How do personal values about Corporate Social Responsibility affect Human Resource Management Practice?

Table of Contents

1. Introduction

2. CSR and its impact on recruitment - A literature review

3. Methodological approach
3.1 Design and Procedure
3.2 Reflexivity
3.3 Participants
3.4 Ethical considerations
3.5 The context of research: Germany

4. Findings/ observations and analysis
4.1 How do individuals understand and define CSR?
4.2 What factors influence these understandings of CSR?
4.3 What role do individual understandings of CSR play in the application and recruiting process?

5. Discussion

6. Conclusion
6.1 Research design limitations
6.2 Recommendations for further research

Appendix 1: Brief description of the companies

Appendix 2: Brief descriptions of the students

Appendix 3: Interview question guide HR-manager

Appendix 4: Interview question guide students

References

Abstract

Little research has been conducted into corporate social responsibility and its implications for human resource management, in particular with regard to application and recruiting process. The study recognizes the importance of CSR in current management practice and strategy and examines the way in which personal values regarding CSR affect application and recruitment practices in Germany. To this end the study explores how individuals understand and define CSR and asks which factors influence this. Moreover, the findings show what role individual understandings of CSR play in the application and recruiting process. The research seeks to understand the external environment that decisions are taken within and thus highlights the impact of socio-economic context on personal values regarding CSR in general and in specific regarding the first point of contact between job applicant and targeted company. The theoretical lens applied makes use of Carroll’s (1991) pyramid of CSR and Festinger’s (1962) theory of cognitive dissonance. The study is qualitative and includes an analysis of 16 semi-structured interviews with business students and HR-managers working in companies in Germany. The results are used to present a complex and multifaceted model that reflects the variety of factors that should be taken into consideration during the application and recruiting process

Declaration of independent research

I declare and certify that this MSc dissertation has been composed by myself and is based on my own work, unless stated otherwise. All sentences or passages quoted in this research from other people's work have been made visible by clear cross-referencing to author, work and page(s)

This work has not been submitted for any other degree

London, 20th August

Acknowledgements

I would like to thank my supervisor, Dr. Sadhvi Dar, for her support and all the helpful comments, considerations and suggestions throughout this research. Moreover, I am thankful to all my participants who gave me their time and contributions thus enabling me to gather the useful information whose results will hopefully initiate further qualitative research in this area. Finally, I would like to express my special gratitude to my parents who made it financially possible for me to do my MSc in London and who have always supported and accompanied me on every path that I have taken

Table of Figures

Figure 1: The Pyramid of Corporate Social Responsibility

Figure 2: Factors influencing the importance of CSR in application and recruiting process in Germany

Table of Tables

Table 1: Demographic structure of the sample

Table 2: Company structure

1. Introduction

Corporate social responsibility (CSR) has been the subject of increasing theoretical and empirical attention over the past few decades (e.g. Carroll, 1991). More and more companies seem to embed CSR into corporate policies and strategies (Duarte, 2010: 356) - a trend which began with the intersection of “philosophical ethics and management education” (DeGeorge, 1991: 42). The European Directorate-General for Enterprise and Industry (2011) defines CSR on their website as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”. Besides the general interest across the European Union in this area, particularly in Germany CSR has become politically significant (Berthoin Antal, Oppen and Sobczak, 2009). As such, both the Federal Government of Germany (2010) and the German Federal Ministry of Labour and Social Affairs (2011) enforce the importance of CSR through public strategies, for example the ‘Nationale Strategie zur gesellschaftlichen Verantwortung’ - National Strategy for Social Responsibility. Nevertheless, only one German university offers a programme of study (undergraduate or postgraduate) that solely focuses on CSR.

Recognizing the politically claimed CSR importance, this research intends to examine how personal values concerning CSR affect human resource management (HRM) practices, specifically with regard to recruiting. The aim is to analyse the cognitive behavioural factors that influence the importance of CSR in application and recruiting process in Germany. Personal opinions and attitudes may play a prevalent role in this context and therefore form the centre of attention. The theoretical framework is provided by Carroll’s (1991) CSR pyramid and Festinger’s (1962) cognitive dissonance theory. Carroll (1991) presents CSR as a pyramid consisting of four different areas that build upon each other.

This study aims to find out whether the general understanding of CSR is in line with Carroll’s (1991) and the way in which this influences the application and recruitment decision-making process. In addition, the research is set in the context of Festinger’s (1962) theory of cognitive dissonance, which implies, that people find mechanisms to avoid a cognitive dissonance. The research aims to find out whether there is a cognitive dissonance within the two interview groups and whether strategies can be found that help to reduce it.

Three research questions are considered:

1. How do individuals understand and define CSR?
2. What factors influence these understandings of CSR?
3. What role do individual understandings of CSR play in the application and recruitment process?

This paper seeks to follow up on a recent debate on CSR “that has tended to claim emphatically that ‘real’ CSR is about more than just philanthropy and community projects, but about how the entire operations of the firm - i.e. its core business functions - impact upon society” (Crane, Matten and Spence, 2008: 8). Therefore, the research aims to examine how personal values about CSR affect HRM practice. This study focuses on the cognitive behavioural factors that affect application and recruitment decision-making processes in Germany. In chapter two, an overview of research that has already been conducted in this area is given and thereby an indication of the lack of qualitative studies. The third chapter outlines the design and procedure of the study, the reflexivity, the participants, the ethical considerations and the context of the research: Germany. In order to understand which factors have an impact on awareness of CSR, qualitative interviews with business students and HR managers from different companies were undertaken. A thematic analysis is used in chapter four to examine the findings of the study with regard to the research questions. The interview content is interpreted with regard to social, cultural and institutional factors. Thereby it is possible to evaluate whether CSR is an inherent part of people’s attitude and values in the recruitment process. The analysis reveals numerous ways in which attitudes towards CSR influence the application and recruitment process. The study endeavours to give different insights into CSR and its effective use with regards to recruitment. The discussion in chapter five critically reflects on the main themes and analytical insights of the study. Moreover, it looks at the findings in the context of Carroll’s (1991) CSR pyramid and Festinger’s (1962) cognitive dissonance theory. A summary of the study and a discussion of its limitations as well suggestions for the direction of further research are provided in the conclusion.

2. CSR and its impact on recruitment - A literature review

A large quantity of general conceptual and empirical research can be found on CSR with a focus on various countries, for example Canada, France, Germany, the United Kingdom and the United States (Berthoin Antal, Oppen and Sobczak, 2010; Freeman and Hasnaoui, 2011; Hiß, 2009). A considerable part of this research examines the relationship between CSR and marketing or financial aspects (e.g. Barnett, 2007; Jahdi and Acikdilli, 2009), whereas little research has been done on CSR with regard to human resources (e.g. Fuentes-García, Núñez-Tabales and Veroz-Herradón, 2007; Morgeson et al., 2011) even though “it becomes obvious that CSR and HRM are intertwined” (Schoemaker, Nijhof and Jonker, 2006: 448). From this limited selection of studies, a small number examines the factors that make a firm attractive to students (e.g. Barber and Roehling, 1993; Gatewood, Gowan and Lautenschlager, 1993). Thereby, a distinction has been made between factors that enhance the general attractiveness of a company and factors that influence decisions to apply to work for a certain company. Beyond this, some studies have investigated CSR as one aspect affecting a company’s attractiveness for applicants (Aiman-Smith, Bauer and Cable, 2001; Bauer and Aiman-Smith, 1996; Behrend, Baker and Thompson, 2009; Turban and Greening, 1996; Zhang and Gowan, 2008).

In their quantitative research study Turban and Greening (1996) detected a positive correlation between a company’s corporate social performance and its attractiveness for potential job applicants. The more a company exhibited CSR the better the company’s general reputation (Turban and Greening, 1996: 662). In this context, corporate social performance was understood as a multidimensional construct which included: community relations, employee relations, the environment, product quality and the treatment of women and minorities. The correlation between the individual variables and the corporate reputation or attractiveness showed that especially community relations and employee relations played a prevalent role. It was stated that understanding the relationship between CSR and attracting applicants can lead to a comparative advantage that allows employers to expand their recruitment pool. Signals corporations send about their value system are the only way for potential recruits to get reliable information, however it is difficult to differentiate between signals that aim to inform and signals that are purely used as marketing tools. Therefore, companies which advertise their socially responsible actions, in general, seem to enhance their corporate attractiveness (Turban and Greening, 1996). However, this only happens when the potential job applicants are familiar with the company a priori. The “results suggest that firms should publicize their corporate social performance in an attempt to attract applicants, although they should provide realistic descriptions of their CSP activities” (Turban and Greening, 1996: 669).

Zhang and Gowan’s (2008) quantitative study firstly examines CSR and the way it is connected to a company’s attractiveness for potential recruits’ and goes on to investigate, whether job applicant’s choose companies which fit their own ethical predisposition. Their results show that understanding CSR as a company’s economic, legal and ethical responsibilities has a significant positive impact on an organization’s attractiveness for potential recruits and the likelihood that they would accept an offer from the company.

It becomes apparent that companies need to exhibit a minimum level of CSR in order to be perceived as attractive (Zhang and Gowan, 2008). The research concludes that ethical predispositions play a prevalent role in determining the importance of CSR in the recruiting process. The authors distinguish between different cognitive frameworks that people exhibit: formalism and utilitarianism. The study reveals that utilitarians focus on the economic performance of a company as this is a direct measurement with which they “assess ethical situations in terms of consequences” (Zhang and Gowan, 2008: 3). “In contrast, since strong formalists emphasize the importance of rules, principles or some other formal features of ethics to determine moral behaviours, they would be more likely to be attracted to an organization upholding its legal and ethical responsibility […]” (Zhang and Gowan, 2008: 3).

Bauer and Aiman-Smith (1996) examined the connection between the recruitment process and a company’s ecological stance as a part of its CSR. They state that job candidates have to rely on corporate signals in order to get information about the company. Recruitment brochures represent one way in which potential recruits’ perception of the firm can be influenced. The outcome of their research shows a positive correlation between company’s proactive environmental policies and perceived corporate attractiveness. Furthermore, this affirmative effect was identified not only for job applicants who held proactive ecological views but also for job applicants who did not. The study supports the assumption that “a firm’s ecological stance can influence potential recruits’ initial reactions toward a company” (Bauer and Aiman-Smith, 1996: 455). In contrast, companies that are perceived as not caring about the environment might carry the consequential negative side effects when recruiting employees.

Aiman-Smith, Bauer and Cable (2000) also included the environmental component as an examination variable in their quantitative research. A distinction was made between a company’s attractiveness and the intention to follow that company. “A potential job recruit must have positive feelings about the company, and be attracted to the organization, before he or she initiates any action to investigate the company further” (Aiman-Smith, Bauer and Cable, 2000: 224). The participants were randomly assigned to one of two scenarios that investigated on the one hand on the desire to pursue a company and on the other hand on the corporation’s attractiveness (Aiman-Smith, Bauer and Cable, 2000: 232). The analysis of questionnaires revealed that the ecological stance was the most important factor for predicting corporate attractiveness, whereas the amount of pay was the decisive factor for predicting job pursuit plans. Therefore, the results show that a company’s high level of attractiveness did not automatically mean that the student wanted to pursue it as a possible employer.

In a quantitative study conducted in 2009, Behrend, Baker and Thompson examined the impact of a pro-environmental corporate communication on potential employees. The message was embedded in a print out of a fictitious company’s job advertisement website in order to examine the participants’ reactions. The authors hypothesized that there would be a positive correlation between an applicant’s personal stance, a company’s advertised environmental recruiting message and the intention to pursue a job at the company (Behrend, Baker and Thompson, 2009: 343). However, the results showed that the participants were generally keener to be employed in companies with pro-environmental messages than without, independently of their personal stance (Behrend, Baker and Thompson, 2009: 347). This is rooted in “the tradeoff between multiple factors, such as pay, benefits, and the negative consequences of working for a non-environmentally responsible company” (Behrend, Baker and Thompson, 2009: 347). It was also examined whether a company’s reputation had a mediating role with regard to the influence of CSR in recruitment; a hypothesis that was supported by the findings.

As the presented literature shows, CSR has a strong influence on recruitment with regard to its impact on an organization’s attractiveness for applicants. However, studies to date have not examined the cognitive behavioural factors emphasizing the nature of this relationship. Recent studies (Judge and Bretz, 1992; Turban and Keon, 1993) attempt to shed light on the phenomenon that a firm’s CSR only influences certain individuals with a specific value system in their decision-making process to join the company. However, there is a lack of research examining how and why CSR is implemented as part of the recruiting process and whether it is of essential importance to business students when deciding which company to work for.

Most of the studies already conducted use quantitative methods which do not capture individuals’ perceptions thoroughly enough (e.g. Backhaus, Stone and Heiner, 2002). Although they reveal a correlation between the different variables, the studies do not investigate the impact of individuals’ decision-making processes and values based on qualitative research. As such, the interpretive dimensions of decision-making at the individual level have not been examined in great detail in existing literature. Moreover, most of the quantitative research (e.g. Backhaus, Stone and Heiner, 2002: 295; Turban and Greening, 1997) uses signalling theory in order to examine the relationship between company and recruits. This theory belongs to the economic field of research and highlights the strategic aspects of the interplay between the different actors. The psychological and sociological factors have therefore been given little attention in research that attempts to understand how CSR affects human resource management.

The aim of this research is to understand whether the growing notion of the importance of CSR is also reflected through students’ and HR managers’ perceptions and behaviour concerning application and recruiting process in Germany. Therefore, this research is set in the context of Carroll’s (1991) pyramid of corporate social responsibility. Carroll (1991) argues that CSR consists of four different areas that build on each other (see Figure 1).

illustration not visible in this excerpt

Figure 1: The Pyramid of Corporate Social Responsibility (Carroll, 1991: 42)

The economic responsibilities form the foundation of the pyramid and are fundamental for a successful incorporation of CSR as they focus on the company’s aim of profit maximisation. It is of prevalent importance that a company also obeys the law through its legal responsibilities while being mindful of its profits. Ethical obligations can be considered when these levels are successfully fulfilled. These reflect the personal values with regard to what is understood as fair or just (Carroll, 1991: 41). Above this, Carroll (1991) considers the philanthropic responsibilities which promoting human welfare, to be separate from the ethical level. This level presents society’s desire for companies “to contribute their money, facilities, and employee time to humanitarian programs or purposes”, although as he also notes, society does “not regard the firms as unethical if they do not provide the desired level” (Carroll, 1991: 42). Carroll (1991: 40) argues that all of these obligations have to be addressed in order for CSR “to be accepted as legitimate”. This research aims to find out where the different companies place themselves in the pyramid, what business students expect from their future employers and whether this plays a prevalent role in recruitment. It remains to be seen, whether it is true that “businesses are not responsible toward society as a whole but only toward those who directly or indirectly affect or are affected by the firm’s activities” (Maignan and Ferrell, 2004: 4).

The research is also set in the context of Festinger’s (1962) theory of cognitive dissonance and aims to discover whether the participants exhibit a certain cognitive dissonance concerning CSR. The cognitive dissonance theory is “a theory about sense-making: how people try to make sense out of their beliefs, their environment, and their behaviour - and thus try to lead lives that are […] reasonable, sensible, and meaningful” (Aronson, 1997: 129). It is assumed that a human being’s cognition consists of many different fragments which aim to fit together. If they do not this leads to an adjustment to eliminate the dissonance (Festinger, 1962: 18). “Two cognitive elements are in a dissonant relation if, considering these two alone, the obverse of one element follows from the other” (Festinger, 1962: 260 f.). This cognitive dissonance can be reduced in three different ways:

one cognitive element can be changed with regard to the person’s behaviour or the environment or the addition of new cognitive components. This implies that the relationship between an HR manager’s personal belief regarding the importance of CSR and the way it is included in the recruitment decision-making process should be examined. At the same time, the research should find out how patterns taught theoretically at university fit together with practical experiences in the business world. The results will show whether students’ and employers’ expectations converge and will outline why graduates are selected and whether CSR makes firms attractive to graduates in the first place. The necessity of a “[…] socially, dialogically embedded kind of corporate practice and greater levels of critical reflexivity” (Balmer, Fukukawa and Gray, 2007: 8) seems to start with the recruiting process. The research presented her thus focuses on this foundation.

3. Methodological approach

The purpose of the research is to analyse how personal values about CSR affect the application and recruitment decision-making process in Germany.

3.1 Design and Procedure

An interpretive approach was used to analyse the findings, focussing on how individuals’ values are related to common assumptions or cultural practices. Thus the focus of the analysis was the interviewees’ “subjective rules, meanings and cultural life” that shape the participant’s expectations (Banister et al., 1994: 52). A thematic analysis was used that involved reading the transcript and noting any recurrent themes, concepts and issues. The content of the interviews was organized “under thematic headings in ways that attempt to do justice both to the elements of the research question and to the preoccupations of the interviewees” (Banister et al., 1994: 57). The focus was on the themes that the participants raised themselves and the subjects they emphasized. This led to the model presented in the analysis below being developed.

Informal face-to-face interviews were carried out and recorded. Each lasted an average of 42 minutes and 11 seconds. Three interviews were conducted via video conference on Skype, four interviews via telephone and the other nine interviews were conducted as face- to-face interviews. The semi-structured interviews aimed to gain an in-depth view into the participants’ different perceptions and individual experiences. It was intended that this would lead to a deeper understanding of the social context. The interviews followed an interview guide (see Appendix 3 and 4) in order to enhance their structure and comparability. All interviews were conducted and transcribed in German - the researcher’s first language. Sections or parts of the transcripts were translated into English by the researcher for the purpose of writing the dissertation and presenting the analysis. In order to ensure confidentiality and anonymity, pseudonyms have been used instead for the interviewees or the companies.

3.2 Reflexivity

As Bryman and Bell (2007: 712) state, researchers should be aware of their biases and values that influence the research. Personal idiosyncrasies, the cultural “baggage” researchers carry and implicit assumptions about reality should be acknowledged (Bryman and Bell, 2007: 712). This seems to be particularly important as the researcher did her BSc Economics and Business Administration at a German university. These personal experiences showed the irrelevance of CSR especially at her former university but also in German business departments in general, reflected through the few CSR lectures that are rarely offered at some universities. In contrast, the researcher has not only wondered who carries the social responsibility, but also perceived CSR and in specific sustainability to play a profound role in politics, business and society. This dissonance has led to the examination of expectations that students, future employees and HR managers have with regard to recruitment.

3.3 Participants

Sixteen participants took part in this study: eight German business students and eight HR managers. Four of the students were female and four were male, whereas two of the HRmanagers were female and six male. The interviewees were all white German.

One male and one female student had already successfully finished an apprenticeship before beginning their university course; the female student as an office communication clerk for a public radio and television channels and the male student as a business administrator in one of the large German car companies.

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