By Byron Lee, Tae-Yeol Kim, Sunghoon Kim, Zhiqiang Liu and Ying Wang

With corporate social responsibility (CSR) now firmly embedded in the culture of progressive businesses, there is an expanding body of literature demonstrating its wide-ranging benefits for enacting organisations. When it comes to maximising those benefits, a crucial piece of the puzzle is Socially Responsible Human Resource Management (SRHRM) – whereby the external CSR activities of a given firm closely match its internal HR practices.

SRHRM involves practices like socially responsible hiring, employee CSR training and motivation efforts, and purposefully considering employee CSR efforts when it comes to their evaluation and compensation. This can raise employees’ awareness of and commitment to CSR, increase their personal organisational identification and commitment levels, and consequently boost job performance.

Current research, however, has not paid much attention to the role organisational outsiders (i.e., people who do not work in the organisation) play regarding this dynamic. The omission is critical, because a firm’s CSR activities are carefully watched by such outsiders and their perception may matter a great deal to the firm’s employees, since their perceived external prestige (employees’ perceptions about the way outsiders view the status of their organisation) can further boost their organisation identification and subsequent performance levels.

A study we recently published combines social identity theory with social information processing theory (rather than remaining passive, employees will actively seek out information to make sense of their working environment) to demonstrate how employees use social cues coming both from within and beyond their organisation when forming their attitude towards it. Accordingly, we found that:

• SRHRM relates positively to employees’ perceived external prestige. Employees may “bask in the reflected glory of the firm” when its SRHRM efforts are well regarded by outsiders.
• This relationship is stronger when employees believe that their firm’s SRHRM practices genuinely aim to improve employee wellbeing and follow industry standards.
• This relationship is weaker when employees view HR practices as prioritising employee exploitation (i.e., getting the most value for cost).

These insights came from analysis of two rounds of surveys involving 480 employees at 30 firms across various industries located in central and eastern China.

For any organisation looking to improve its SRHRM efforts, our study highlights the importance of communicating clearly and consistently to both employees and relevant outsider elements. It’s essential that employees see for themselves that the firm’s HR and CSR genuinely align, so that they pick up solid social cues that their firm is “practising what it preaches” to the outside world. Equally importantly, however, firms should also ensure that organisational outsiders can see the validity of their SRHRM efforts, and that their employees are aware of outsiders’ positive response; this is vital for boosting employees’ perceived external prestige, and subsequently their organisational identification and overall performance.

Practically speaking, firms should design their CSR activities in close coordination with their HR practices. Broader corporate values and overall message supported should also be mirrored, while any inconsistencies or clear contradictions should be purposefully avoided. One example of such an inconsistency might be a firm that starts a CSR campaign to raise awareness regarding equal opportunity hiring, but at the same time maintains a maternity leave policy that is far less flexible and/or generous than current industry standards.

More broadly, firms wanting to practise SRHRM should do everything they can to develop their HR practices so that they reflect a willingness to support and care for their employees, while following or even leading the way when it comes to industry standards. Not only will this strengthen the consistency of the firm’s external and internal CSR efforts, it will also enhance outsiders’ perception of it, in turn boosting the overall positive impact of its SRHRM.

This article is based on a study entitled “Socially responsible human resource management and employee performance: The roles of perceived external prestige and employee human resource attributions” published in Human Resource Management Journal here.

Byron Lee is an Associate Professor of Management at CEIBS. Tae-Yeol Kim is the Philips Chair and Professor of Management at CEIBS. Sunghoon Kim is an Associate Professor at The University of Sydney Business School. Zhiqiang Liu is a Professor at the School of Management, Huazhong University of Science & Technology. Ying Wang is an Associate Professor at the School of Management and Economics, Beijing Institute of Technology.