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Employees' Satisfaction and CSR practices: case study

Dr. Khaled Ibrahim Attia

k_attia1@yahoo.com

Arab Academy for Science and Technology and Maritime Transport

Dr. Mohammed Wahba

m_wahba2003@hotmail.com

Arab Academy for Science and Technology and Maritime Transport

Mr.Eslam Ahmed Hussein

eslam.tqm@gmail.com

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 well-

being 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

Employee Satisfaction Non Discrimination

Unionization Right and bargaining power

Work Life Balance

Fair and sufficient Wage Pay

Good conditions of Health and Safety

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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

SA8000 dimensions Cronbach's alpha

(composite reliability)

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

Satisfaction

Pearson

Correlation 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

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

Table (3-b) ANOVA test of the study variables

ANOVA

Model Sum of

Squares df

Mean Square

F Sig.

Regression (between groups)

9314.11 5 1862.823 390.124 .000

Residual (within groups) 921.565 193 4.775

Total 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.

B Std. Error Beta

(Constant) -4.690 1.468 -3.195 0.002

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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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 (table-

5) 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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