The War for Talent and the Role of Corporate Social Responsibility

By In Weekly Email 5 minute read time

The Question

Why do firms engage in protecting the environment or lending a hand in the community in which they operate?  The dominant logic is that businesses do Corporate Social Responsibility (CSR) or emphasize Corporate Social Performance (CSP) to attract customers, to satisfy investors, or to enhance employee morale.  But in a compelling study, researchers contend that CSR and CSP does even more than that; it can serve as powerful signals that attract potential employees.  In a world where talent matters more than ever, any tool that increases the size and the quality of the applicant pool should be worth gold.  For more, check out the article in its entirety here.

Theory

At the crux of their arguments is signal theory.  Essentially, signal theory suggests that job seekers often have little information about organizations.  Because of this, applicants rely on organizational signals to make decisions to apply or not to any given business.

The authors suggest that when an organization emphasizes its Corporate Social Performance (CSP), it sends signals that should strike a chord in 3 distinct ways.  First, applicants imagine the pride they would feel if they worked at an organization that signals CSP.  Second, organizations that advertise their CSP may indicate that it shares values with applicants.  Lastly, firms that engage in CSP may signal that they treat their internal employees better than others.  All of these signals, individually and collectively, cause an applicant to become more attracted to a given business.  

The Samples and Measures

These social scientists were ambitious.  We’ve decided to focus on the first part of the study, which involved an experiment with control and experimental groups. 

We’re in danger of oversimplifying, but allow us some room to maneuver here.  180 junior and senior students were recruited and given the directive: pretend as though you are currently looking for a job and that you are suitable for at least one of the jobs advertised by each company.  

In an interesting move, the researchers had three different websites constructed of fictitious companies. In one website, the firm’s community involvement was emphasized on their webpage.  In the second condition, the firm’s environmental performance and stewardship was emphasized.  In the third condition and to serve as the control, no community involvement or environmental orientation was included.  It was all about business.  60 students were randomly assigned to each of the following conditions.

The researchers also built a survey instrument that captured anticipated pride, perceived value fit with the hiring organization, and expected treatment from the hiring organization.  Lastly, they captured organizational attractiveness as students had to rate their agreement with such statements as, “This company is attractive to me as a place for employment.” 

We Now Open the Kimono

If Corporate Social Responsibility (CSR) and Corporate Social Performance (CSP) wasn’t important to you prior to reading this, it should be now based on some hard and fast evidence. 

Some robust tests of statistical significance were conducted.  The results strongly suggest that when organizations emphasize either community involvement or environmental stewardship, they make the organization more attractive.  And this attractiveness seems to work through 2 strong signals—anticipated pride to work with the hiring organization along with a perceived value fit between applicant and hiring organization.  Interestingly, the notion that CSP was a good indicator or signal of how a given organization treats its employees didn’t pan out.

But wait, there’s more.  The participants of the study who had a higher communal orientation or seemed to care more about the environment really cared about the value alignment between themselves and the potential hiring organization.  As a consequence, these do-gooders were even more attracted to the hiring organization.

Again, to summarize: CSP increases an organization’s attractiveness through signals related to anticipated pride and perceived value fit.  And those that are pre-disposed to helping out or saving the environment scored even higher in their attraction to a given organization. 

Conclusion

We want to make you a better leader, a stronger manager, and a critical thinker.  With that in mind, let’s see how we can be the best version of ourselves here based on what we’ve read.

Hiring is hard these days with record employment.  And, within a given industry, pay scales are similar.  Pay, quite simply, may not be enough to differentiate you from your competitors.  What can differentiate a biz appears to be its CSR and CSP.  To attract more and better applicants, organizations may wish to signal to the labor pool their community efforts and environmental stewardship.  By doing good, you are rewarded with better employees.  

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