Master Thesis
MSc BA: Organization & Management Control August, 2012
University of Groningen
Behaviour alignment to reach short- & long -term
Master Thesis
‘Behaviour alignment to reach short- and long-term CSR objectives’
Name: B.W.R.A. Akkermans Supervisor: dr. J.S. Gusc
Adress: Turfsingel 1010 Co-supervisor:dr. C.P.A. Heijes
Postal Code: 9712KM Groningen August 2012
Student number: S1633600 Faculty of Economics and Business
Telephone nr: 06-57545705 Specialization: Organization & Management Control
Email: bram_akkerman@hotmail.com University of Groningen
Abstract
In face of increasing attention to CSR, an abundance of studies, management systems and
management tools are focused on implementation and performance of CSR objectives. This study examines how performance of CSR objectives can be enhanced by commitment of employees. Therefore the attitude and subsequent behaviour towards CSR are defined and propositions are made how an organization can act on the attitude of employees by the composition of a
Management Control System (MCS). By means of a case study the current practice is examined and is linked with the set propositions.
Content
1.0| Introduction 4
1.1| Research objective & Relevance 5
1.2| Research design 6
1.3| Introduction of participating companies 7
2.0| Literature study 9 2.1| Introduction 9 2.2| Defining CSR objectives 10 2.2.1| Introduction of CSR 10 2.2.2| Definition of CSR 10 2.2.3| Defining CSR Objectives 11 2.2.4| Conclusion 13 2.3| Management controls 14
2.4| The attitudes of employees towards CSR objectives 16
3.0| Theoretical framework 24
4.0| Methodology 30
5.0| Case Study 32
5.1.1| The CSR policy of VSB 32
5.1.2| The attitude of personnel in VSB 35
5.2.1| The CSR objectives of SG 36
5.2.2| The attitude of personnel SG 37
5.3| Conclusion 38 6.0| Conclusion 40 6.1| Introduction 40 6.2| Conclusion 40 6.4| Limitations 43 6.5| Further research 44
7.0| Acknowledgement & Executive summery 45
8.1| References 47
8.2| Appendix - interview guide 49
1| Introduction
In a world with increasing scarcity of resources, economic instability, increasing distrust in capitalism and declining consumer demand in general, companies find themselves re-assessing their mission in society. Although the practice of Corporate Social Responsibility (hereafter CSR) has developed and increased throughout the years, recent scandals - for instance related to H&M, Apple and many others- indicate there is room for improvement. Furthermore, a large number of organizations have been exploiting CSR to increase their image without implementing CSR throughout their organization (Devinney, 2009, p.51). This presses the need for organizations to integrate and proof CSR objectives in order to reduce their negative impact on the environment ánd avoid negative publicity. This - together with the rise of public attention and actions in response to misbehaviour by large corporations (Porter M.E., 2006, p. 3) - makes the current focus on CSR and implementing of CSR objectives inevitable.
implementation of behaviour controls can easily lead to a contradicting outcomes (Merchant & van der Stede, 2012, p.17), there should be dealt with these incentives in a precise manner.
1.1| Research objective & Relevance
There is an abundance of studies which address the implementation of CSR. However, they do not pay (much) attention to the perception and attitudes of employees towards CSR. Most are focused on the implementation on a higher management level. Nevertheless, the individual attitude of the personnel on the work floor greatly influences the success of the set objectives.
This study will use the individual attitude of the employee as a starting point for the composition of a management control system (hereafter MCS) tailored to the characteristics of the organisation. Proposing an effective MCS, adjusted to the different attitudes and perceptions of the personnel, will lead to better performance on CSR objectives. This research contributes to the existing literature by accustoming the MCS to employee attitude, in order to achieve CSR objectives. This link between attitude of personnel and the composition of the MCS in order to accomplish CSR objectives gives a new insight, accomplishing existing literature.
Subsequent to the research objective the main research question is:
- How can the MCS be customized to the employee attitude towards CSR, in order to accomplish preferred behavior aligned with the CSR objectives?
This study will use a literature study combined with a case study to examine the opportunities by composing effective management controls. The literature study will provide a theoretical framework, which will be linked with the current use in practice and tested for its likeliness by a case study.
In order to answer the main research question, the following sub-questions are examined by a literature study;
1. How are CSR objectives defined?
2. Which attitudes do employees have towards CSR objectives?
These sub-questions will result in a set of propositions on the composition of the management controls in order to influence behavior and actions of employees.
The second part of this study will provide a link with use of management controls in practice by a case study. The case study will examine the following research questions:
5. What attitudes have employees in these organisations towards CSR?
6. Which management controls do the organizations use in order to stimulate to CSR? 7. Does behaviour correspond to the expected outcome, considering the employee
attitude and chosen management control system?
1.2| Research design
This study consists of both a literature study and a case study. Firstly, the literature study will provide a theoretical framework to explain the possible effect of the composition of the MCS and the attitude of the employee towards the CSR objectives. Secondly, a case study will test the compliance of the theoretical framework with current CSR practises of two organizations and the likeliness of the conceptual model.
The case study of two firms in the construction industry will examine the current practise of using the management controls to induce behaviour and actions to . As result this thesis will provide propositions for further research on the subject how organizations could alter their management control system to reach their CSR objectives.
Literature study
Case study
In the second part of this study two companies in the construction industry are subject to a case study with the intention of investigating their use of management controls on employees to reach the CSR objectives. The propositions - based on the literature study – are tested for their likeliness by both case studies. The participating organisations are carefully selected, based on their operations and set CSR objectives.
The case study will be conducted by using semi-structured interviews (Schmidt, 2004, p 254), in order to gather in depth information. To provide a clear representation of both organisations, employees in different positions will be interviewed. The methodology of the case study is described more elaborately in chapter 4.
1.3| Introduction of participating companies
Visser en Smit Bouw
Visser en Smit Bouw (hereafter VSB) is a subsidiary of VolkerWessels (hereafter VW), the second largest construction company of the Netherlands. The history of VSB dates back to the beginning of the 20th century, when the carpenter mr. Visser and engineer mr. Smit started working together for the construction of water towers. In 1970 VSB was acquired by Koninklijke Adriaan Volker and after a number of mergers part of VW. VSB focuses on the development and construction of complex utility and industrial projects. Currently the company employs around 300 fulltime employees and acts as a main-contractor.
Schröder Groep
Expected results
2|
Literature study
2.1| Introduction
The theoretical part of this study will examine how organizations can act on the attitudes of employees towards CSR .The question however remains, how to find this key to corporate success: how can employees be motivated and intrigued to behave and act in the interest of the organisation, more specifically to CSR objectives? Management control systems indicate personnel performance and secondly provide a motivational and behavioral direction to employees (Otley, 1999, p.365). Central to this study is the question how a control mechanism can be used to alter or enhance positively actions and behaviour by employees to the specific CSR objectives of an organization. The next figure illustrates the relation between the different concepts.
Figure 1.
The illustrated concepts will be addressed in the following order. Firstly the emergence of various CSR objectives will be provided in chapter 2.2. Secondly, the management control mechanisms will be presented separately in chapter 2.3. Thirdly, chapter 2.4 will address the different attitudes and perceptions employees can have towards CSR. Finally, chapter 3will address how specific management control mechanisms relate to the attitude types. Based on this theoretical outline, a number of propositions and conceptual models will be elaborated in the last section of this part.
2.2| Defining CSR objectives
2.2.1| Introduction of CSR
CSR is a comprehensive concept, interpreted by organisations in numerous objectives with different scope, impact and intention. Some organisations embrace the concept CSR to the full extent. However, most organisations emphasise on a specific objective in CSR. Certainly the abundance of a definition of CSR does not just comply with practice: in literature authors also differ in perspective and scope on CSR. To understand the emergence of CSR and the large number of perspectives and definitions on CSR objectives, this study will start with the origin of corporate social responsibility by providing a short overview of the emergence of CSR. The literature review of Carroll (1999 and 2010) on a CSR definitions overview of resemblance and differences will be pointed out. This will be presented in paragraph 2.2.2, followed by the different CSR objectives, which are introduced in the specific context of organizational context based on the research of van Marrewijk in paragraph 2.2.3. Finally a distinction will be made between two main categories of objectives organizations might pursue.
2.2.2| Definition of CSR
According to Carroll (1999) the history of the current perception on CSR dates back to 1950. He declares Howard R. Bowen to be the founding father of CSR, who specified CSR in his publishing as follows:
‘It [CSR] refers to obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of actions which are desirable in terms of the objectives and values of our society’(Bowen, 1953)
‘CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis (Commission of the European Communities, 2001).’
Other researchers established a definition constructed out of different facets in order to try defining the scope of CSR to its full extend. An example is the ‘three domain approach’ of Schwarz & Carroll (2003), and the ‘three concentric circle’ approach of the Committee for Economic Development (1971, p.15). These types of definitions try to relate CSR to the specific context of organisations.
Regarding the previous paragraphs, there can be concluded, that no unambiguous definition to CSR has been developed which comprehends the full scope, different perspectives, stages and objectives. The question remains if one all-embracing definition of CSR can be formulated at last. However academics like Jackson & Hawker (2001), who state that there is no definition at all, are not quite right according to Dahlsrud (2008). The problem is - according to Van Marrewijk - the abundance of definitions, of which most are biased since they are defined towards specific interests. Most definitions contain similar dimensions, to analyse the different concepts of CSR. Dahlsrud (2008, p.4) puts forward 5 dimensions; 1)
Environmental- the relationship between business and natural environment; 2) Social - the
relationship between businesses and society; 3) Economic - the financial aspects of CSR and social economical development; 4) Stakeholder - the relationship between different stakeholder surroundings and organization; 5) Voluntarism - actions not prescribed by law. The dimensions indicate the scope of the used definition, either broad or emphasising on a specific subject of CSR. The contribution of Dahlsrud accentuates how comprehensive the CSR concept has become.
2.2.3| Defining CSR Objectives
‘In general, corporate sustainability and CSR refer to company activities – voluntary by definition – demonstrating the inclusion of social and environmental concerns in business operations and in interactions’ (Van Marrewijk, 2003).
Based on the value system of Clare W. Graves (as quoted, van Marrewijk & Werre, 2002 p.2) van Marrewijk & Werre manage to operationalize CSR by stating 5 interpretations/ambitions corporations can pursue towards CSR;
- Organisations which have a compliance-driven perspective on CSR, to pursue CSR objectives which are determined by regulations legally permitted or obliged to by society.
- The second perspective - profit-driven- extents it’s view by integrating social, ethical and ecological aspects to operations, as long as it contributes to their financial performance.
- The caring perspective goes beyond the legally and economic considerations: organisations pursuing this perspective try to balance economic, social and ecological concerns.
- The synergistic view goes beyond a balanced corporate performance and will try to incorporate their relevant stakeholders by a win-together approach. Sustainability is an inevitable future perspective.
- Finally, the holistic approach goes even further by incorporating CSR in every aspect throughout the organisation, which aims at contribution to the quality and continuation of every entity, present and future. Sustainability is the only alternative in this perspective, since all organisms and organizations are mutually interdependent. The organisation has its responsibilities towards all other beings (van Marrewijk, 2003, p. 102).
The specific context, the stage of development of an organization and the way it adapts to changes in the environment, determine which of the 5 perspectives is applicable (Van Marrewijk, p.103). This makes it possible for organisations to ascent in ambition; to transform them by shifting from one ambition to the next.
influences both the applicability of control mechanisms and attitude of an employee. This will be discussed to a greater extend in the next chapters. The ambitions of Van Marrewijk are simplified and separated in two categories;
- Obligated & profit driven
- Voluntary & philanthropic driven
Examples of the first category are objectives such as CO2-emission quotas issued by government, or certifications like ISO 14001 as demanded by consumers. The organisation implements objectives in the organisation to maximize profit and to avert negative effect, such as negative publicity and activism against the organisation. Often these types of objectives are well definable, separable, measurable and short-term oriented. Organisations in this category are trying to balance economic, social and ecological concerns, as long as CSR objectives contribute to the economic performance (van Marrewijk & Werre, 2002, p. 7-8). The second type goes beyond the obligated and economical driven CSR objectives. This is a set of objectives which are in line with contributing to a sustainable world. The voluntary/philanthropic type brings forth measurable / quantitative and qualitative objectives. These are often long term oriented and are therefore harder to regulate in a conventional way. CSR should be incorporated throughout the organisation by adding the voluntary/ philanthropic aspect with a holistic approach as sum mum (van Marrewijk & Werre, 2002, p. 7-8). Szekely et al. (2005) points out the difficulty in measurability of several CSR objectives, since they are hardly definable and measurable.
2.2.4| Conclusion
2.3| Management controls
2.3.1| Introduction
To realize organizational objectives, personnel should act and behave in line to pursue organizational objectives. As stated before management control systems can be used to alter the behavior and actions of personnel. According to Merchant et al. (2012, p.17) three types of controls can be identified; results controls, action controls, and personnel & cultural controls. The first two can be described as ‘hard or direct’, measurable controls and the last one as a ‘soft or indirect’, qualitative control. Although the emphasis is on financial results controls, soft controls are gaining in popularity last decades (Merchant & Van der stede p. 96). This chapter will give an overview of the different management control mechanisms and their preconditions.
2.3.2| Results control
The emphasis of this control type is on the outcome of a particular objective. In this manner it influences actions and decisions of employees, since they are evaluated on meeting the objectives and feel the consequence of their actions. However these types of controls do not directly prescribe the actions and behavior of employees, they ensure control on the outcome without affecting autonomy. Therefore, this control mechanism induces creativity and innovation on how to meet the objectives. In addition results control creates a meritocracy: employees are rewarded on their performance. These incentives can be either intrinsic or extrinsic. A distinction can be made between intrinsic motivated and extrinsic motivated personnel (Frey et al., 2002, p. 73). Three elements are crucial to the effectiveness of results control: knowledge about the desired result, the ability to affect the desired results, and the ability to measure the results effectively.
2.3.3| Action control
2.3.4| Personnel & cultural control
Personnel controls anticipate on the natural tendency of employees to control or motivate themselves. This type should clarify expectations about what an organization wants. Furthermore, it can be used to select personnel and/or provides resources in order to make sure that employees are capable of performing their tasks. This control mechanism can also anticipate on self-monitoring - the willingness to perform a good job - which would induce self-respect and satisfaction (Merchant & van der Stede , 2012, p.88). Cultural controls are used to enhance mutual monitoring among personnel, based on shared norms and values. Personnel and cultural controls can be cost-effective and constructive. However, the effects of personnel and cultural controls vary widely while implemented on individual basis, in groups and in communities (Merchant & van der Stede, 2012, p. 95).
2.3.5| The application of controls The effectiveness of the chosen control mechanism depends on the degree of control tightness that is applicable to the situation; a stringent implementation based on frequent supervision, or a loose implementation without obligations. The degree of tightness or looseness depends on the type of control and the organizational context. For example tightness of a control can be with frequency measurements or the detailed description of a control objective. Furthermore - to overcome unforeseen side effects or even contradictive outcome - objectives have to be clearly defined and feasible, in order for employees to know what is expected from them and not to discourage them by unrealistic or unclear objectives (Merchant & van der Stede, 2012, p.132). According to Chenall (2003, p.161) managers have to choose a set of controls in order to align the actions and behavior of personnel with the goals of the organization, while acting on the specific context. However, there is no perfect set of controls without side-effects: the costs of the control and the effect of ‘crowding out’ (Frey &Osterloh, 2002, p.13) should be considered. The crowding out-effect stresses the importance of a balance between intrinsic and extrinsic motivation. Therefore a management control system should not over-emphasize on one of the three types of controls.
2.3.6| Conclusion
different attitude types of employees towards CSR by the composition of the MCS. The next chapter will introduce different attitude types towards CSR and in chapter 3 the different attitudes are coupled to an effective set of control mechanisms.
2.4| The attitudes of employees towards CSR objectives
2.4.1| Introduction
Merchant & Van der Stede state that the outcome of controls are difficult to predict, since the benefits and side effects of a control mechanism depend on how an individual employee reacts on these controls (Merchant & van der Stede, 2012, p.217). Therefore there is ‘no one form of control optimal in all circumstances’. Although the individual can deviate in reaction, it is essential to predict the general behaviour and actions subsequent to certain attitudes. Since the behaviour of an individual is important in the design of a management control system, the attitudes of employees towards CSR are examined. Based on these findings, chapter 3 will discuss how management control mechanisms can be adapted to the different attitudes. Before focusing specifically on the attitudes and perceptions of employees towards CSR, this chapter firstly will define attitude in general. Second, the scope is narrowed down towards perspectives of employees towards CSR. Although the quantity of research focusing on the attitudes on individual level in relation to CSR is marginal, the studies of Rodrigo & Arenas (2008) and Hemingway (2005) address this specific topic. To overcome possibilities of unilateral views, this chapter will discuss the (dis)similarities between the studies. Finally this chapter will provide a number of different types of employee attitudes towards CSR.
2.4.2| Perspectives and attitudes of employees
Most definitions on attitude are rather broad, in order to encompass the topic to its full extend. A popular definition in literature on behaviour is stated by Ajzen in 1982. He defines attitude broadly:
’Predisposition to respond in a generally favourable or unfavourable manner with respect to the object of the attitude’.
According to Lee &Wong (2007, p.6) analysing attitudes is essential for understanding and predicting the behaviour of an employee. Moreover the attitude of an employee can be segregated in two parts (Lee Wong 2007, p.6): ‘Attitude towards the work itself’, in this case the attitude towards the CSR objectives themselves; ‘Attitude towards specific impediments, which is the attitude towards specific, mostly negative, characteristics of CSR objectives. Research on determining the employee attitude is abundant and varies greatly in scope. However, most authors use a set of dimensions to explain employee attitude. Often this set is based on the fundaments provided by Hackman & Oldham (1975), identifying 5 motivational determinants: task variety, autonomy, feedback, identity and significance. According to Hackman, grading of these determinants indicates the level of job satisfaction of an employee.
2.4.3| Employee attitudes towards CSR: Rodrigo & Arenas
The study of Pablo Rodrigo and Daniel Arenas investigates whether employees care about CSR, which resulted in three different attitude typologies. Their research is based on a case study, conducted at two construction firms who claim to have successfully implemented CSR objectives. The reaction to the implementation of CSR objectives depend on the type of attitude an employee has. In order to clarify the different attitudes towards CSR, Rodrigo & Arenas constructed a framework based on four layers to support their research. Firstly, the attitude is based on two main elements (Rodrigo & Arenas, 2008, p.269):
- the attitude employees have towards the organisation; - the attitude employees have towards society.
contributes to society are both composed out of two categories. The attitude towards CSR objectives of the organization is affected by two components:
- ‘The acceptance of the new social role of the organization’; - ‘Identification of the employee with the organisation’.
The first component focuses specifically on how employees perceive the social role of their organisation, which refers to their perspective of the role of their organization in society. When the employer implements objectives beyond economic benefit, the behaviour, emotions and cognitions of personnel about their social role and social role of the organisation change. The second category focuses on the congruence between social vision of the employee and the CSR objectives of the organization (Rodrigo & Arenas, 2008, p.270-271).
The attitude towards society is composed out of the following components (Rodrigo & Arenas, 2008, p.270):
- ‘importance of the work performed’ - ‘sense of social justice’
The first criterion focuses on whether an employee feels contributing to a better society with their job due to the CSR projects of their employer, which is based on a self-transcendence concept. The second criterion attends to the sense of social justice of employees, which is based on the employees ‘worldview’ (Rodrigo & Arenas, 2008, p. 273-274)
Attitude types
The attitude of an employee is based on the outcome of the four concepts described previously. By grading the attitude of the employee in relation to these concepts, based upon clearly defined categories, Rodrigo & Arenas define three types of attitudes: committed, indifferent and dissident (Rodrigo & Arenas, 2008, p.276). The following section describes the different attitude and presents the associated behaviour.
and owners demonstrate this commitment, but it can be found throughout every level of the organization. According Rodrigo & Arenas, the average age in this category ranges from 40 to 65 and majority has a higher level of education or technical training.
The ‘indifferent’ type understands the new role of the organisation; however they do not (yet) accept this new role. Furthermore, this type of employee has a low or indifferent identification with the company. The sense of importance of work is high or intermediated, but their sense of social justice not of poorly developed. These employees are more oriented towards their own individual goals and indifferent towards the new goals of the company. Nevertheless, this does not mean they are not performing well, since they do not want to endanger their own career. They do not act against the new CSR objectives. Moreover they are focused on their job description in order to climb on the organizational ladder. The implementation of CSR objectives does not alter their commitment. This type of personnel is mostly employed in the middle and higher levels of the organization and has the prospects of promotion. Their average age ranges from 25 to 35 (Merchant & Van der Stede, 2012, p.277 ).
The third type is the ‘dissident employee’. They do not accept or possess a clear concept of the new CSR objectives. This type of employee has no identification with the organization. They grade low on sense of importance of work. They have a moderate to high developed sense of justice however, since this personnel type has another perspective of social justice. They regard work only as a source of income and consider CSR objectives as a money consuming obstruction. Besides that, they are not interested in the social significance of their job and maintain a keen sense of social justice which emphasizes on themselves or their immediate group. The introduction of new CSR objectives frustrates and depresses them: it does not bring them direct advantages. In general this type is employed at the lower levels or has temporal job contracts, with a salary scale marginally above minimum wage. Rodrigo & Arenas do not indicate a clear age profile. They state however, that most employees of this type have joined a low level of education (Rodrigo & Arenas, 2012, p.277).
2.4.4| Remarks on the research of Rodrigo & Arenas
Furthermore, the profile of the employee (age, level of education, job description) as put forward by Rodrigo & Arenas is based on the context of the Chilean construction industry. This specific profile might not be representative for the western working population.
2.4.5| Employee attitude towards CSR: C. Hemingway
The study by Cristine Hemingway (2005) focuses on Corporate Social Entrepreneurship (hereafter CSE) and personal values of employees. A Corporate Social Entrepreneur is an employee who identifies and progresses opportunities of social responsibilities within an organisation (Hemingway, 2005, p.236). Her research explores the level to which the employee is willing to use the opportunity, to innovate and to contribute to CSR. Although the scope of the study is slightly different, the matrix produced by her study defines the attitudes of employees towards CSR, which is of importance for this research. The of matrix Hemingway consists of two main concepts;
- the personal values of the employee - the culture of the organisation
The matrix determines four different attitudes towards the CSR objectives of an organisation, which will be described in next paragraph. In order to define four types, both concepts are divided in two antonyms: personal values can be either collectivistic or individualistic and the organizational culture can be either supportive or unsupportive. The emphasis of Hemingway’s study lies on personal values in relation to CSR, which is underexposed in literature according to Hemingway (2005, p.240). The distinction made in personal values is based on the research of Schwartz and Bilsky (1987, p. 555). A collectivistic sense of duty towards CSR by an employee would induce positive and active attitude (Hemingway, 2005, p.238). The distinction in organizational culture is based on studies of Walley & Stubbs (1999) and Walley (2000), which conclude that the environment must provide circumstances to accommodate participation of personnel.
Attitude types
employee would be able to contribute to the chosen objectives and values expressed in the organization. Often this type of employee is in a senior position.
However, an unsupportive culture would result in this case in a ‘frustrated’ attitude type, since the employee is morally motivated towards CSR, though not able to implement his/ her ideas on CSR. This type of employee can express their frustration in several ways. First of all, they can be morally mute and undertake no action. Secondly, they take action by reframing their CSR objectives in more (economical) accepted terms. Thirdly they can act subversively, undermining the goals of the organizations, since they are dissatisfied with the CSR objectives of their employer. The frustrated type of employee can be found throughout the various levels of the organization.
The employee with individualistic personal values can either result in an apathetic or a conformist attitude, depending on the supportive nature of the culture. Both types cannot be defined as a CSE, since the CSR objectives do not match with their personal values.
A ‘conformist’ employee faces a supportive organisational culture. However, they will not initiate in the CSR objectives: their behaviour towards the CSR objectives can only be directed when they are formally sanctioned. Most conformist are lower level managers, which can even be formally appointed to a socially responsible role.
Contradictory, the ‘apathetic’ employees are subject to an unsupportive organizational culture, resulting in discouraged employees or even sabotaging behaviour towards the CSR objectives. This type is not interested in CSR. Due to the unsupportive culture without assistance on pursuing CSR objectives, they can express their negative or even hostile attitude towards the CSR objectives unrestrained. This can result in counteracting behaviour and actions.
2.4.6| Remarks on the research of C. Hemingway
A critical remark can be made towards the study of Hemingway: she does not address the effect of lower level personnel on CSR objectives, since she focuses solely on the managers of an organisation. Due to this, she seems to be suggesting that the lower level employee cannot be a CSE.
CSR. This aspect is of importance to the analysis / case study later on. Furthermore, Hemingway states that the attitude can be adjusted and that empirical research could determine the conditions on how to adjust the attitude of employees towards CSR.
2.4.7| Comparison of the studies
In order to define the existing attitude types towards CSR, a comparison of both studies ia made, before defining the different and attitude types and corresponding behaviour used in this study. The studies of Rodrigo & Arenas and Hemingway both compose a set of attitudes. This comparison will focus on shortcomings of the presented typologies and how both complement each other.
The fundament of both attitude typologies of Rodrigo & Arenas and Hemingway differ, nevertheless the research of Rodrigo & Arenas is partly based on the study of Hemingway. Rodrigo & Arenas complements the study of Hemingway by using the abundance of determinants to define the attitudes and uses qualitative empirical data. The study of Hemingway is a literature study which focuses on personal values.
Another important difference is that Hemingway states that personal values are affected by the organizational context resulting in a particular attitude, while Rodrigo & Arenas use personal values to determine the attitude of an employee. Despite the differences in fundaments, there are also some significant resemblances between the typologies, according to Rodrigo & Arenas. He points out the congruence between the typologies ‘active’ and ‘committed employee’, ‘apathetic’ and ‘dissident employee’ and ‘conformist’ and ‘indifferent employee’. The behaviour corresponding to the attitude types of both studies is also similar. The studies deviate on the ´frustrated´ type of Hemming way. Rodrigo & Arenas state that the frustrated type does not fit to any of the typologies of Rodrigo &Arenas, since there can be no frustration in a company which successfully implemented CSR projects (Rodrigo & Arenas, 2008, p.278). This ‘frustrated’ attitude type can however be applicable to the case study later on in this research, since not every employee has to be complying to the objectives of the organizations.
study of this research. Therefore the typology of Rodrigo & Arenas has to be altered, by incorporating the frustrated type in the dissident type of Rodrigo & Arenas. There is a resemblance between both types, since both types reject the set CSR objectives of their employer, which can result in negative behaviour of this type of employees.
2.4.8 | Conclusion
3|
Theoretical framework
3.1| Introduction
In the previous sections the diverse attitudes of employees towards CSR are described and relevant control mechanisms are introduced. According to Hemingway (2005, p.239) these attitude types can be altered. This section will examine - based on a management control approach - how the behaviour and actions associated with attitude types can be enhanced or altered. However, responding on the attitudes of personnel can be rather difficult, since the individual perceptions and attitudes can vary widely among the workforce. The next section discusses which controls should be accentuated in order to act on the main characteristics of the different attitudes types. The composition of the management control system can act on the different attitude types by emphasising on particular management control mechanisms. Furthermore the degree of the tightness in the application of the chosen control mechanism should be adjusted.
3.2| Committed personnel attitude type
The behaviour and actions of a committed employee type can be defined as participative and active towards CSR objectives. Therefore the organization should provide the circumstances to enhance and direct the positive involvement of this type of employees.
Result controls can give direction on specific objectives and clarify goals. This is an important aspect: since the employee is already positively oriented towards CSR, result controls can transform this positive attitude into an effective outcome. Additionally this type of controls preserves autonomy and creativity without endangering the set objectives. An example of this of control are the targets on pollution emission or zero accidents.
The application of personnel controls can provide partially the circumstances to enhance the positive attitude of these employees. For instance management can stimulate the active attitude by providing training and by an allocation of resources tailored to the CSR objectives. Moreover, social active employees can be placed on socially responsible positions in the organization. Additionally, cultural controls can be used to enhance awareness among personnel and to create an organizational culture which is positively oriented towards CSR. This would induce the committed type to express their opinion and correct colleagues who are not participating in the CSR objectives.
Besides the choice of specific controls, tailored to the attitude of the employee, also the degree of tightness is of importance for the effectiveness. A loose application of the results controls (a low degree of tightness) is preferable in case of the committed personnel attitude: since the employees are actively involved in the objectives, a high degree can even have a counteracting, demotivating effect. Furthermore loose management controls will encourage personal responsibility and can stimulate innovativeness by personnel. However a higher degree of tightness in application of cultural can cause a situation where the committed comes to full potential, since he is able to share and cooperate in this CSR positive organizational culture.
Proposition 1: the MCS composition of employees with an active attitude type
3.3| Indifferent attitude type
The indifferent type does not participate in the CSR objectives of their employer, however they neither oppose to these objectives directly. This kind of employee wants to make progress in his/ her career and is therefore willingly to perform in line with their job description. Likewise, these employees merely cooperate when they are formally sanctioned when acting otherwise. The composition of management controls has to focus on giving direction to personnel and showing them what exactly is preferred, since this type of employees does not involve in the CSR actively when they do not perceive it as important to their employer.
It is likely that this type responds well on results control, when clearly defined what outcome is preferred on the set targets. This control mechanism acts on the employee’s sensitivity to perform on goals which are perceived as being important to their superiors. Though it is important that objectives cannot be ‘bypassed’ since the indifferent employee will probably try to achieve results in the easiest way.
Action controls are well applicable when facing the indifferent personnel type, since regulation and procedures provide a clear framework of specific demanded behaviour and actions. Furthermore, based on the set of procedures and regulations employees can be sanctioned easily. However, the employees will only perform on the set regulations and
Management control system aligned towards CSR Behaviour & actions objectives Cultural/ personnel control Action control Results control Commited personnel attitude type Description
Emphasis on control type: The degree of control tightness:
High High
Medium Medium
Low Low
procedures and are not stimulated to alter their attitude towards CSR. The configuration of controls has to be well defined: employees should understand what action is expected, for instance by a detailed description of the tasks without room for misinterpretation.
Personnel and cultural controls can be used to alter attitude of the indifferent employee towards the objectives in long-term, since these are indirect control mechanisms. Whereas the action and results controls focus on change in direct behaviour, cultural & personnel controls can be used to alter the attitude positively on long term. Training and awareness meetings can enhance the social consciousness of employees in order to create the fundamentals of a CSR oriented culture. The indifferent type will also become more active towards the CSR policy when this becomes a factor in the selection and allocation of personnel, since this type is in general focused on their career. The degree of tightness is crucial, especially on action and results control, since this type of employee will only perform well when these objectives are an integral part of their job evaluation. Therefore the description of actions and targets of the results control have to be linked with direct consequences.
Proposition 2: the composition of a Management Control System acting on employees with an indifferent attitude type
2. An organization can anticipate on the indifferent employee type by focusing on results controls and action controls with a higher degree of control tightness. Cultural control can be used to alter the responsiveness of employees towards CSR on a long term.
Management control system aligned towards CSR Behaviour & actions objectives Cultural/ personnel control Action control Results control Indifferent personnel attitude type Description
Emphasis on control type: The degree of control tightness:
High High
Medium Medium
3.4| Dissident attitude type
The dissident employee type has a rejective perspective towards the CSR objectives of his/her employer. This might lead to three types of behaviour towards the CSR objectives: they do not undertake action, pursue their own perception on CSR or even sabotage the CSR objectives of the organization. These different types of behaviour can be managed using the same management controls. Since the identified behaviour subsequent to the dissident attitude is undermining the set CSR objectives, it is of great importance to identify this personnel type to prevent misconduct.
The three types of behaviour undermine the objectives of the organization: therefore the composition of the MCS focuses on detection and prevention. Action controls are most important in this particular case, since this type of control mechanism directly prescribes behaviour and actions of personnel. Well defined procedures and regulations, which leave no room for misconduct, can secure proper actions and behaviour in line with the CSR objective. In addition, a high degree of tightness on this control is of great importance in the case of a dissident employee type. For instance highly detailed task description and high frequency of control will prevent and detect misconduct early.
Although action controls are most suitable to the dissent type, they are not applicable in every situation; for instance in case actions and behaviour are difficult to observe. Nevertheless, the dissident can also be influenced by results control, especially when they are rewarded on their individual performance since these employees are often self-centred. The set targets have to be applied with a high degree of control tightness, because the dissident employee will try to enforce his/her own perspective or sabotage the outcome. The set targets have to be well defined and there should be direct consequences connected to the performance on these targets.
Proposition 3: the composition of the management control system acting on employees with an dissident attitude type
3. An organization can anticipate on the dissident employee type by emphasising on action control, with a high degree of control tightness. The effectiveness of results control depends on the base of the nature of their frustration. Cultural control can be used to alter the responsiveness of employees towards CSR on long term.
3.5| Conclusion
The composition of the MCS can be adjusted to the attitude of employees to accomplish CSR objectives of an organisation. It is important to detect the different attitudes among personnel in order to respond effectively. An organization is able to manage the performance on CSR objectives by the adjustment of the management control system to the characteristics of the workforce. The behaviour of the different attitude types can be altered by the choice of controls and the degree of tightness in application of these controls. Therefore, a management control system can stimulate the committed employee type, directing and involving
Management control system aligned towards CSR Behavior & actions objectives Cultural/ personnel control Action control Results control Dissident personnel attitude type Description
Emphasis on control type: The degree of control tightness:
High High
Medium Medium
Low Low
indifferent employees in the CSR objectives and prevent misconduct of the dissident
personnel type. The composition of one uniform management control system which acts on a diverse workforce, consisting of the diverse employee types, can be compromising, since the different attitude types have individual needs.
4| Methodology
The aims of this chapter are to, first, investigate the use of MCS in order to reach CSR objectives, and second, to study the link to the formed propositions of the theoretical framework as explained in chapter 3. A case study of two companies in the construction industry is conducted to examine these relationships and processes. This section presents the research methodology of this case study. At first the case selection process will be described and the following paragraph explains the data collection in more detail.
Case selection
maintain, operate) which take life-cycle costing / sustainability into account; they are both SME(small and medium-sized enterprises ). VSB operates as an independent organization and is therefore comparable to a SME-company.
Therefore, this does not have to impair the results of the case study, especially because both companies are both main contractors and control the supervision on the construction sides. Furthermore the interviewed employees of both companies have relatively similar task descriptions. More importantly both companies do deviate in the used MCS to achieve their objectives. Furthermore, the results are examined per company; no direct comparison is made between both organizations.
Data collection
The case study is based on semi-structured interviews and written documents on CSR objectives and MCS’s. In order to gather in depth information, semi-structured interviews are used (Schmidt, 2004, p 254). Firstly, to define the CSR objectives and the composition of MCS higher (executive) managers were interviewed, complemented with additional internal documents: for instance written CSR policies, targets, procedures and regulations. In cooperation with the managers, a number of employees were selected for semi-structured interviews to examine the attitude towards the CSR objectives of personnel.
The interview questions are partly based on the interview used by Rodrigo & Arenas to identify attitude towards CSR (Rodrigo& Arenas, 2008, p. 280). To provide a representation of the attitude among the workforce, employees in different positions have been interviewed. The interviewed management were provided prior to the interview with information on the subject. In contrast, the interviewed employees were not provided with information before hand in order to have a direct honest response. After the interview the participants had the opportunity to respond, alter or complement information.
At both companies four employees on different levels of the workforce were interviewed. The selected employees at both companies are relatively comparable in job tasks are comparable to each other. At VSB two project managers and two construction site managers were interviewed. At SV two project managers, a development engineer and a construction site manager were interviewed.
The interviews varied in length: the interviews on (executive) managers had an duration of approximately 1,5 hours, while the interviews on employees had an duration of roughly 30 to 45 minutes. The interviews were taken during 3,5 weeks on various locations, from the head office of both companies to six buildings sites throughout the Netherlands. During the interview the comment was coded (Schmidt, 2004, p.256) and digitally recorded. Using the recording and the coding the attitude of each interviewee was analyzed afterwards. The digital recordings can be requested by the author of this study and an example of the remarks taken during the interviews is provided in appendix 8.3.
5|
Case Study
The results of the case study are presented in this chapter. Firstly, the CSR objectives of both organizations, their ambition and the composition of the MCS’s will be adressed. Secondly the attitudes of employees towards CSR objectives of both companies are determined based on the interviews.
5.1.1| The CSR policy of VSB
Before discussing the CSR objectives of VSB into detail, it is important to address the CSR policy of VW, since the objectives of VSB are subject to the policy on corporate level. VW defines in their mission statement that it is their responsibility to conduct safe, integer and sustainable business. Subsequently, this is translated in a policy based on four fundamentals;
marketplace, workplace, environment and society. The formation of the policy on corporate
performance using the international standard for sustainability reporting of the Global Reporting Initiative (B level at the moment) and the carbon footprint of their operations.
The CSR objectives of VSB use the CSR policy of VW as a guideline and are combined with additional market specific requirements. The last factor is important, since the CSR policy of a constructor can be an essential determinant in public tenders; for instance sustainability certifications as ISO 14001, BREEAM and additionally safety certifications such VCA and BTR greatly influence the acquisition of governmental projects. The four fundamentals of VW’s policy and certification guidelines of VSB are translated and operationalized in a comprehensive number of objectives. The four fundamentals are presented in table 6.1.
Marketplace Workplace Environment Society
supply chain, innovation
health, safety, integrity, training & diversity raw material management , CO2 reduction society investment and environment management Table 5.1
In line with VW, at VSB the emphasis lies on personnel safety and environment. According to Barthold Rooosendaal (technical director) CSR objectives do not have to impair economic benefit. However, waste management and reduction of energy consumption are both profitable and reduce the burden on environment. Therefore VSB monitors their carbon footprint (the total emission of carbon oxide in their processes). In addition he states that VSB adapts to new directives and certifications standards in their industry rather quick. ’We don’t want to fall back on the competition’ states Barthold Roosendaal when he explains the choices of VSB. A variety of control mechanisms are implemented to accomplish the objectives of VSB.
Results controls
Action controls
VSB established written procedures to support the CSR objectives such as codes of conduct, safety procedures and environmental issues, for instance procedures on waste reduction, separation and recycling. Most of these action controls are detailed in description, aimed at processes on work floor level. There are also measures taken which physically support the employees to pursue the objectives, for instance investments in extraction systems to reduce dust particles and the offering of low emission lease cars to their employers.
Personnel/ Cultural controls
Training is essential to reach the safety objectives, although VSB also offers training possibilities on other CSR issues; a green driving training and meetings with the topic CSR are optional. Moreover posters, flyers and stickers are present on construction sites to create awareness. VSB uses personnel and cultural controls on both operational and management level.
There is a distinction between the composition of MCS for the safety objectives and environmental objectives. Where the MCS of the environmental objectives mainly focuses on result and action controls, the MCS on safety objectives also focuses on personal /cultural controls. KAM coordinator of VSB Mike Vink recognizes this and states that VSB provides the ‘extrinsic framework’ to support the environmental objectives, by defining clear objectives and providing the resources. However, this should be supported by ‘intrinsic drivers’ to make the subject livelier under personnel.
Additionally VSB tries to make their suppliers and subcontractors compliant to their CSR policy. Nevertheless, it is difficult or even unrealistic to demand this from every hired self-employed individual (ZZP-er). At least they have to comply with the minimal requirements of VSB, the VW’s codes of conduct and the regulations at the construction side.
5.1.2| The attitude of personnel in VSB
Resulting from the responses of the interviewees, the attitude of the VSB employees towards CSR objectives are identified. Remarkably, there is a clear distinction identifiable in attitude towards CSR objectives concerning safety and the environment. Although it was not intention of the interview, during the interviews the participants themselves made a clear distinction between both CSR objectives. In the scope of this study it is interesting to examine if this difference in attitude of both CSR objectives can be related to the composition of the MCS. The next section will firstly present the attitudes of employees; in the next chapter 6.3 a possible relation between the characteristics of the chosen MCS, role of the employee and attitude will be discussed more elaborately.
The attitude towards safety objectives of the interviewed employees are defined as committed. The safety objectives are integrated and fully accepted by the employees. Safety has become a part of the organizational culture. Employees understand the necessity of procedures and regulations. Therefore most employees are actively involved to accomplish and improve the set objectives. One of the building side managers stated ‘at first we thought it was uncool to wear projective clothes and work by set rules. We have seen however a significant decrease in accidents the last decade. This is mainly causative to the procedures and rules. Nowadays safety is important to my colleagues: we correct each other on dangerous actions.’
The attitudes of personnel regarding the environmental objectives is more diverse. Remarkably the attitude of both project managers are identified as ‘committed’ and the attitude building side managers show an indifferent attitude. The project managers are actively involved in the set objectives. They positively motivated and tries to anticipate and adapt more sustainable solutions. Their vision on CSR resembles the objectives of VSB. They believe the CSR efforts do have impact. Although, some of them believe the VSB CSR objectives can be more rigorously. One of the project managers states ‘the CO2 reduction is heading in the right direction, however further progress is important. This temporal office units [where the interview took place] are for instance not isolated well.’
personal main concern.’ Furthermore, building site managers have less notion of the concept CSR with a more narrow perspective on the definition of CSR. Although these interviewees are skeptically at times, they are not typified as dissident, since they are not obstructive towards the objectives. Nonetheless some interviewees pointed out there are colleagues or subordinates which can be described as dissidents.
5.2.1| The CSR objectives of Schröder Groep
SG is specialised in the development and construction of projects with a high sustainability level. The CSR ambition of SG focuses on sustainability throughout the business process. This devotion to sustainability is based on the vision of founding director Gerard Schröder, who states it is important to reduce the impact on the environment in order to secure the globe for the future. Furthermore Gerard states that the ambition of SG is not solely market driven: the majority of the early projects are self-initiated; SG started sustainable developments 7 years ago, before sustainability became a hot item in the Dutch construction industry and well before a high demand for sustainable real estate was present. SG was one of the first real estate developers in the Netherlands which embraced the BREEAM certification. The company differentiates itself from the competition by emphasising on sustainable solutions. The organization demonstrates the possibilities of implementing sustainable solutions without higher construction costs. This vision and commitment makes SG a frontrunner in adapting en implementing sustainable solutions in the Dutch construction industry.
The CSR objectives of SG are mainly oriented towards sustainability. However, it also involves occupational health, providing a healthy and safe work environment to all employees. The main objective though, is the reduction of energy consumption and emission of CO2. Furthermore, a reduction of negative impact of the construction process is of great importance. For instance, a report is made beforehand on each specific construction-site how ecological damage can be reduced.
The reputation - and therefore the future of SG - depends on the performance on the set objectives. Therefore SG composed an MCS ensuring the behaviour of their employees are aligned with the CSR objectives. Gerard Schröder states it is important to have a committed workforce which is willing to participate actively on these objectives.
Results control
at least 50% recycled concrete at the construction projects are achieved in this way. Furthermore, the management of SG uses bonus payments to extrinsically motivate personnel. This bonus is based on the evaluation of the overall performance. The frequency and composition of this bonus varies. The bonus payments are not specifically tailored to the CSR objectives of the organization, but are these are part of their evaluation. The tightness of the application of the results control at SG is defined as ‘loose’.
Action controls
SG relies on a self-constructed management system, which outlines direct procedures to the employees and monitors their projects. Both the financial and sustainable effects of potential projects are calculated on forehand. This forecasting is monitored and measured throughout the stages of the project. Based on this information the projects are evaluated and best-practices are applied in new projects. Furthermore this management system is tailored to the requirements of BREEAM. Formerly the company was also ISO 9001 certified. Nevertheless, the management decided to abandon this certification since it involved to much bureaucracy, which endangered the flexibility and innovativeness of the company. The employees are allowed to deviate from the procedures, when they can motivate that the procedures are not directly applicable to the project or can be more efficiently applied.
Cultural controls
The management SG highly emphasizes on the cultural and personnel controls. The vision of Gerard Schröder inspires the workforce. The organizational culture is oriented towards innovation of. Furthermore, SG provides their employees with education and training on CSR issues. For instance, one of the employees is BREEAM certified.
Overall the organization emphasises on cultural controls, complemented with a management system of action controls, which are detailed in description though loose in application. The CSR objectives derives from the vision of Gerard Schröder, he can defined as an active and strongly committed CSE.
5.2.2| The attitude of personnel SG
have a positive effect on the environment. They not only share the same vision, but also show the commitment: employees are proud to be part of the company. Most employees perceive it as a challenge to beat competition by excelling on sustainable performance of their projects. The two of the ‘committed’ employees indicate that CSR objectives are of significant importance to most employees. They even indicate the vision of SG on CSR changed their private life. One project manager states ’before my career at SG I was not really focused on CSR. This changed since my employment at SG. I even used sustainable technologies in my newly built home’. Furthermore they indicated CSR is an important part of the strong organizational culture at SG.
However, the attitude of one employee can be identified as dissident. Despite the fact this employee enjoys working at SG and states to appreciate the relatively open culture, this worker does not share vision of SG. Where others believe in the ideology of the objectives this employee sees it solely as a marketing tool. Furthermore, this employee states that it performs in line with its job description; he however does not feel obliged to participate on the set CSR objectives. As a remark must be made to this specific employee, that his employment at SG is coming forth out of an acquisition.
5.3| Conclusion
By the case was investigated whether the behaviour of employees corresponded to the expectations based on the three propositions - considering the existing employee attitude and chosen management control system.
result and action control resulted in well-functioning, but still indifferent employees towards sustainability items.
6|
Conclusion
6.1| Introduction
After having discussed the results of each sub question individually in the previous chapter, this chapter will focus on the findings in relation to the main research question. The conclusion will be followed by a discussion on the interpretation of the findings, the limitations of this study and proposals for further research.
6.2| Conclusion
Subsequent to the wide range of CSR definitions there is abundance of different CSR objectives. Therefore in the interest of this study a distinction was made between CSR objectives into two main categories; 1) obliged/ economic driven and 2) voluntary/
philanthropic driven. Mostly, objectives of the first category - obligated/profit driven - are
easier definable, separable and measurable compared to the second category. The differences in organizational context cause wide variation in objectives and perspective’s towards CSR. The following basic attitude types among personnel were identified, based on studies of Rodrigo & Arenas and Hemingway:
‘Committed employees’ accept the new role of the organisation to the full extent. They highly identify themselves with the organisation.
The ‘indifferent’ type understands the new role of the organisation. They however do not (yet) accept this new role and are not intrinsically motivated to change behaviour in line with this new role.
The ‘dissident’ type does not accept or possess a clear concept of the new CSR objectives. This type of employee has no identification with the organization and grades low on sense of importance of work.
objective: it influences actions and decisions of employees, since they are evaluated on meeting the objectives. Action control directly prescribes actions and behaviour of employees, ensuring employees to perform certain actions. Personnel controls anticipate on the natural tendency of employees to motivate themselves. They clarify expectations about what an organization wants and focus on intrinsic motivation of the employee.
The composition of a Management Control System is greatly influencing the outcome of CSR policy within the organisation. Therefore the MCS (configuration of management controls) has to act on main characteristics of the organisational context – the general attitude of employees towards CSR – to be effective.
Three propositions were made, based on the three fundamental attitude types and the management controls as listed above:
Proposition 1: An organization can anticipate on the committed employee type by emphasising on personnel and cultural controls in combination with results controls. These controls should be implemented with a low degree of tightness in case of the result controls and a higher degree of tightness for the cultural controls.
Proposition 2: An organization can anticipate on the indifferent employee type by focusing on results controls and action controls with a higher degree of control tightness.
Proposition 3: An organization can anticipate on the dissident employee type by emphasising on action control, with a high degree of control tightness. The effectiveness of results control depends on the base of the nature of their frustration. By a case study in two construction companies was investigated whether the behaviour of employees corresponded to the expectations based on the three propositions - considering the existing employee attitude and chosen management control system.
