strategically leveraging csr as a...

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International Journal of Management (IJM)

Volume 7, Issue 4, May–June 2016, pp.152–164, Article ID: IJM_07_04_012

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ISSN Print: 0976-6502 and ISSN Online: 0976-6510

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STRATEGICALLY LEVERAGING CSR AS A

RECRUITMENT TOOL TO ENHANCE

ORGANIZATIONAL ATTRACTIVENESS” -A

SURVEY OF IT PROFESSIONALS OF

GUJARAT

Kirti Makwana

Assistant Professor,

Indukaka Ipcowala Institute of Management (I2IM)

Faculty of Management Studies (FMS)

Charotar University of Science and Technology (CHARUSAT)

Changa, Anand, Gujarat, India

Dr. Govind Dave

Dean and Principal

Indukaka Ipcowala Institute of Management (I2IM)

Faculty of Management Studies (FMS)

Charotar University of Science and Technology (CHARUSAT)

Changa, Anand, Gujarat, India

ABSTRACT

Attracting and retaining the “right” people has becoming crucial for the

organizations to function sustainably and successfully. To keep up to the

requirements, organizations are trying and testing the impact of various

strategies towards fulfillment of this objective. The present study focuses on

the concept of CSR that was earlier viewed as just a “Philanthropic” gesture

has now taken the form of “Recruitment Strategy”. This article offers a

framework for companies to address CSR strategically and also envisages

underlying dimensions CSR: a tool for organizational attractiveness—

intentions and beliefs. Signaling Theory and Social Identity Theory have been

emphasized in the present study. The study reveals that Signaling theory has

profound impact (30.5%) on increasing Organizational Attractiveness

followed by Social Identity theory (28.3%). The Sense of employees, that

include policy towards employees, employer-employee relationship and

employee welfare programs, also play a crucial role (20.7%) to alleviate

organizational attractiveness.

Strategically Leveraging CSR as A Recruitment Tool To Enhance Organizational

Attractiveness” -A Survey of It Professionals of Gujarat


Key words: Corporate Social Responsibility, Organizational Attractiveness,

Sense of Employees Signaling Theory, Social Identity Theory

Cite this Article: Kirti Makwana and Dr. Govind Dave, Strategically

Leveraging CSR as A Recruitment Tool To Enhance Organizational

Attractiveness” -A Survey of It Professionals of Gujarat. International Journal

of Management, 7(4), 2016, pp.152–164.

http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=7&IType=4

INTRODUCTION

IT sector, in India, has transformed India from an agriculture-based economy to a

knowledge-based economy. This sector has made significant contributions in the

country’s economic growth. The sector can be broadly categorized into 4 segments.

For India, Figure 1 shows the segment-wise market share of the IT sector.

Figure 1 Segment wise Market Share

Apart from these, the lives of people have been positively influenced by direct or

indirect contribution of IT sector to various parameters such as employment, standard

of living, per-capita income etc. In India, the IT Software segment has seen significant

growth and has put India on the global map. It contributes for almost 75% of the total

revenues of the IT sector. Though Hardware enjoys second place in terms of market

share in India, it is quite low as compared to global benchmark. The BPO segment has

grown well and is expected to make a footprint in the IT Sector. From managerial

perspective, if we scrutinize the Indian IT sector on porter’s 5 force analysis (as

shown in Figure 2), we find that there is a high threat of new entrants. In this scenario,

the organizations are in a constant battle of growing, or at-least retaining their market

share.

Kirti Makwana and Dr. Govind Dave


Figure 2 Porter's Five Force Analysis of Indian IT Industry

The software sector is service-oriented and thus the products offered are tailored

to the requirement of its client. Hence, major input costs are those of human resources

(forming almost 40% of the total costs) and research and development.

The organizations have now recognized the significance of a talented workforce to

attain a competitive advantage in this globalized economy. So, the IT giants are in a

constant look-out for talented and qualified employees. With such a scenario, the

organizations are using different strategies to enhance their attractiveness for the

prospective employees.

The demographics of our workforce are changing, highlighted by the exit of the

baby boom generation and the entrance of Generation Y workers. The evolving needs

and values of today’s workers make employee recruitment more challenging. “How-

to” articles about recruiting and attracting new employees abound in the popular

business press, but scholars are challenged to explain clearly the science of

organizational attraction. What makes an organization attractive to a potential

applicant? (BACKHAUS, STONE, & HEINER, 2002).

Several authors have suggested what organizations should do to make them

attractive enough for job seekers that possess the needed knowledge, skills and

abilities. Such factors as reward system, work environment, congruence between

organization and jobseeker’s value, diversity policies, treatment of the environment

have been proven by researchers as factors that attract job seekers to organizations

along with CSR (ADETUNJI & OGBONNA, 2013). Today, many organizations, use

“Corporate Social Responsibility” to strategically leverage their organizational

attractiveness. The following study explores the role that CSR plays in attracting

potential talent pool and why a person considers CSR as an important component

while selecting a prospective employer and his organization.

LITERATURE REVIEW

“War for Talent” a term coined by research power house McKinsey & Company in

1997 is still going strong and its hurting organization’s and country’s competitiveness

severely. (Mohamad & Huzaifah bin, 2012). Traditional approach of luring talents via

attractive salary packages and fringe benefits has not been conclusively able to attract

the best talent in the current human resource. Good benefits package and competitive

pay although important are not sufficient to attract and retain “the best of the best”.

Competitive Rivalry

HIGH

Availability of Substitutes

MEDIUM

Buyer Power

MEDIUM

Threats of New Entrants

HIGH

Supplier Power

LOW/NO POWER




(Vallaster, Lindgreen, & Maon, 2012). In Fortune magazine’s “100 Best Companies

to Work For” survey, not a single person cited money as a motive why they loved the

place they worked (Fortune, 2011). Hence, the vital question to be asked is “What is

the world’s best looking for?” Lee, (2008) says the common carrot lies in the

intangible, such as pride in where they work and what they do. In a recent survey of

1200 people, TCS, a resource communications agency, found that 43.9 percent of its

respondents were influenced by an organization’s CSR policy when applying for a

job. (Ramasamy, Yeung, & Yuan) Another famous research carried out by Greening

and Turban (2000) which focuses specifically on few corporate social variables

suggests that firms may develop competitive advantages by being perceived as

attractive places of employment because of their performances with regard to quality

of products and services, treatment of women and the environment, and issues of

diversity. Evidence prevails that potential employees refers to sustainable

development (SD) reports to decide whether or not to work for a company (Global

Reporting Initiative, 2010). Initial attraction of an applicant is influenced by the

perceptions of the firm’s image.(Mohamad & Huzaifah bin, 2012). Corporate Social

Responsibility (CSR) has been proven to positively influence organization

attractiveness to job seekers. (ADETUNJI & OGBONNA, 2013) (BACKHAUS,

STONE, & HEINER, 2002). For example, certain companies, such as IBM, General

Motors, and Microsoft, are sending out brochures to prospective applicants promoting

their companies' philanthropic and environmental programs, indicating that some

firms are using social responsibility as a recruitment tool. Researchers have focused

on 5 Corporate Social Performance (CSP) dimensions: employee relations, the natural

environment, product quality, treatment of women and minorities, and community

relations. (Albinger & Freeman, 2000). Numerous studies have focused externally,

looking at the influence of CSR on prospective employees. These works, which tend

to be based on signaling theory (Spence, 1973) and social identity theory (Moon,

2010), suggest that a corporation‘s socially responsible practices send a positive

signal to potential workers. (Greening & Turban, 1997)

Signaling Theory

Job seekers require complete and accurate organizational information to match their

needs properly with organizational offerings. (Greening & Turban, 1997)

Organizational characteristics have been shown to be indicative of personnel practices

and job seekers tend to use these characteristics as clues. (Schlager, Bodderas, Maas,

& Cachelin, 2011) This use of organizational attributes as predictors of working

conditions is captured under the rubric of signaling theory. Signaling theory suggests

that individuals use various clues, dropped by the firm, to draw conclusions about the

firm’s intentions or actions. (Aggerholm, Andersen, & Thomsen, 2011).More

specifically, propositions based on signaling theory suggest that organizational

attributes provide applicants with information about what it would be like to be a

member of an organization because such attributes are interpreted as providing

information about working conditions in the organization.

Social Identity Theory

Social identity theory suggests that individuals derive their self-concept in part from

their membership in certain social groups (Greening & Turban, 1997) (Moon, 2010).

Employer is an important source of self-concept. Employees enjoy the benefits of

their employer’s positive reputation. This provides another foundation on which to

argue that a firm’s CSP will be important to job seekers as a way of selecting a self-



enhancing employment setting.(Moon, 2010). Meeting social responsibilities not only

allows organizations to display high levels of moral or ethical conduct but also has

been shown to provide instrumental benefits and various types of competitive

advantage. These benefits include things such as superior financial performance,

enhanced reputation, more motivated work forces, and the ability to attract desired

employees. (BIR, SUHER, & ALTINBAŞAK, 2009). Companies are facing pressures

from communities, non-governmental regularities, activities and socially responsible

citizens, to behave as responsible corporation of the society. In this context

corporations are using conception of CSR not only to build favorable relationships

with government but also with all related stakeholders in order to ensure sustainable

business performance. (Ali & Jawaria, 2011). There are many potential reasons to

believe that different job seeking populations will consider an organization's CSP

differently when making job choice decisions. Signaling information from

organizations may not be targeted to, available to, or understood by some types of job

seekers, and therefore, may not influence their decisions. Work values developed

through education and life circumstances are likely to differ across different job

seeking populations. Most practically, job-seeking populations with fewer choices

often have less education, fewer skills, or are unemployed and may have urgent needs

for work. Therefore, those with fewer choices cannot afford to be choosy (Albinger &

Freeman, 2000).

CSR should be viewed as a strategy to gain competitive advantage rather than an

obligation that must be fulfilled. Studies have shown that most of the fortune 500

companies engage in aggressive CSR programmes. (BACKHAUS, STONE, &

HEINER, 2002). The ability to raise capital from the investment community is

increasingly being tied to a business's CSP. (Albinger & Freeman, 2000). The

employees at the present tend to be mobile and volatile. They move from one

company to another for many reasons. Recently, employer branding is becoming

popular. It applies marketing principles in the field of human resource with the

intention to attract, motivate and keep talented employees. The essence of employer

branding is to create a distinguishable image of an organization as a preferred

employer. It seems that candidates and actual employees are interested to work in a

company that they thought having excellent working condition and that would treat

them well. They are seduced by the social status as members of this organization.

They are proud being identified with organization that has positive reputation.

Nowadays, the companies are persuaded to be in the list of “best employer”. By being

in the list, they give signals not only about a favorable work environment but also an

assurance that companies would maintain those “good practices”. This kind of

reputation leads to attraction and retention of talents. Organizational prestige makes

an organization attractive, hence influence organizational commitment.

RESEARCH GAP

CSR is considered only as a philanthropic initiative of organizations. Though there

are much wider implications of CSR activities and many more motives of undertaking

CSR activities, much research has not been conducted on these areas, specifically in

the IT sector for Gujarat. The present study explores the potential and implication of a

company’s CSR activities on its attractiveness to the prospective employees.




RESEARCH OBJECTIVES

To study the impact of CSR activities on organizational attractiveness

To evaluate the contribution of various variables on organizational attractiveness

To evaluate the impact of CSR activities as a marketing tool to attract and retain

talent.

RESEARCH MODEL

ORGANIZATIONAL ATTRACTIVENESS

HYPOTHESIS

Core Hypothesis

H0: There is no significant relationship between Corporate Social Responsibility and

Organizational attractiveness

H1: There is a significant relationship between Corporate Social Responsibility and

Organizational attractiveness

1. Signaling Theory

H0: There is no significant relationship between the perceived organizational

attributes based on signaling theory, through CSR activities and Organizational

Attractiveness.

H1: There is a significant relationship between the perceived organizational attributes

based on signaling theory, through CSR activities and Organizational Attractiveness.

CSR Organizational pride/ Organizational prestige

Employee’s characteristics: high/low achievers

Motives for CSR

Conducive working conditions

Better organizational reputation

Implied positive-ness for organization’s policy and practices

Employee welfare

Perceived corporate citizenship

Financially stable organization

Media dominance

CSP dimensions: Community outreach, Diversity

Sustainable development

Due to globalization

Type of org/sector/industry

Demographic factors: Family background, Age, Education,

Gender, Family Income

Hierarchal level

Degree of job choice possessed by applicants

Aligning individual and organization values

Knowledge, Importance & Perception about CSR

More Salary (high Economic concern)

Opportunities for advancements

Portrayed as ethical organization

Avoid litigation & Compliance to Government regulation

Socially responsible (high concern for society

Celebrity Endorsement

Organizational

Attractiveness



2. Social Identity Theory

H0: There is no significant relationship between the organizational pride/prestige

based on social identity theory, through CSR activities and Organizational

Attractiveness.

H1: There is a significant relationship between the organizational pride/prestige based

on social identity theory, through CSR activities and Organizational Attractiveness.

3. Corporate Reputation

H0: CSR activities does not significantly improve corporate reputation, thereby,

enhancing organizational attractiveness

H1: CSR activities significantly improves corporate reputation, thereby, enhancing

organizational attractiveness

4. Policy towards employees

H0: Policy towards employees does not play a significant role in enhancing

organizational attractiveness

H1: Policy towards employees plays a significant role in enhancing organizational

attractiveness

5. Job Options

H0: There is no significant relationship between consideration of CSR and the number

of job options available with the employee

H1: There is a significant relationship between consideration of CSR and the number

of job options available with the employee

6. Promote corporate image

H0: To promote corporate image is not the prime motive of organizations to adopt

CSR activities

H1: To promote corporate image is the prime motive of organizations to adopt CSR

activities

7. “Good Books” of all the stakeholders and avoid litigation

H0: To be in the “Good Books” of all the stakeholders and avoid litigation is not the

prime motive of organizations to adopt CSR activities

H1: To be in the “Good Books” of all the stakeholders and avoid litigation is the

prime motive of organizations to adopt CSR activities

8. Hierarchal position

H0: There is a significant relationship between hierarchal position and consideration

of CSR as a recruitment tool.

H1: There is a significant relationship between hierarchal position and consideration

of CSR as a recruitment tool.




RESEARCH METHODOLOGY

Research Design: Descriptive

Source of Data: Secondary (Articles, Research Papers, Thesis) and Primary

(Questionnaire)

Data Collection Method and Instrument: Survey/Questionnaire by

personal/telephonic/mail interview

Sampling Plan:

Sampling Frame: Gujarat

Sampling Size: 100

Sampling Unit: Working professionals of IT companies in Gujarat

Sampling Method: Convenient / Snowball

ANALYSIS

A. RESPONDENTS’ CHARACTERIZATION

The respondents approached for the data collection are professionals working in

varied IT firms in Gujarat, ranging from MNCs like TCS (5%), Wipro (10%), and

Oracle (4%) to somewhat less well-known but well-established firms. Majority of the

respondents (57%) are of age less than 25 years. These are the persons who are aware

of the trend of being socially responsible. Majority of the respondents perceive that

CSR is necessary (33%) and beneficial (33%), while some others perceive it as a

voluntary initiative (28%) by the organizations. Only few of the respondents believe

that it is compulsory (8%). The perception of an organizations’ CSR initiative is also

dependent on their hierarchal position in the organization structure. 59% of the

respondents belong to the middle level, 34% to the lower level and only 7% to the top

level. Family income is also a crucial parameter as it provides an insight of the

financial needs, standard of living and urgency of grabbing a job for the potential

employment-seekers. Majority of the respondents (40%) belong to the middle-class

family with an annual income of ₹ 1, 50, 000 to ₹ 3, 00, 000.

B. HYPOTHESIS TESTING

1. Hypothesis under Scrutiny: There is a significant relationship between the

perceived organizational attributes based on signaling theory, through CSR activities

and Organizational Attractiveness.

Variables for testing the Hypothesis: Considered “Best Employers”, having the best

brains, good work environment, good employer-employee relation, ethical, financially

stable, offer better opportunities for advancements, involving in employee & family

welfare programs for its employees, positive treatment to women and minority.

Analysis & Interpretation: Out of all the variables listed above, that support

signaling theory, “Best Employers” has the highest mean of 3.74 with a standard

deviation of 0.981. These values suggest that majority of the respondents perceive that

the employers who undertake CSR activities are “Best Employers”. 72% respondents

have affirmed this positive signal to the Employer attribute. Through scrutinizing the

data, it can be observed that majority of the means are around 3-4, with more skewed

towards 4. So, it can be derived that all these variables “signals” positive-ness of the

organization, thereby enhancing Organizational Attractiveness. To quantify the

quantitative impact of each of these variables among themselves, correlation analysis



was used. It could be derived from the correlation matrix that a high degree of

positive correlation exists between “Good Work Environment” and “Good Employer-

Employee Relation. This depicts that improvement in the Work Environment will

have a direct and positive impact on Employer-Employee Relations. The high degree

of correlation suggests that Best Employers are able to attract and retain Best Brains

through employee welfare and good work environment. The results of Factor Analysis

(Principal Component Analysis) suggest that the employers that conduct/promote

CSR activities are considered as Best Employers which in turn signal higher

Organizational Attractiveness. The regression analysis was used to quantify the

contribution of signaling theory to organizational attractiveness. The value of the

coefficient of determination (R2) suggest that the variables of signaling theory

contribute 30.5% to the organizational attractiveness. It is observed that the value of

F-Significance (.000) is less than the level of significance (0.05). Thus, the null

hypothesis can be rejected and alternative hypothesis is proved. So, there is a

significant relationship between the perceived organizational attributes based on

signaling theory, through CSR activities and Organizational Attractiveness.

2. Hypothesis under Scrutiny: There is a significant relationship between the

organizational pride/prestige based on social identity theory, through CSR activities

and Organizational

Variables for testing the Hypothesis: For enhancing corporate reputation;

Organizational prestige; considered to have good reputation in market, best brains,

involved in employee and family welfare activities; positive treatment to women and

minority; celebrity endorsement; Motive behind CSR: development of Society,

Sustainable Development, promote corporate image, employee satisfaction, be in

“Good Books”; Ultimate beneficiaries: Society, Employee.

Analysis & Interpretation: The negative skewness observed in majority of the

variables, for social identity theory, suggest that there are mixed reviews about the

validity of this theory and most of the responses vary between Disagree to Neutral.

This can also be observed from the values of mean. There is a highest degree of

correlation exist between conducting CSR activities with the motive of development

of the society as well as contribution to the sustainable development. The result of

Factor Analysis (Principal Component Analysis) indicates that the organization

conducting CSR activities have Good Reputation in the market, thereby contributing

to social identity theory. The regression analysis was used to quantify the contribution

of social identity theory to organizational attractiveness. The value of the coefficient

of determination (R2) suggests that the variables of social identity theory contribute

28.3% to the organizational attractiveness. It is observed that the value of F-

Significance (.019) is more than the level of significance (0.05). Thus, the null

hypothesis can be accepted. There is no significant relationship between the

organizational pride/prestige based on social identity theory, through CSR activities

and Organizational Attractiveness.

3. Hypothesis under Scrutiny: CSR activities significantly improves corporate

reputation, thereby, enhancing organizational attractiveness

Variables for testing the Hypothesis: Main benefit: enhancing corporate reputation,

improving relations with suppliers, institutions, donors, community; considered to

have good reputation in market; motive: promote corporate image, benefit in

relationship with institution finance and community.

Analysis & Interpretation: The mean values for all the variables range from 3-4,

majority of them more towards 4, that is, “Agree”. Hence it can be depicted that




majority of respondents agree to the view that CSR activities can improve corporate

reputation, and subsequently organizational attractiveness. There is a high degree of

correlation between benefit derived by CSR on enhancing Corporate Reputation and

the motive of CSR activity to promote corporate image. Thus, it can be deduced that

CSR activities significantly improve Corporate Reputation, thereby, enhancing

organizational attractiveness. So, CSR activities significantly improves corporate

reputation, thereby, enhancing organizational attractiveness

4. Hypothesis under Scrutiny: Policy towards employees plays a significant role in

enhancing organizational attractiveness

Variables for testing the Hypothesis: Significant Area of CSR: Policy towards

employees, Benefit: To strengthen the sense of employees; considered to have good

employer-employee relation, better opportunities for advancements, involving in

employee welfare activities.

Analysis & Interpretation: The highest mean value of “Sense of employee” suggest

that majority of respondents perceive this benefit as significant in improving

organizational attractiveness. The highest degree of correlation between

“Advancement opportunities” and “Employee Welfare Activities” suggest that these

two areas are of prime importance, under employee policy and carry significant share

in improving the organizational attractiveness. The regression analysis suggests that

the contribution of policies towards employees to enhance organizational

attractiveness accounts to 20.7%. The value of F-Significance is less than level of

significance. So, null hypothesis should be rejected and alternate hypothesis holds

true. Hence, the policy towards employees plays a significant role in enhancing

Organizational Attractiveness.

5. Hypothesis under Scrutiny: There is a significant relationship between

consideration of CSR and the number of job options available with the employee.

Analysis & Interpretation: The negative value of correlation suggests that when

respondents have fewer options, their emphasis on CSR activities is reduced. The

value of F-Significance is greater than the level of significance. This indicates that

when there are less job options, respondents will not emphasis on CSR activities.

6. Hypothesis under Scrutiny: To promote corporate image is the prime motive of

organizations to adopt CSR activities

Analysis & Interpretation: The weak correlation indicates that promoting corporate

image is not the prime motive of organizations to adopt CSR activities. This is also

reflected in the results derived from regression analysis with coefficient of

determination of 3%. Even the value of F-significance is higher that the level of

significance. Thus, the null hypothesis can be accepted that promoting corporate

image is not the prime motive of CSR activities.

7. Hypothesis under Scrutiny: To be in the “Good Books” of all the stakeholders

and avoid litigation is the prime motive of organizations to adopt CSR activities.

Analysis & Interpretation: The weak correlation indicates that staying in “Good

Books” is not the prime motive of organizations to adopt CSR activities. This is also

evident from the value of coefficient of determination and F-significance that is

greater than alpha, thereby accepting the null hypothesis. Hence, to be in the “Good

Books” of all the stakeholders and avoid litigation is not the prime motive of

organizations to adopt CSR activities.



8. Hypothesis under Scrutiny: There is a significant relationship between hierarchal

position and consideration of CSR as a recruitment tool.

Analysis & Interpretation: There is a Weak correlation between hierarchal position

and consideration of CSR as a recruitment tool. This is also reflected from low value

of coefficient of determination (2%). The value of F-Significance is greater than

alpha. Thus, the null hypothesis is accepted. So, there is no significant relationship

between hierarchal position and consideration of CSR as a recruitment tool.

CONCLUSION

The present research assesses the effectiveness of strategically leveraging CSR as a

recruitment tool to enhance Organizational Attractiveness. The findings indicate that

this tool as a profound potential for solving the prime issue faced by the

organizations, attracting and retaining talented workforce. The data derived, and

subsequent analysis, suggest that Signaling theory effectively contributes in

enhancing Organizational Attractiveness, whereas Social Identity Theory, for the

selected set of respondents appear to be less appealing. The number of job options

available, hierarchal position and corporate reputation that appeared to be significant

factors while studying the literature, did not turn up to be significant for this research.

This can be attributed to a plethora of extraneous variables, which are beyond the

scope of the present study. It can be depicted from the results that policy towards

employees, is what a potential job-seeker will look for. Policy towards employees,

employee welfare programs, relationship between employer and employee are the

prime areas that an organization should focus while leveraging its CSR activities to

increase organizational attractiveness. Thus, the organizations seeking to recruit from

a diverse applicant pool should aim at balancing stakeholder interest as well as

organizations well-being by positioning their CSR initiatives strategically.

PRACTICAL IMPLICATIONS & SUGGESTIONS

The present research proves that CSR can be an effective recruitment tool. The

strategy-makers and top management can use this novel concept to improve their

organizational attractiveness. They need to broaden their horizons, think out-of-the-

box and realize the significance of this tool. Not just a “Philanthropic” activity, CSR

should be viewed from a strategic perspective to lure the talent, have competitive

advantage and move a step ahead towards Sustainable Development.

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