CSR and aging workforces
An explorative study on CSR-implementation in SMEs J. Gellert, F.; J. De Graaf, F.
Publication date 2012
Document Version Final published version Published in
Business ethics: a European review
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Citation for published version (APA):
J. Gellert, F., & J. De Graaf, F. (2012). CSR and aging workforces: An explorative study on CSR-implementation in SMEs. Business ethics: a European review, 21(4), 353-363.
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Corporate social responsibility and aging workforces: an
explorative study of corporate social responsibility
implementation in small- and medium-sized enterprises
Franz Josef Gellert and Frank Jan de Graaf
Hanze University of Applied Sciences, Groningen, the Netherlands
Although critical differences exist between large companies and small- and medium-sized enterprises (SMEs), limited empirical research has been done on human resource (HR)-related corporate social responsibility (CSR). In this paper we study aging workforce management (AWM) as a component of CSR.
Our study was conducted in the Netherlands through a randomly distributed online questionnaire. Managers and team leaders of 201 SMEs responded. The data were analyzed using multiple hierarchical regression analysis. Our results are twofold: first, findings suggest that CSR policies in micro organizations with fewer than five employees seem to be strongly associated with AWM; and second, that companies with a focus on integration of older workers in daily activities do not perceive their actions as HR-related. Using AWM as part of CSR helps to give insight into the role of the owner, company size and the nature of implicit CSR practices. Our study demonstrates that the use of AWM in CSR research can lead to valuable insights and therefore, our overarching research question is answered that AWM can be used when studying CSR.
Introduction
According to several authors (Graafland et al. 2003, Lepoutre & Heene 2006, Perrini et al. 2007, Spence 2007), a critical topic in corporate social responsibil- ity (CSR) research is the application of CSR-related activities in small- and medium-sized enterprises (SMEs). Most CSR research is theoretical or is focus- ing on big multinational companies. More research should be done on the implementation of CSR poli- cies in SMEs. In this paper we assess the perceived implementation of a CSR-related component, aging
workforce management (AWM). An increasing number of older workers can be observed in SMEs, which raises the question how these workers are integrated within companies’ CSR activities.
We argue that CSR application in SMEs is a sense- making process, considered as a constant interaction between managers (owners) and employees in which values and norms lead to corporate policies, manage- ment behaviour changes and social inclusion/
exclusion of people (Basu & Palazzo 2008). To
further understand these processes, we furthermore
argue that it is even more important to focus on older
workers and their integration in daily business activi- ties because we know from earlier studies that there are stereotypes of older workers that SMEs need to overcome (Schalk et al. 2010). We know that those in charge in SMEs may face difficulties concerning how to direct aging workforces (Silverstein 2008, Streb et al. 2008, Schalk et al. 2010).
A limited body of knowledge is available on how CSR and AWM are associated and therefore we con- tribute with our study to research on both CSR and AWM. It is even more of a challenge to combine CSR and AWM for complementary benefit. We know from literature (CEDEFOP 2010) that an aging workforce is not considered as a vital aspect in the context of CSR, although an increasing number of older workers are expected to be employed in SMEs in the future.
The size of a company seems to play an important role when we consider AWM in a CSR context.
According to Moore & Spence (2006), CSR applica- tions in SMEs differ from in large companies. Even more interesting is whether SMEs differ with regard to AWM as a component of CSR. Where Matten &
Moon (2008) have conceptualized the nature of CSR in its institutional context, we focus on the integration of older workers in SMEs to further understand the relationship of CSR and AWM in SMEs. SMEs are defined in our paper according to the European Com- mission definition (European Commission 2011) by the number of people employed. We randomly con- tacted approximately 3,000 SMEs in the Netherlands through an online distributed questionnaire. From those, 201 managers and supervisors from eight dif- ferent business sectors and from six different company sizes provided us with relevant information.
The Netherlands was chosen for the research because our underlying assumption is that the selected country represents a good mixture of CSR-related issues and AWM in developed countries and has additionally a strong number of SMEs.
Our paper is outlined as follows: we continue by developing a conceptual framework of the perceived relationship between CSR and AWM and further explain why AWM is relevant in CSR research and why SMEs differ in this respect; the next section is the methodology; and our paper is finalized by presenting our results, followed by a discussion, con- clusion, future research and implications.
CSR in SMEs: the importance of employer–employee relationships
According to Perrini et al. (2007), to study CSR in SMEs is a relevant issue because most of the previous CSR studies were focused on larger organizations with the underlying assumption that the bigger the company, the more CSR is respected and applied.
That implies that SMEs might have different CSR- related applications. SMEs are likely to be consid- ered as manager/owner driven which has, according to Graafland et al. (2003), important implications for the instruments and strategies SMEs use for the implementation of CSR focusing on employees.
With regard to employees, researchers (Curran &
Blackburn 2001, Tilley & Tonge 2003) outlined employee characteristics as CSR practices in SMEs as follows: (1) the person with ultimate responsibility for running the organization is mostly the owner/
manager (Jenkins 2006, Lepoutre & Heene 2006);
and (2) since SMEs cannot compete with bigger com- panies in terms of scale and price, informal relation- ships between the owner/manager and the employees are crucial for the success of many SMEs (Lepoutre
& Heene 2006, Spence 2007).
Although there is a logic behind the statement that SMEs have different CSR-related applications than big companies, there is little research on how size differences seem to influence the application of CSR (Curran & Blackburn 2001, Tilley & Tonge 2003).
CSR literature suggests a significant employee influence on SME policies (Spence 2007). This is related to the fact that owners are often also manag- ers and that SMEs operate in relatively small local networks and, therefore, SMEs typically lack strate- gic planning, for example explicit human resource management (HRM) strategies, as part of their CSR policy. This does not necessarily imply that SMEs do not have CSR policies but they are less visible, trans- parent and public. Graafland et al. (2003) outlined that smaller firms make less usage of instruments and strategies to implement CSR than bigger organiza- tions do.
We assume that SMEs have implicit CSR policies
following the distinction between implicit and explicit
CSR by Matten & Moon (2008). Matten & Moon
(2008) use the difference on the institutional, that is
mainly national, level. The categorization implicit
and explicit CSR could be used in SME-related research as well, being in line with the suggestion of other authors that CSR within SMEs is mainly implicit (e.g. Graafland et al. 2003). CSR in SMEs is rarely codified and SMEs lack skills and resources that enable them to formulate their challenges as CSR-related (Graafland et al. 2003, Moore & Spence 2006). Furthermore, governance characteristics need special attention (Graafland et al. 2003, Jenkins 2006, Lepoutre & Heene 2006, Mandl & Dorr 2007, Spence 2007). Governance as the ownership structure means that often the owner is a co-worker as well. Also, the size and the role of personal contact in small compa- nies seem to underpin this relationship. Moreover, Mandl & Dorr (2007) report that the application of a close relationship between the owner/manager and the employees, called a proactive employee strategy, results in a decrease in employee turnover and absen- teeism. This governance characteristic is an extra reason to give the management of aging workforces specific attention.
Thus, we have formulated our starting proposition as follows:
Proposition 1: The quality of the relationship between SME owner and employees influences the perception of AWM as an employee-related CSR policy.
The relevance of AWM in SMEs
One of the most challenging aspects for SMEs is the management of an increasing number of older employees and how that influences productivity and performance (Kearney 2008, Van Dalen et al. 2010).
Research on aging workforces has produced some- times promising yet mixed outcomes (Streb &
Voelpel 2009, Schalk et al. 2010). Controversial find- ings were generated when research on physical labour, mental fitness, and the competitiveness and overall performance of older workers was presented (Streb et al. 2008). For SMEs, the aging of employ- ees brings different challenges and demands, particu- larly in terms of performance (Streb et al. 2009).
Therefore, instead of providing broad age conceptu- alizations, such as biological age or psychological age (Sterns & Miklos 1995, De Lange et al. 2006, Kooij et al. 2008), we have concentrated solely on
the functional age concept, as this can be directly linked to performance (Sterns & Doverspike 1989).
Functional age is the ability to produce high quality outcomes, have low absenteeism and show a high level of well-being regardless of biological age.
Although physical and mental changes due to aging are visible and the work ability and performance of older workers will likely decrease with age, certain models and tools can compensate these weaknesses and lead to positive outcomes (Cennamo & Gardner 2008, Gellert & Kuipers 2008, Silverstein 2008). Spe- cifically, while no evidence indicates a significant decline in overall cognitive performance (Beier &
Ackerman 2005), older workers are often considered costly, less flexible, less adaptable to new technology, and less willing to cooperate and learn new skills (Walker 2006, Streb & Voelpel 2009, Schalk et al.
2010). Older workforces’ mental and physical abili- ties ask for management’s attention which can be considered as critical in the context of normative notions, because employees often give varying, mostly negative, assumptions and remarks on nor- mative notions (Freudenthal 2001, Delgoulet &
Marquie 2002, Reed et al. 2005). The aforemen- tioned theory review strengthens our argument that studying AWM in SMEs as a part of CSR could give more insight into the association between older workers and CSR practice. Furthermore, different business areas (production, services) provide an overview of CSR practice with regard to AWM.
Thus, we present our next proposition:
Proposition 2: The management of an aging work- force is perceived as important in SMEs.
The relevance of CSR in combination with AWM
Recently, the literature on CSR in SMEs has been growing. Although aging is an additional critical topic for companies and has important social impli- cations (Börsch-Supan 2003, Van der Heijden et al.
2008), the topic has hardly been mentioned, either explicitly or implicitly, in the CSR literature until now. For example, if we try to position the term
‘aging workforce’ in Jenkins’ (2006) inventory of
CSR practices, only the employment of older and
disabled people is mentioned, which would indicate that aging is only a problem. If we give ourselves more freedom, we could also relate it to mentorship (i.e. a more positive explanation of age) or equal opportunities (i.e. a rights approach). When Fuentes-Garcia et al. (2008) made an inventory of the relationship between CSR and HRM, the issue of an aging workforce was not mentioned, either. The lack of attention in CSR research is not in line with the growing importance of AWM.
We start to fill this gap by studying the employer–
employee relationship in SMEs with the underlying assumption that AWM is a component of CSR and that the aforementioned relationship is defined as a sense-making process driven by values and norms.
We explore this missing link by focusing on the role of the owner/manager (attitudes and behaviour) and the strong personal relationships between the owner/
manager and his/her employees. This leads to our next proposition:
Proposition 3: The increasing number of older workers increases employers’ and employees’ perception of AWM as part of CSR.
Based on our theoretical overview, we are able to present a conceptual model (see Figure 1) that includes the relationships and our assumptions.
Method
This study examines the relationship of CSR and AWM in SMEs. Respondents provided us with data
on company structure, business field, CSR-related issues, and AWM relevant factors. The respondents are representatives from 64 (34%) micro businesses, 97 (52%) small businesses and 26 (14%) medium- sized businesses. The business definitions are taken from the European Commission SME definition (European Commission 2011). Eight different busi- ness sectors were reached: retail business (food, home electronics, consumer goods), services, pro- duction, health care, construction and logistics. The number of employees at each represented business ranged from 1 to over 122, with an average of 29 employees per company. In an attempt to include blue-collar workers, the survey shows that 113 of the responding companies have production per- sonnel, although only 34 businesses initially claimed that they belonged to the production sector. Of the 201 respondents, 114 were males and 87 were females, more than 40% work as general managers, 8% as human resource managers, 12% as team managers, and 40% as blue-collar and white-collar workers.
Instrument
A self-developed online questionnaire was randomly sent to 3,000 Dutch companies via email; of those, 201 responded. Organizations were selected based on Internet access to registered companies. The ques- tionnaire consisted of 12 questions related to orga- nization demographics as well as to CSR and AWM- related attributes. Demographics were: number of employees and gender. The CSR-related issues con- sisted of five items (all people over 50, production workers, production workers over 50, policy for older workers and explicit–implicit policies); and the AWM-related issues covered five items (demo- graphic change importance, retention of older workers, integration of older workers, career per- spectives of older workers, and recruitment of older workers). Some sample questions follow: (1) ‘How many people over 50 work on the production line?’;
(2) ‘Do you think that older people are integrated in your organization?’; (3) ‘Do you perceive internal/
external CSR policies?’ Although one can dispute the usage of single items, we chose this form because participants provided us with self-reported measure- ments (Wanous et al. 1997).
Figure 1: Conceptual model for aging as a proxy of corporate social responsibility (CSR) to understand the relationship between CSR, organizational characteristics
and CSR practices. SME, small- and medium-sized enterprises; AWM, aging workforce management
Respondents gave answers and assessments based on a 10-point scale ranging from 1 = completely dis- agree to 10 = completely agree. Space was given for individual comments for all questions and addition- ally at the end of the questionnaire.
Analyses
First, we started with a Pearson correlation data analysis to obtain the means, standard deviations and correlations. After that, we ran an analysis of variance (ANOVA) test to examine whether the means were equally distributed for all company sizes.
We then analyzed the data using hierarchical mul- tiple regression, entering the control variable gender in the first step and following with the predictor
‘number of employees’ in step two. We tested influ- ence of the predictor ‘number of employees’ on the dependent variables of CSR (all people over 50, pro- duction workers, production workers over 50, policy for older workers, and explicit/implicit policies) and AWM items (demographic change importance, retention of older workers, integration of older workers, career perspectives of older workers and recruitment of older workers).
Results
The means, standard deviations and correlations are presented in Table 1.
As evidenced by Table 1, gender is negatively related to older worker support, which means that the majority of the sample was male. This may have biased the perception that less support is offered for older employees in organizations because females are less affected by this issue. The number of employees is strongly positively and significantly correlated with the following factors: all people over 50, pro- duction workers, production workers over 50, reten- tion of older workers and career perspectives of older workers. Clearly, the size of a company is important with regard to attention given to older employees.
The factor ‘all people over 50’ is strongly signifi- cantly related to production workers, production workers over 50 and career perspectives. Employees over 50 indicated their interest in career perspectives.
It was even more important for this group that the
organization paid attention to demographic changes and consequently to career perspectives for older workers and to the retention of older workers (Peter- son & Spiker 2005).
An ANOVA test was taken as a starting point to find out whether significant predictor mean devia- tions appear between company size categories. The results indicate that the factor ‘all people over 50’
varied significantly among company sizes. Compa- nies with up to 63 employees seem to pay more attention to older workers, because the relationship between the owner and the employees is stronger in these organizations than in organizations with more than 63 employees (Table 2).
Our propositions were tested using hierarchical multiple regression analyses. As illustrated by Table 3, almost all size categories of companies predict a strong influence on the variable ‘people over 50’. The highest variance was explained by approximately 92% and was in the category 93 to 121 employees; therefore, these results support our underlying assumption that SMEs have a stronger sensitivity to older employees and perceive them more intensively as a part of CSR as compared with bigger organizations. This is because the relationship between owner/managers and their employees appears to be strong. Surprisingly, in terms of pro- duction workers over 50, only the category of orga- nizations with fewer than five employees achieved a variance of 20% for taking care of their older workforce.
We can also conclude from the results in Table 3 that the size of a company influences the attention of companies for a specific CSR-related topic which could shed a light on what Matten & Moon (2008) called implicit CSR. Are bigger companies more active, or are they able to make CSR policies more explicit? From our data we suggest that only the small companies really seem to manage older workers properly. Therefore, our first proposition, that ‘The quality of the relationship between SME owner and employees influences the perception of AWM as an employee-related CSR policy’, is confirmed.
From Table 3 we see that when the company is
bigger, respondents consider workers over 50 as a
target group for policies. Since the size of SMEs is
associated with the implementation of CSR, the
... ... T able 1: Mean, standard deviation (SD) and correlations
MeanSDGenderNumberof employees Allpeople over50 Production workers Production workers over50 Older workers support Extern– intern support Demographic change importance Retention ofolder workers Integration ofolder workersCareer perspectives ofolder worker Gender1.43.496– Numberof employees
29.0236.63.042– Allpeopleover505.8511.41.055.671b– Productionworkers13.4523.15-.023.772b.543b– Productionworkers over50 5.2814.50-.021.237b.342b.238b– Olderworkers support
1.92.271-.164a-.127-.112-.029-.028– Extern–intern support 1.46.519-.220.315-.049.144.217.033– Demographicchange importance
3.872.93.006.069.130.103.190a-.092.662b– Retentionofolder workers 1.10.296-.104.159a.088.273b.126-.082.076.273b– Integrationofolderworkers8.612.53.022.088.007.034.010.007.297-.117.040– Careerperspectives ofolderworkers
1.03.173.036.354b.172a.553b.313b-.249b.529a.144.386b.041– Recruitmentof olderpeople
1.81.436-.005-.017-.006-.107-.072.097-.120.001-.047.060-.172a aCorrelationissignificantatthe0.05level(one-tailed). bCorrelationissignificantatthe0.01level(one-tailed).
... ...
retention of older workers and career perspectives are core issues for SMEs. This might be explained by the fact that an aging workforce is considered as a critical construct that can lead to employees with high qualifications who complement the CSR prac- tice. Referring to this, we can conclude that the level of the organization’s treatment of older employees indicates the application of an implicit CSR policy
intended to address employees’ issues seriously (Matten & Moon 2008). Thus, our second proposi- tion, that ‘The management of an aging workforce is perceived as important in SMEs’ is partially con- firmed. Employers and employees see the relevance of AWM as a part of CSR and findings suggest as well that they understand the normative nature of AWM.
...
Table 2: Analysis of variance All people over 50
Number of employees Mean difference Standard error Sig. Lower bound Upper bound ⱕ5
6–34 -1.75 1.63 .89 -6.45 2.94
35–63 -5.60 2.04 .07 -11.50 -.29
64–92 -15.90* 4.27 .00 -28.21 -3.60
93–121 -4.65 4.27 .88 -16.96 7.65
122+ -38.18* 3.03 .00 -46.94 -29.43
6–34
ⱕ5 1.75 1.63 .89 -2.49 6.45
35–63 -3.85 1.67 .19 -8.67 -.96
64–92 -14.15* 4.10 .00 -28.98 -2.32
93–121 -2.90 4.10 .98 -14.73 8.93
122+ -36.42* 2.80 .00 -44.50 -28.36
35–63
ⱕ5 5.60 2.04 .07 -.29 11.50
6–34 3.85 1.67 .19 -.96 8.67
64–92 -10.30 4.28 .16 -22.65 2.05
93–121 -.95 4.28 1.00 -11.40 13.30
122+ -32.57* 3.06 .00 -41.40 -23.76
64–92
ⱕ5 15.90* 4.27 .00 3.60 28.21
6–34 14.15* 4.10 .00 2.32 25.98
35–63 10.30 4.28 .16 -2.05 22.65
93–121 11.25 5.69 .36 -5.16 27.66
122+ -22.27* 4.84 .00 -36.22 -8.33
93–121
ⱕ5 4.65 4.27 .85 -7.65 16.96
6–34 2.90 4.10 .98 -8.93 14.73
35–63 -.95 4.28 1.00 -13.30 11.40
64–92 -11.25 5.69 .36 -27.66 5.16
122+ -33.52* 4.84 .00 -47.47 -19.58
122+
ⱕ5 38.18* 3.03 .00 29.43 46.94
6–34 36.42* 2.80 .00 28.36 44.50
35–63 32.57* 3.06 .00 23.76 41.40
64–92 22.27* 4.84 .00 8.33 36.22
93–121 33.52* 4.84 .00 19.58 47.47
Significance: **pⱕ 0.01; *p ⱕ 0.05.
