The public has raised its expectations for corporate social responsibility (CSR) significantly over recent years. Scandals like Volkswagen's Dieselgate and the Deepwater Horizon oil spill eroded collective trust in corporations. Consumers now expect companies to prove themselves worthy of their business by embracing the role of societal benefactor. Consumers are more likely to work with firms they perceive as agents of positive change, which incentivizes managers to prioritize humanitarian pursuits.
Harvard Business School defines CSR as the idea that a business has a duty to society and is therefore obligated to make a positive impact on the world. The current social landscape rewards organizations that try to make a difference. Some of the most common examples of CSR-based initiatives include carbon footprint reduction, improving company diversity, equity and inclusion, and charitable giving.
Experts understand societally conscientious actions improve operations like sales and public reputation, but new research found that corporate responsibility stimulates your organization internally as well. In "Employee reactions to perceived CSR: The influence of the ethical environment on OCB engagement and individual performance" researchers Jeffery Chandler, Daniel Gullifor, Matthew Quade, Yury Rouba, and Walton College assistant professor Oleg Petrenko examined CSR’s influence on employee performance and how managers can encourage positive behavior by creating an ethical environment.
Evolving Expectations
As public expectations increase and more companies enact social initiatives, societal engagement has become all but mandatory for businesses that want to remain competitive in today’s market. People, especially younger individuals, want to make a positive impact. Many people ingrain this desire into every choice they make. A desire to do good may lead a potential customer away from one business and toward another socially responsible organization. And, yes, while CSR has gained a lot of negative press for its increasingly obligatory nature and for its creating acourt of public opinion, responsibility can’t be totally negative, right?
For example, many global corporations with successful CSR initiatives underway have witnessed positive effects. For example, The Coca-Cola Company focused on sustainability by committing to a “World Without Waste.” In 2018, The beverage company pledged to make 100% of its packaging globally recyclable by 2025 and use at least 50% recycled materials by 2030.
Unsurprisingly, Coca-Cola’s revenue increased over 14% the next year. The brand has previously alienated its more environmentally conscious customers who avoided Coke due to its wasteful packaging. By pledging to reduce single-use plastics, Coca-Cola enabled its buyers to identify with the company as a fellow protector of the planet. Coke had regained the public’s trust, and people do business with the brands they trust. Socially responsible actions create such trust.
Workplace Identity
Business researchers recognize that CSR-based actions heavily influence public perception, but research has yet to touch on how internal stakeholders like employees react to societal engagement. This micro-level analysis would allow managers to understand the reach of their social responsibility and effectively maximize its output. According to the researchers, CSR affects an employee’s opinions to a greater degree than it affects consumers’ opinions. The researchers found that people gain a sense of identity from what they do for a living. Employees believe their employer reflects on themselves and thus resist negative characterization. An employee’s perception of company values drives the relationship with that person and their employer. CSR directly affects workers’ ability to identify with an organization.
When a company engages in social initiatives, its workforce feels like part of the brand and enters an exchange-based relationship with the organization. Employees sense that socially responsible employers benefit them outside of compensation and feel obligated to return the favor. Employees will work extra hard for a company that has their best interests in mind and reflects well upon them. This hard work manifests in improved work ethic and performance reviews. However, employees must be aware of social engagement taking place if managers wish to reap the workplace benefits of CSR. Intentional and direct communication of such initiatives often catalyzes workforce improvements. Successful companies ensure employees the opportunity to identify with the work they are performing by informing them of social initiatives and publicly promoting charitable actions via social media or company memos.
Managers, however, should not use these findings to manipulate their workforce through misrepresentation. Employees are, after all, quite adept at sniffing out a lack of authenticity. Instead, research indicates that managers who express genuine concern for the wellbeing of others (inside and outside of their workforce) amplify CSR’s positive effects. Employees must be assured their company’s social engagement is authentic, and actions always speak louder than words.
Ethical Environment
People will not blindly trust everything their boss tells them. Social engagement means nothing to employees if their managers fail to promote the same responsibility at work. As an illustration, let’s say you work for a company that is constantly advertising its commitment to diversity. But when you look around the office, you notice everyone looks very similar to you. You may begin to question your company’s integrity: if the executives don’t honor their public intentions, what’s stopping them from selling you short as well? Why should you honor your commitments as an employee of a dishonest company? Employees take behavioral cues from their superiors. If employees notice management acting dishonestly, they will soon follow suit. Managerial inauthenticity hinders relationships between employee and employer, all but negating any positive impact CSR had in the first place.
Maximizing Output
Societal engagement not only matters to your consumers; it also matters to your employees. It acts as a catalyst for a relationship built on positive exchanges between a company and its employees. If workers are aware of their organization’s efforts to improve the world they inhabit, they will try to return the favor. Operating in an ethical environment only amplifies employees’ reactions to CSR, as they begin to recognize their belonging in the organizations and appreciate their role in something bigger than themselves.
Oleg V. Petrenko is an Assistant Professor in the Strategy, Entrepreneurship, Venture and Innovation Department at the Sam M. Walton College of Business at the University of Arkansas. He received his PhD from Oklahoma State University. His research broadly focuses on the micro-foundations of strategy in large corporation and new venture contexts. Specifically, he is interested in examining the psychology of executives and entrepreneurs and how it impacts strategic decision-making and firm performance.
Jack Travis is pursuing an undergraduate degree in journalism at the University of
Arkansas. Travis is the copy editor of the Arkansas Traveler and the treasurer of
the UA chapter of the Society of Professional Journalists. He is interested in marketing
and brand journalism.
