Increase in Employee retention

IT Companies strategic CSR Effort

HP

Figure 6 Impact Of CSR on Cisco and HP

Increase In Employee Retention

Increased Market Share

Figure 7 Strategic CSR Effort in IT Companies

cisco and HP Company

Relationship

Increases

Strategic CSR

Positive Relationship

Employee Retention

Strategic CSR

Increased Employee Retention

Better Organizational Performance

Figure 8 Relationships between Strategic CSR and Employee Retention Figure 9 Better Performance through Strategic CSR and Employee Retention

8.0 Influence of strategic CSR and employee retention on organizational performance It has being evident that strategic CSR results in increased employee retention. This increased employee retention will benefit organizational performance in various dimensions. Employees will be more productive and will be able to achieve organizational goals in an efficient manner. Employee retention helps to achieve organizational productivity and the financial gains of the firm rises. Strategic CSR helps the firm to improve not only its image but helps to achieve a more devoted HR which direct to achieve organizational mission and hence the organizational performance is enhanced.

9.0 Advantages of strategic CSR Retention

relationship of and Employee

Strategic CSR provides multiple advantages. Strategic CSR helps to enhance the image of the company in front of the stakeholders. Employees prefer to work for organizations who are working actively for the welfare of the environment and society. Satisfied employees are more productive and turnover rate will decline in the organization. Strategic CSR gives the power to employees to attract employees. Firms who have high commitment for CSR finds relatively easier to recruit employees even in a tight market as the retention rate remains high so the firms benefits and gets reduction in hiring and training cost of new personnel. Also strategic CSR results in earning more better profits by capturing more share of the market. As strategic CSR companies depict to be socially responsible firms so it enhances 9

customer base and loyalty. Consumers like to go into transactions with such firms who are doing well for the environment and society. 10.0 Disadvantages of relationship of strategic CSR and Employee Retention The major disadvantage of strategic CSR is that the company has to commit additional resources and it has to incur additional costs to pursue its CSR program. Financially strong companies can only invest in CSR programs. Some firms might exploit the label of CSR to avoid regulatory checks and not actually adhering to the true practices of CSR.

References
1. Waldman D, Corporate Social Responsibility: What it really is, Why its so important, and How it should be managed? , pg 1 2. Rangan K, Why Every Company Needs a CSR Strategy and How to Build It?, Harvard Business School, pg 5, Working Paper 12-088, 2012 3. Howatt W, 1Employee Retention: A Discussion Model, One HOWATT HR Consulting Inc, pg 1 4. Chhabra V, CURRENT TRENDS IN EMPLOYEE RETENTION STRATEGIES, International Journal of New Practices in Management and Engineering: Vol: 4 Issue: , pg 3 5. EMPLOYEE RETENTION REDUCING RECRUITMENT BY INCREASING RETENTION, DRAKE INTERNATIONAL NORTH AMERICA, White Paper Vol 2, pg 12 6. Bhattacharya C, Using Corporate Social Responsibility to Win the War for Talent, MIT Sloan Management Review, VOL.49 NO. 2, pg 2, 2008 7. STUDIES IN TRADE AND INVESTMENT: CREATING BUSINESS AND SOCIAL VALUE: THE ASIAN WAY TO INTEGRATE CSR INTO BUSINESS STRATEGIES, ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC, UN, pg 13, 2010 8. Filho J, Strategic Corporate Social Responsibility Management for Competitive Advantage, Brazilian Administration Review, v. 7, n. 3, art. 5, pg 1, 2010 9. Saha S, CSR: An effective tool to retain employees, The Economic Times,2013 10. Kwan W, Corporate Social Responsibility: Implications for 10

11.0 Conclusion It can be concluded that CSR has become a requisite for surviving in the competitive global world. CSR is gaining importance and with it different trends regarding CSR has emerged. The emerging trends of CSR have strong implications for employee retention for any organization. Usually employees prefer to serve companies who are actively involved in social responsible activities. Thus those companies who are utilizing CSR strategically are able to maintain a skillful workforce. Strategic CSR enables better employee retention rate and it reduces employee turnover. Although companies have to devote extra resources for employing CSR but the cost will outweigh the long term benefits in the form of improved financial gains and a highly motivated workforce.

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(Online)

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