Employees' Satisfaction and CSR practices: case study

Employees' Satisfaction and CSR practices: case study Dr. Khaled Ibrahim Attia [email protected] Arab Academy for Science and Technology and Maritim...
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Employees' Satisfaction and CSR practices: case study

Dr. Khaled Ibrahim Attia [email protected] Arab Academy for Science and Technology and Maritime Transport Dr. Mohammed Wahba [email protected] Arab Academy for Science and Technology and Maritime Transport Mr.Eslam Ahmed Hussein [email protected] Arab Academy for Science and Technology and Maritime Transport Abstract: Corporate social responsibility becomes more important for corporate survival, at the same time the manpower represents the most valuable asset/resource that creates value for modern firms, the present study attempts to investigate and modeling the relationship between Corporate Social Responsibility (CSR) practices and overall employee satisfaction which represents a compound mental process. The authors examined the impact of five dimensions of Social Accountability Standards (SA8000) practices on employee satisfaction: Health and safety, unions and bargaining right, discrimination, work life balance and sufficient wage. As CSR is a social concept, case study was used to involve and understand the concept action, and data gathered through a survey. A proposed model was tested on a sample of 199 employees, that represents 49% response rate, within an Egyptian firm that is operating within the textile industry. Results showed that all internal CSR dimensions are significantly and positively related to satisfaction. In addition, the findings of the present study provide evidence to suggest a model can be developed to enhance satisfaction based on CSR practices. Limitations of the study, directions for future research, and implications of the findings are highlighted. Keywords: CSR, Employee Satisfaction, SA8000 practices.

1. Introduction There is a real growing trend that includes Consumers and employees to become aware of the social consequences of their behavior and intangible attributes of

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companies and they are increasingly attracted to brands and companies that are known for developing cause-related relationships and social responsibilities (Cone Case Evolution studies, 2013; SAI,2015c). Corporate reputation and social activities accomplished by any firm that is operating with any society turned to be more important, durable and resistant to competitive pressures than product and service attributes (Illia and Balmer, 2012; Casado-Diaz, et al, 2014). Different types of pressures are being exerted on all types of firms. Pressures from employees for better working conditions, others from local communities for a healthier environment… etc., are always maintained. History of business provides evidence to suggest that researchers,scholars as well as practioners be also very much concerned with the impact of CSR practices on the overall firms' performance. As far as the present study concerned with CSR practices and their impact on the employee satisfaction,the researchers are going to examine the impact of five dimensions of Social Accountability Standards (SA8000) practices on employee satisfaction: Health and safety, unions and bargaining right, discrimination, work life balance and sufficient wage. Literature Review: Economic and social changes enforced policy makers to recognize that poverty alleviation and sustainable development cannot be achieved through government alone, and that the pursuit of economic growth through employment creation and income generation should be balanced with protection of the basic rights of workers (Craig, 2011). In the past two decades, standardization imposed by multinationals on their subsidiaries operating in developing countries, that initiated conceptual and legalization changes (Dunning, 2003). Many developing countries launched plans for economic, social and environmental development that emphasis improvements of lifestyle, social protection and labor markets. For example, the social protection expenditures in Egypt and Tunisia raised to 9% and 5% of GDP respectively (Silva et al., 2012). A growing number of companies have aligned to the idea of Companies’ Responsibility (CR), which challenges the institutional model of corporations where it incorporates the social and environmental impact of business practices into CR (Li & Geiser, 2005; Windell, 2006; Hiscox et al., 2008). For example, at the beginning of 2014, 3388 organizations were socially certified, whose headquarters are located in 71 different Countries and with a total of 2,019,193 employees (Merli et al., 2015). Civic and value driven social and environmental standards, such as Fair Trade, Organic, Hazard Analysis & Critical Control Points (HACCP) and International Organization for Standardization (ISO) standards, are becoming more and more like industrial conventions (McEwan & Bek, 2009). Practitioners and scholars proposed that CSR management issues should be indispensable to business strategy and CSR management should be part of the overall management strategy (Porter and Kramer, 2006; Katamba, et al, 2012; Lee, 2008; Casado-Diaz, et al, 2014). International bodies supported such efforts, for example; United Nations Global Compact, issued The 10

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Principles (UNGC, 2002), Organization of Economic Co-operation and Development (OECD), issued its Guidelines for Multinationals to Engage in CSR, and ISO, released the ISO 26000 standard In 2010. Such development issues complemented with core concerns of international business ethics (Kline, 2005). CSR is a ‘business-driven' initiative. It is the voluntary contribution of business to sustainable development which takes into consideration the interests of stakeholders (Stamm, 2004; Zafar et al., 2014). CSR has been described as the extent to which organizational outcomes are consistent with social values and expectations (Lerner and Fryxell, 1988), ‘sensitizing concept’ and ‘interface management’ (Jonker and Pijkeren, 2006), and as 'the responsibility of enterprises for their impacts on society' (European Commission, 2012; Ayuso, et al, 2013). The CSR concepts and foundations, such as Carroll's CSR pyramid and Social Exchange Theory (SET), have become a necessity that emerged from changes such as; globalization, empowered social societies that associated with developed social values, government initiatives, codes and standards, CSR goes beyond philanthropy and charity; it is about ethics, religion moral, caring, culture, philosophy and values which will ultimately translate into good business sense, good practice, good governance, transparency saving from recycling, energy and water use and better resource material management and better profit (Rosamaria Moura‐ Leite & Robert, 2011; Zizek and Mulej, 2013; Fombrun, 1996; Fombrun and Van Riel, 2004; Russell and Marie, 2005; Cropanzano and Mitchell, 2005; DeConinck, 2010; Karanges et al., 2014; Carroll, 1979; Carroll, 1991; Zabin, 2013 and CEBCglobal, 2005). Integrating CSR into the value chain is a source of competitive advantage (Porter and Kramer, 2006) and enhanced reputation With better financial performance, and the ability to attract foreign investors and greater customer satisfaction and employee commitment (Bayoud and Kavanagh, 2012). Because the most important recourse is the human resource through which companies can gain nonrecurring competitive advantage, the importance of social responsibility towards employees is paramount. CSR information reflects an important side of ethics within a company that helps legitimize corporate behavior and contributes in generating a positive corporate reputation (Colleoni, 2013). More than 80 percent of Fortune 500 companies address CSR reports on their web sites (Lii and Lee, 2012). 2.1 Social accountability SA8000 There are standards that partly or fully covers CSR and social accountability, such as; AA1000 series, Global Reporting Initiative (GRI), Business Social Compliance initiative (BSCI), Sedexglobal, SA8000 and ISO 26000. ISO 26000 and SA8000 covers the same scope with different purpose; ISO standard is a guidance standard, whereas the SA8000 could be used as a management and operational standard that a company may be certified against (Hemphill, 2013; Bazillier and Vauday, 2014). SA8000 and similar codes are voluntary requirements to improve workplace conditions, especially in nations that lack robust enforcement of regulatory standards (Hiscox, et al, 2008). SA8000 expands on the eight conventions of International Labor Organization (ILO's) Declaration of Fundamental Principles of Rights at Work which covers child labor, forced labor, discrimination and free association and collective bargaining to include standards on health and safety, working hours, wages, and discipline.

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2.2 Job satisfaction & SCR Sustainable competitive advantage could be obtained by building resources that are both valuable and hard for competitors to imitate. Workers tasks are complicated and much harder to quantify, therefore, employee's satisfaction and engagement represent an intrinsic motives that have valuable effect on productivity, corporate returns and repetitions (Saks 2006; Shuck and Wollard, 2010; Eikhof, et. al., 2007; Rania, et al, 2011; Luthans, 1998; Colquitt, 2009). Social exchange relationships play a critical role in shaping work environments and employees' satisfaction (Bartunek and Dutton 2000; Masterson et al., 2000). Employee attitudes relating to job satisfaction and organizational commitment are of major interest to the field of organizational behavior and the practice of human resources management (Ohiwerei, et al, 2011; Shujat, et al, 2011). The estimation of job satisfaction, which includes both physical and psychological factors, is a compound mental process, which starts from the evaluation of one‘s own expectations on the ideal job and ends with the general wellbeing of the employee, it (Depedri, et al, 2010). To understand the adoption and influence of standards, it is important to study specific situations in which standards evolve. Adopting SCR results in Key benefits and a successful CSR strategy has to be context specific for each individual business (Brunsson & Jacobsson, 2002; Van Marrewijk, 2003), i.e. the institutional context. 2.3 Health and safety requirement Studies have found that Occupational Safety and Health (OSH) that has been performed by company not only provide a sense of security to employees, but also could provide satisfaction to employees (Yusuf et al., 2012). Safety climate is a series of actions and a coherent set of perceptions and expectations that workers have regarding safety in their organization (Gyekye, 2005). SA8000 seeks to ensure that workers have a safe and healthy workplace, where adequate preventive measures are taken to minimize, and where possible eliminate health and safety risks both in the short and long term. At the enterprise level, especially in the developed world, there is increasing concern of the need to provide a safe and healthy work environment, to the degree that employers should seek to eliminate risk where possible and provide training about the potential hazards of the workplace. Such recognition is driven by tougher penalties and higher costs of non-compliance, as well as cost savings, efficiency and employee retention gains. Interviewing workers and open-end questions are critical for an evaluation of OSH conditions. 2.4 Freedom of association and the right to collective bargaining Workers have the freedom to form and join any trade union they choose, free of any form of interference from employers or competing organizations set up or backed by the employer. Collective bargaining is the voluntary negotiation between employers

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and organizations of workers in order to establish the regulation of terms and conditions of employment by means of collective agreements. In the absence of coverage, workers may benefit from union membership (Bryson and Freeman, 2006). SA8000 requires that employers permit, without any direct or indirect impediments or negative consequences for any workers, non-violent efforts towards worker organizing, trade union membership, and collective bargaining. Examples of issues that should be considered are legal challenges or discrimination against trade union. Annual Survey of Violations of Trade Union Rights, which is published by the International Confederation of Free Trade Unions (www.icftu.org), keeps watch on updates concerning unions and associations 2.5 Discrimination It refers to any distinction, exclusion or preference, which has the effect of nullifying or impairing equality of opportunity or treatment. Studies examined employees' perceptions of discrimination that affect their work-related attitudes revealed that all three types of perceived discrimination have an effect on organizational commitment, job satisfaction, and organizational citizenship behavior (Sanchez & Brock, 1996; Ensher et al, 2001). SA8000 seeks to ensure equal and respectful treatment for all workers in all matters. Employees should be employed, trained, promoted and compensated solely on the basis of their job performance and they should be free from all types of indecent verbal, physical and sexual harassment and other discriminatory practices. Positive discrimination could be exist and required, for example; women engaged in hazardous work, night work, underground work and work during pregnancy and/or nursing period. Discrimination may cause vital consequences, a clear example of employees' discrimination was in 2000, where Coca-Cola company paid 192.5$ million as a settlement for discrimination against African-American employees. According to gender gap index in 2010, issued by UNICEF, Egypt rank is 125 of 134 countries. 2.6 Work life balance For those in employment, and especially dual-income households, the challenge posed by reconciling the growing demands of work with caring responsibilities outside the workplace. It is one of the dominant issues facing family life in modern societies. Apart from career life, work life balance is that segment which includes family, personal growth, fitness and health, community relations and friendship (Raisinghani and Goswami, 2014; Greenhaus et al., 2003). Work life balance is an escalating issue, for example; in the EU as a whole, part-time working accounts for only 6% of male employment and 33.3% of female employment (EU-LFS). Job satisfaction is one of the factors diminishing work life conflict (Saif, et al, 2011; Maren et al. 2013). SA8000 deals with methods and ways to reach harmonious balance between work responsibilities, private responsibilities and personal interests. 2.7 Numeration

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The compensation and rewards received for workers' work consist of all the economic benefits supplied by the organization, as pay, promotion, and other benefits, including verbal recognition and responsibilities. Satisfaction with pay and job security are the most important job satisfaction categories (Clark, 1997). The most studied reward is wage; the wage is the central focus of the incentive scheme, which aims at inducing workers to exert the optimal effort level (Depedri, et al, 2010). The differences in wages among co-workers, which is an index of distributive fairness, negatively affect job satisfaction (Benz, 2005) and consider a critical violation of employee' social rights. 3. The Study Research Objective: This research attempts to assess the relationships between some of SA8000 perspectives with employees' satisfaction. The research uses case study technique within textile industry in Egypt. It comes in three parts, starting with a presentation of employee satisfaction as a dependent factor with five SA8000 perspectives as independent factors, then, assessing factors within a case study and analyzing results. Finally, presenting conclusions, recommendations and further research.

4.Research Methodology and Design: 4.1 Research Approach To realize the objectives of the present study, the following methodological techniques have been adopted. 4.2 Research Variables & Measurements: A number of variables were considered for this study. The Independent variables of this research were Good conditions of Health and Safety, the right of Unionization and bargaining power, Non Discrimination, Work life balance and Fair and Sufficient Wage pay. The dependent variables used were measures of employee satisfaction. 4.3 RESEARCH HYPOTHESIS: Hypothesis 1: There will be a significant relationship between Good conditions of Health and Safety, and Employee Satisfaction. Hypothesis 2: There will be a significant relationship between the right to create Unionization and having bargaining power, and Employee Satisfaction. Hypothesis 3: There will be a significant relationship between Non Discrimination, and Employee Satisfaction.

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Hypothesis 4: There will be a significant relationship between Work Life Balance, and Employee Satisfaction. Hypothesis 5: There will be a significant relationship between Fair and sufficient Wage Pay, and Employee Satisfaction. 4.4 Research Framework: The framework utilized for this research was model consists of the five practices of SA 8000 Standard that are believed to achieve employee satisfaction. The five practices are Good conditions of Health and Safety, the right of Unionization and bargaining power, Non Discrimination, Work life balance and Fair and Sufficient Wage pay. The dependent variables used were measures of employee satisfaction. The study model is illustrated in figure (1.1).

Figure (1) Study Model INDEPENDENT VARIABLES

DEPENDENT VARIABLES

Good conditions of Health and Safety Unionization Right and bargaining power

Non Discrimination Work Life Balance Fair and sufficient Wage Pay

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Employee Satisfaction

4.5 Sampling Size and method The main goal of this study was to develop the conceptual model to measure the direct effects of the five SA8000 practices on General Employee Satisfaction in one of Multinational Textile Companies in Egypt. The specific sample was comprised of 199 out of 800 employees working in one of Multinational Textile Companies in Egypt. The Sample includes different employees groups classified basing on; Department, Current position, Level, Gender, Age, years of Experience. 4.6 Data Analysis Techniques: To accomplish the main goal of this study, three sub-objectives were investigated. The first sub-objective was to develop a valid and reliable measurement model. The second Sub-objective was to investigate the direct effects of the five practices of SA8000 on Employee Satisfaction. The third sub-objective of this study was to investigate the different effects of the five practices of SA8000 on different employee groups in the organization. To test validity and reliability of the measurement scales, factor analyses were conducted. The results of Cronbachs Alpha and Internal Consistency showed that the measurement scales were indeed valid and reliable. Correlation analysis was employed to examine the direct effects of the five SA8000 Practices and General Employee Satisfaction. Simple Regression Analysis was further conducted due to the existence of Multicollinearity effect among independent variables. To investigate the different effects of Talent Management on different employee groups ANOVA analysis was conducted. 5.Research findings: The salient findings realizd through the present study can be highlighted as follows : First ,Analysis: Gaps in official statistics, and the limited availability of administrative statistics on flexible working arrangements, make it imperative to gather data and generate statistics from independent research methods, such as surveys. To explore the organization's effort to promote their social mission statement, involving the employees and the way its gaining competitive advantage, the researchers used both qualitative as well as quantitative methods of research.

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In 2014, a structured interview throughout self-administered questionnaire was used to collect the necessary data. The questions were mainly inspired by KILIÇ & SELVİ (2009) and Mukururi,Ngari (2014). A total of 400 questionnaires were distributed, out of which 199 were returned back. Most of the respondents were collected from production sections (44%), maintenance section (18.5%), quality section (7.5%) and accounting (5%). Female constituted only 3.5% of total respondents. All statistical analysis was performed using SPSS (release 20.0). Scale reliability was assessed using Cronbach's α. The α values ranged from 0.87 to 0.92 (higher than 0.70 recommended by Nunnally (1978) & Malhotra (2004)) (Table-1). The validity of the variables reflects their robustness; the variables within this research are global measures of social accountability. Table (1): Cronbach's alpha of Study Variables Cronbach's alpha (composite reliability)

SA8000 dimensions Health and Safety

0.920

Unionization

0.892

Discrimination

0.871

Work Life Balance

0.901

Wages

0.889

Employee Satisfaction

0.907

Between employees' satisfaction and SA8000 variables, a bi-variate Pearson correlation was carried out and results were reported in table (2). By examining the table, significant correlation exists between satisfaction and SA8000 variables. Table (2 ) Internal consistency of the study variables Employee Pearson Satisfaction Correlation

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P

Employee Satisfaction

Pearson Correlation

P

Work Life Balance

.803**

0.0001

Health and Safety

.599**

0.0001

Wages

.847**

0.0001

Unionization

.823**

0.0001

Discrimination

.849**

0.0001

Univariate ANOVAs were performed as post hoc analysis (table-3).

Table (3-b) ANOVA test of the study variables ANOVA Model Regression (between groups) Residual (within groups) Total

Sum of Squares

df

Mean Square

F

Sig.

9314.11

5

1862.823

390.124

.000

921.565

193

4.775

10235.7

198

ANOVA test of the study variables which equal 2-tailed T test is the technique used to determine the equality of means. The results indicate significant difference between groups and that the model can predict the dependent variable (satisfaction).

The multivariate and regression analysis indicated the relationships between dependent and independent variables and their strengths and directions. Table (4): Regression analysis of different factors affecting on employee satisfaction Model Summary Model

R

(R2)R Square

Adjusted(R2) R Square

Std. Error of the Estimate

Dimension 01

.954a

0.91

0.908

2.18517

R2 indicates the proportion of the variance in the dependent variable (satisfaction) that is explained by the combined impact of the independent variables (SA8000 perspectives).

Table (5) Multi Variation and Regression Analysis Coefficients

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Model

Unstandardized Coefficients

Standardized Coefficients

t

Sig.

-3.195

0.002

B

Std. Error

(Constant)

-4.690

1.468

Health and Safety

-0.143

0.028

-0.187

-5.106

0.0001

Unionization

0.685

0.063

0.437

10.824

0.0001

Discrimination

0.820

0.075

0.452

10.874

0.0001

Work Life Balance

0.351

0.091

0.171

3.866

0.0001

Wages

0.420

0.117

0.167

3.597

0.0001

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Beta

Second:findings,discussion & conclusions: The analysis supported the association between variables and could be used to develop a model that predicts the management efforts to affect employees’ satisfaction and hence their productivity. As adjusted (R2) is preferred when there are many independent variables, the (R2) R Square (goodness of fit) which means that practices within the scope of the study, predicted the employees' satisfaction by 90% with only 2.18 percentage of error. On the other hand, the analysis coefficients (table5) tell us the weight and direction (positive or inverse) of the relationship of each independent variable with the dependent variable. The unstandardized coefficients are useful to compare each variable between the regressions and its 'B' can only be compared with other variables measured in the same units as the case under study. 't' value and significance of variables indicated that all variables Work together (associated) and that Unionization and Discrimination have the Strongest and Most significant Impact on Satisfaction. The negative sign of the developed model, indicates that both the constant and Health and safety variable are negatively associated/correlated with employee satisfaction.

Based on R2 and coefficients values, the relationships between study variables could be modeled as follows:

Dependent variable: Y= employees 'satisfaction

Independent variables: H= Health and Safety U= Unionization D= Discrimination WL= Work Life Balance W= Wages

Y= -4.690 + (-0.143 *H) + (0.685 *U) + (0.82*D) +(0.35*WL) + (0.42*W)

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For the case under study, the model generated, provides insights about degree and direction of relationships between employees' satisfaction and study variables. The constant value reflects that the employee is not satisfied when all variables presented equal zero or have no effects. Moreover, health and safety precautions or procedures have negative impact over employees ' satisfaction. Such impact could reflect reluctance behavior due to improper safety and healthy procedures. 5.Recommendations and study implications: This study and the model developed attempted to provide a causal relationship that benefits managers in Textile industry in Egypt (as a case study) with insights concerning employees' satisfaction in relation to the deployment of SA8000 practices. The outcome of this research enables administrators to develop and monitor specific initiatives to increase employee satisfaction through focusing on specific practices, thereby improving performance of their organizations. Ultimately, the study results would help academics and practitioners, especially in developing societies, to understand how social Practices affect an employee Satisfaction in specific industry. Social responsibilities and practices are contextual issues that differ according to many variables, such as culture, governance and education. However, the results generated are still limited and could not be generalized. Nevertheless, for developing countries, the influence to adopt standards is primarily made up of external requirements from foreign buyers because there is a lack of local governance, relatively weak enforcement of national laws and a low level of union affiliation. In addition, there are competing actors and standards, which make it difficult for a labor standard like SA8000 to have an influence throughout the supply chain of this industry.

6. Further studies

Buyers may require similar standards to SA8000, such as WRAP (World Responsible Accredited Production), which points to the fact that the standard SA8000 have yet not reached acceptance by all actors and been institutionalized (Brunsson & Jacobsson, 2002). Since the buyer has a central role in integrating the standard with the purchasing policies; thus, more research is needed on buyers’ perception of obstacles and opportunities with adapting the business practices to the conditions of the supplier.

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