A new report reveals links between enlightened governance and employee engagement.
By Dr. Anne Herman
The latest study from the Kenexa Research Institute (KRI) suggests that an organization’s participation in corporate responsibility and environmentally friendly business practices has a significant positive influence on employee engagement and business outcomes. The report is based on the analysis of data drawn from a representative sample of workers surveyed through WorkTrends, KRI’s 2010 annual survey of worker opinions.
An organization that is considered to have a strong corporate responsibility climate is one in which business choices are made that support environmental responsibility, actions demonstrate a genuine commitment to corporate responsibility, and contributions are made to the communities in which employees live and work.
Across all countries surveyed, employees who work for an organization in which their colleagues positively view corporate responsibility efforts experience a significant, favorable impact on how they rate their pride in the organization, overall satisfaction, and willingness to recommend it as a place to work. Furthermore, employees with favorable opinions of their organizations’ corporate responsibility activities are more likely to declare an intention to stay. In the United States, almost 50 percent of employees report working for a responsible organization.
“Our research clearly indicates that organizations operating with a strong corporate responsibility climate have more engaged, confident, and customer-oriented employees,” says Anne Herman, a KRI research consultant. “It will be of great interest to senior leaders in organizations, however, that our results also indicate that those organizations that implement corporate responsibility efforts outperform those organizations that do not on important financial metrics such as diluted earnings per share.”
Employees in today’s job market still care about the organization’s values and reputation. Previous research indicates that corporate responsibility plays an important role in attracting interested candidates. Employees indicate that their organizations’ corporate responsibility activities increase their overall job satisfaction. This is particularly true for those in upper and middle management roles, and this knowledge can be a key tool in helping organizations achieve their retention targets.
Herman continues: “Despite the recession, organizations are still engaging in building socially responsible businesses. In fact, since 2008 there has been a slight increase in the number of organizations that can be described as having a strong corporate responsibility climate. For example, in the financial industry, three in four businesses reportedly operate with a strong corporate responsibility climate. In the case of financial services firms, this might be in response to negative backlash to the activities that have occurred in recent years.”
The WorkTrends database is a comprehensive, normative database of employee opinions on topics including leadership, employee engagement, and customer orientation. In 2010, approximately 10,000 workers in the United States, and 1,000 individuals in each of the following countries/regions took the WorkTrends survey online: Australia, Brazil, Canada, China, Denmark, Finland, France, Germany, India, Italy, Japan, Mexico, the Netherlands, Russia, Spain, Sweden, Switzerland, and the United Kingdom. The Gulf Co-op Council (GCC) countries of the Middle East were also surveyed to a lesser extent, due to surveying limitation in that region of the world. The GCC countries include Saudi Arabia, United Arab Emirates, and Qatar. Altogether, 29,338 employees were surveyed in 2010.
The WorkTrends survey questions were designed specifically to evaluate how workers view their organization’s corporate responsibilities activities. The poll invited responses to three statements:
• My company does a good job of contributing to the communities in which we live and work.
• My company’s commitment to social responsibility (e.g. community support, protecting the environment, etc.) is genuine.
• My organization makes business choices that support the environment, such as recycling, energy conservation, and vendor selection.
Opinion items were rated using a five-point Likert-like scale. The percentage favorable is the percentage of employees who chose either of the two most positive answers (typically “strongly agree” or “agree”).
Employees’ evaluations of their organization’s leadership team are driven by the extent to which senior managers gain employees’ confidence through their decisions, actions, and communications, by keeping employees well informed regarding company direction, and by being seen as having the ability to deal with the organization’s challenges.
Employee engagement is defined as the extent to which employees are motivated to contribute to organizational success—and are willing to apply discretionary effort to accomplishing tasks important to the achievement of organizational goals. An engaged employee has pride in, advocates for, is loyal to his/her employer and exerts discretionary effort toward achieving employer goals.
The Employee Engagement Index is the average level of agreement for the following statements:
• I am proud to tell people I work for my company.
• Overall, I am extremely satisfied with my company as a place to work.
• I would recommend this place to others as a good place to work.
• I rarely think about looking for a new job with another company. HRO
Anne E. Herman, Ph.D., serves as a research consultant for the Kenexa Research Institute.