Corporate Responsibility Impacts Employee Satisfaction

Job satisfaction of employees is an important concern for corporate managers. A high level of job satisfaction means healthy growth for the company. The present study found that job satisfaction is higher if the company is considered environmentally more responsible. The study also found that the financial value of the company did not have a bearing on the job satisfaction of the employees. “The practical implication for managers is that investments in environmental performance and related communications are important” in order to be able “to recruit, motivate and retain the best talent,” per the researchers.

Employee satisfaction is defined as “improved job attitudes, increased productivity, and reduced turnover.” Many factors influence the job satisfaction levels of the employees of an organization. Corporate responsibility (CR) reporting is one such factor that is keenly observed by employees, when rating a job as satisfactory. Being environmentally responsible is a part of corporate social responsibility. It is believed that being environmentally responsible adds to the job satisfaction of the employees. It is also assumed that the employees of a financially valuable company would be highly satisfied in their jobs. The researchers of the present study tested both these hypotheses.

* All companies in the Standard & Poor’s 250 list that reported corporate responsibility (CR) were included in this study. A total of 113 companies fulfilled this criterion.
* Employee satisfaction and environmental performance of the company was based on the “The Company Reputation Index” by Vanno. Vanno’s measure is based on individuals posting online opinions and news stories on several sub-topics.
* Topics for employee satisfaction included “compensation, coworkers, diversity, job satisfaction and management” while topics for environmental performance included “anti-pollution measures and recycling, clean and renewable energy usage, sustainability, and conservation and preservation.”
* Statistical analysis was performed to find the correlations between various variables.

* It can be said with great confidence that perceived environmental performance of a company and its employee satisfaction go hand in hand.
* There is no significant relationship between a firm’s financial performance and employee satisfaction.

The study uses perceived environmental performance of a company rather than actual indicators. The analysis was based on short term link between employee satisfaction and CR reporting by the company during a specific period. The results of long term assessment may be different from this. However, the study is successful in pointing out the future direction for managers with regard to recruiting and retaining the best talent. Managers need to communicate effectively with employees on environmental and related corporate social responsibilities. Further, this study suggests future directions for research in, “determining the causal mechanisms between actual environmental performance, perceptions of relative environmental performance and employee satisfaction.”

Higher employee satisfaction means workers are more motivated and productive. Engaging employees through communication creates a mutual understanding between businesses and the people working in them. Such an engagement improves job satisfaction. This study concludes that corporate responsibility (CR) reporting, regarding environmental performance data, can be used as a tool to create more satisfied employees. Corporate responsibility reporting includes environmental issues, as well as ethical and social issues such as employee and community matters. Better corporate responsibility regarding environmental issues is perceived positively by the employees of an organization. With better corporate responsibility, the level of job satisfaction improves for the employees.

For More Information:
A Greener Company Makes For Happier Employees More So Than Does a More Valuable One
Social Science Research Network; December 2009
By Cassandra Walsh, Adam J Sulkowski; Department of Management and Marketing, Charlton College of Business, University of Massachusetts Dartmouth, North Dartmouth, Massachusetts

*FYI Living Lab Reports Are Summaries of the Original Research.