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The linkage between HRM, CSR and performance outcomes

Article  in  Baltic Journal of Management · January 2012

DOI: 10.1108/17465261211195856

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 The linkage between HRM, CSR and performance outcomes1

Ilona Bučiūnienė and Rūta Kazlauskaitė

ISM University of Management and Economics, Lithuania

Abstract
Purpose – This paper aims to look into the current CSR and HRM developments in Lithuania and
to study the relationship between corporate social responsibility, human resource management and
organisational performance outcomes.
Methodology – A survey of 119 medium and large-sized organisations (over 100 employees) in
Lithuania was conducted to study CSR and HRM implementation in the country and to test the
relationship between corporate social responsibility, human resource management and
organisational performance outcomes.
Findings – 78.1 per cent of the respondent organisations have a written or unwritten HR strategy.
Only 38.8 per cent have a CSR statement, but more than half of respondent organisations have a
code of ethics, corporate values statement and diversity statement (respectively 65.4, 63.0 and 53.1
per cent). Research findings show that there is a linkage between HRM, CSR and performance
outcomes – organisations with more developed HRM, i.e. those where HRM performs a strategic
role and the HR function performance is evaluated, have better developed CSR policies. The latter
were found to have an impact on organisational and financial performance outcomes.
Research limitations/ implications – The study is built on the Cranet survey data, therefore not all
CSR-related HRM practices were analysed. Due to a limited number of organisations using CSR-
related HRM practices, the statistical analysis failed to determine statistically significant
relationship between the usage of those practices, the level of CSR development and performance
outcomes.
Practical implications – Organisations that are socially responsible and follow a strategic approach
to HRM exhibit better performance outcomes, profitability in particular.
Originality/ value of the paper – The paper confirms the existence of the HRM-CSR-performance
linkage, i.e. organisations with better developed HRM, i.e. HR plays a more strategic role and its
performance is more evaluated, also have more developed formal CSR policies, which in turn has a
positive impact on organisational and financial performance outcomes.
Keywords: Corporate social responsibility, Human resource management, Organisational
performance, Business strategy, Lithuania
Paper type Research paper

Introduction
It is not only financial competitiveness that the survival of a nowadays organisation depends on. It
is no less relevant for organisations to justify their existence in the eyes of their multiple
stakeholders. Respectively organisations face increasing pressure to act in a socially responsible
manner.
To demonstrate their corporate social responsibility (CSR), organizations develop codes of
ethics, publish CSR statements and reports, and call in independent auditors to assess the
implementation of their CSR policies and practices. However, in this context there arises a question
regarding the benefits of CSR. Corporate social responsibility may be of value to employees and
society, but does it pay to the organisation itself to invest in it? Does corporate social responsibility

1
Published in Baltic Journal of Management. (2012); 7(1), p: 5-24. DOI:10.1108/17465261211195856
have an impact on organisational performance? Or is it merely a means to enhance a corporate
image?
Prior research efforts to empirically verify the CSR-performance linkage have provided some
positive support for the CSR impact on the financial performance of the organisation (Orlitzky et al,
2003; van Beurden & Gössling, 2008). It is noteworthy, however, that the impact of CSR on other
forms of performance outcomes, i.e. HR-related, organisational, etc., has hardly been studied so far.
Therefore this paper will contribute to prior research, as it will look into CSR impact on the less
researched types of performance outcomes.
As to the practitioners’ opinion of the CSR benefits, it has to be said that it is rather divided.
Some recognise the relevance of multiple stakeholders and willingly invest in CSR activities; while
others consider CSR an extra cost. The latter even argue that the idea of CSR is inconsistent with
shareholders’ (whom they consider the key stakeholder) interests of profit maximization
(McWilliams & Siegel, 2001; Balabanis et al, 1998).
Provided CSR does have a positive impact on organisational performance outcomes, it is
relevant to find ways for promoting CSR among employees, as the implementation of CSR polices
and practices is highly dependent on their reciprocation and collaboration. This in turn requires
developing their positive attitudinal and behavioural characteristics (Baptiste, 2008). HRM plays a
critical role in achieving the above aim, as it is one of the means of gaining employee support and
commitment necessary for the implementation of CSR policies and practices.
The association between HRM and CSR is twofold. On the one hand, human resources, as an
organisational, can be looked upon as an object of corporate social responsibility. Socially
responsible organisations are believed to be taking better care of their employees and continuously
seeking to improve their working conditions and well-being. The latter are definitely a prerogative
of HRM. On the other hand, it is through an organisation’s employees that actual corporate social
responsibility manifests in everyday activities of an organisation. Even more they can be viewed as
an indicator of corporate social responsibility. Such activities expose the organisation’s social
responsibility to the public through their everyday interaction with customers and other external
stakeholders inside and outside the organisation (Schoemaker et al, 2006). A question that arises in
this context is then how the two constructs – CSR and HRM – are interrelated and what is their
impact on the organisational performance outcomes.
It is noteworthy, however, that little research has been conducted on the CSR-HRM linkage
so far. Thus this paper contributes to prior research in the field, as among other issues it looks into
the relationship between HRM and CSR. Besides only few empirical studies on the CSR-
performance linkage have been conducted in the Central and East European (CEE) context. Taking
into consideration the arguments of the contingency approach which states that management
practices are context specific, research in the field makes a relevant contribution. To be more
specific, this paper will study the relationship between HRM, CSR and performance outcomes in
the Lithuanian context. As CSR and responsible HRM developments in Lithuania have not been
given much research attention so far, the paper will also look into the current state of affairs and
thus contribute to the CSR research in the CEE context.

1. CSR concept definition

In the past few decades, corporate social responsibility has gained a growing research and
practitioner attention. This by large has been conditioned by such factors as the conception of the
negative outcomes of globalisation, relevance of cooperation, and value transformations in
nowadays society. However, despite its popularity, the CSR concept still lacks a universally
accepted definition.
One of the most widely used CSR definitions has been offered by World Business Council
for Sustainable Development (1999). According to this definition, corporate social responsibility is
an organisation’s commitment to a discretionary behaviour that leads to economic development and
contributes to the welfare of its employees, local community and society at large. Similarly, Kotler
and Lee (2005) argue that corporate social responsibility is an organisation’s commitment to the
enhancement of the community’s well-being through ethical business practices and contribution of
corporate resources. It is noteworthy, however, that in the latter CSR concept definition the term
community well being incorporates both human conditions and environmental issues. McWilliams
et al (2006) refer to CSR as an organisation’s disinterested and voluntary, i.e. not required by law,
engagement into activities leading to the attainment of some social good. Thus it can be stated that
corporate social responsibility encompasses voluntary organisational commitment to further the
well-being of its employees and society at large, and discretion in doing business.
However, one may naturally wonder whether it pays to be morally good and behave in a
discretionary manner. This issue is probably one of the oldest philosophical dilemmas. In the 20th
century, the discussion was initiated by Levitt (1958), who raised serious concerns about CSR
dangers. The author argued that a clear distinction should be made between the government’s and
business activities and responsibilities. Accordingly business should recognise the government’s
functions and should neither seek nor be expected to undertake them and organisations should only
put effort in defending their interests where the government directly intrudes into their operations.
As profit making is the major goal of a business, its resources should not be utilised for non-
primary activities.
Friedman’s agency theory (1970; 1977) also supports the idea that corporate social
responsibility refers merely to the organisation’s obligation to make maximum profit in compliance
with the laws and minimal ethical restrictions. World Business Council for Sustainable
Development (1998) emphasises the fact that modern businesses still raise concern that corporate
social responsibility does not provide any obvious benefit to the organisation. Besides, there is quite
a common belief in business that the utilisation of corporate resources for non-commercial activities
may have a negative effect on the shareholder value. They also argue that it is the government and
the individual who should take on social responsibility, instead of forcing it onto business.
Freeman (2004) further developed the concept of corporate social responsibility in his
stakeholder theory. He proposed that to be recognised as socially responsible an organisation should
take into consideration the interests of its multiple stakeholders (consumers, employees, suppliers,
investors and community), as they all have an impact on organisational performance outcomes.
However, Freeman’s position was criticised by Greenwood (2007) who disagrees with the above
statement and calls it a myth, for stakeholder inclusion does not necessarily mean that such a
business will act responsibly.
In an attempt to systemize the existing CSR definitions, a distinction is made between CSR
as an ethical stance and a business strategy. Following the first one, organisations engage in CSR
without any self-interest or expectations for reward. As a business stance, CSR focuses on the
prevention of any harm that may result from business activities and strategic business goal
accomplishment (Wan-Jan, 2006).
On the other hand, it is argued that the idea of a “one solution fits all” definition for CSR
should be abandoned. Taking into account the specifics of organisational development, awareness
and ambition level should be considered (van Marrewijk, 2003). Findings of Lindgreen et al (2009)
empirical study also show that there is no one way to act responsibly. Their cluster analysis
identified four types of CSR practices, each targeted at a different stakeholder group. The findings
imply that CSR practices depend on the stakeholders that the organisation considers relevant.
In this paper we look at CSR as a voluntary engagement of an organisation in activities
leading to the resolution of some social and/or environmental concerns associated with any of the
stakeholder groups.

2. The relationship between HRM practices and CSR

The HRM-CSR linkage has received a modest research attention so far. Prior research has mainly
focused on the issues of ethics in human resource management (Guest, 2007; Margolis et al, 2007;
Kamoche, 2007). In this paper we take a broader view and argue that HRM plays a critical role in
promoting and enhancing corporate social responsibility, as it contributes to the development of the
synchronicity between economic and social goals and performance of the organisation.
 One way to disclose the HRM relevance in the CSR implementation is to look into the drivers
of CSR. The organisational pursuance of social goals and engagement in CSR are heavily
dependent on corporate values. Orlitzky and Swanson (2006) distinguish between two corporate
value models, i.e. “value neglect” and “value attunement”. Managers who exhibit normative myopia
neglect the relevance of social and ethical values in their decision-making. Such executives use
formal and informal mechanisms to suppress their employee value awareness and analysis of the
organisational activity from the point of view of ethics. This in turn leads to poor corporate social
performance. In contrast, managers who demonstrate normative receptivity signal the relevance of
values and multiple stakeholder concerns to their employees. Consequently such organisations are
more likely to be engaged in CSR practices and demonstrate better social performance.
Value attunement, however, requires more than an executive belief in values and their
signalling. The implementation of CSR polices and practices is also highly dependent on employee
reciprocation and collaboration, which emphasises the critical role of HRM. To facilitate value
attunement, organisations have to select and recruit employees with certain moral principles,
develop appraisal systems which would enhance employee social performance, reward employees
for value attunement, and provide respective training and development to them (Orlitzky &
Swanson, 2006). Employee engagement in CSR activities also requires developing their positive
attitudinal and behavioural characteristics (Baptiste, 2008). Thus HRM plays a critical role in
achieving that, as it is one of the means to gain employee support and commitment necessary for the
implementation of CSR policies and practices. The more it is developed the more active should be
the organisational involvement in CSR activities.
The above arguments lead to the following hypothesis:

H1: HRM development in the organisation has a positive impact on corporate social
responsibility, i.e. organisations with more developed HRM systems will have better developed
CSR policies.

The HRM development and role in the organisation are operationalised in this paper as the
development of the HRM function (i.e. the extent to which the performance of the HR function is
evaluated in the organisation) and its strategic role. The latter is viewed as an HRM manager
involvement in making major strategic decisions within the organisations. To be more specific,
whether the person with top HR responsibility has a seat on the Board, or its equivalent, and is
involved in the business strategy development (Conner & Ulrich, 1996).
Provided HRM and CSR are interrelated, what does then constitute responsible HRM? The
concept has not been defined in a comprehensive manner yet. Research has only offered some HRM
practices that socially responsible organisations tend to follow or are at least expected to follow.
In the Presidency conclusions of the European Council (2000), where a special appeal was
made in respect to CSR, a number of HRM-related priorities have been identified. The latter include
the improvement of employability and reduction of skill gaps, provision of learning opportunities;
promotion of special programmes to enable the unemployed to fill skill gaps; giving priority to
lifelong learning by exploiting the complementarity between lifelong learning and adaptability
through flexible management of working time and job rotation; furthering all aspects of equal
opportunities, and making it easier to reconcile working life and family life, in particular by setting
a new benchmark for improved childcare provision.
In the Green Paper promoting the European framework for CSR (2001), the European
Commission referred to such responsible HRM practices as employee empowerment, responsible
recruitment practices, better information throughout the company, better definition of training
needs, equal pay and career prospects for women, profit sharing and share ownership schemes, and
concern for job security.
Aguilera et al (2007) speak of a relationship between communication, as an HRM practice,
and CSR, as CSR implementation necessitates employee ability to judge social concerns of their
managers and the quality of their relationship with them. Vountisjarvi (2006) refers to eight groups
of HRM-related CSR activities: values and principles; training and staff development; employee
involvement; job security; employee health and well-being; equal opportunities; work-life balance;
and integration of disadvantaged groups into the work-force.
Drawing on the above authors, it can be stated that organisations which engage heavier in
CSR should also have better developed HRM practices, which can be referred to as CSR-related
HRM practices. Such organisations should be engaged in responsible recruitment, training and
career management practices; flexible management of working time and job rotation;
communication, i.e. better information flows throughout the company; better definition of training
needs; profit sharing and share ownership schemes; employee involvement and empowerment of
employees, employee health and well-being; practices intended to reconcile working life and family
life, in particular an improved childcare provision; and concern for job security.
Employee-related CSR activities, such as for instance corporate investment and engagement
in CSR-related HRM practices, make a critical organisational policy and practice in the today’s
dynamic labour environment, where organisations typically face low employee commitment and
high absenteeism. Prior research into the HRM-performance linkage shows that organisational
commitment and investment into regular HRM practices leads to lower employee turnover and
absenteeism and higher organisational commitment (Addison & Belfield, 2001; Guest, 2001; Batt,
2002; Wright et al, 2003). Respectively it can be argued that the engagement in CSR, specifically
into CSR-related HRM practices, would also have a positive impact on employee commitment. This
in turn would contribute to turnover and absenteeism reduction, as employees typically respond
positively to organisational commitment towards them. Through a positive word-of-mouth, this
would also lead to the enhancement of the positive employer brand. Taking into account critical
trends in the current labour market and changing labour attitudes to work and the workplace
(Torrington et al, 2008), the engagement into CSR-related HRM practices makes a critical
prerequisite of the enhanced organisational performance.

3. Organisational benefits of CSR

Nowadays organisations face an increasing pressure from journalists, academics, and local
communities to engage into CSR activities. Organisations however are often reluctant to do that, as
they see CSR as a cost. This in part can be explained by their a priori assumption that an
organisation cannot simultaneously pursue economic and social goals. However, Orlitzky and
Swanson (2006) argue that there is a potential for pursuing these two seemingly incompatible goals
in tandem.
Jones (1995) supports an idea that morally responsible behaviour produces a number of
organisational benefits. He argues that business relationship with stakeholders that is based on trust
and cooperation may lead to the attainment of competitive advantage. This in turn implies that it is
worthwhile to be honest, trustworthy and ethical. Following arguments of the theory of the firm,
McWilliams et al (2006) argue that CSR can be considered a form of strategic investment, for it
contributes to the building and sustaining of corporate reputation.
World Business Council for Sustainable Development (1999) also supports the idea that
businesses should not view corporate social responsibility as a cost. They argue that CSR may
contribute to the reduction of organisational costs through the enhancement of positive social
effects and elimination of negative ones. CSR may also assist to the alignment of corporate and
social values, which in turn may lead to the identification of new commercial opportunities.
There have also been some empirical attempts to show that CSR leads to positive
performance outcomes. Though findings of such studies have produced varied results, the vast
majority of studies in the field testify to a positive relationship between CSR and financial
performance (Orlitzky et al, 2003; van Beurden & Gössling, 2008). According to Lindgreen et al
(2009), majority of the US businesses believe that CSR has a positive impact on their financial
outcomes. Margolis and Walsh (2003) have provided an overview of 127 published empirical
studies on the linkage between socially responsible activities and organisational financial outcomes
that were conducted during the period of 1997 to 2002. The vast majority of those studies have
confirmed a positive relationship between corporate social responsibility and financial outcomes.
Findings of a recent large-scale longitudinal study also demonstrated a statistically
significant positive relationship between financial outcomes and CSR (Orlitzky, 2005). Besides, the
research showed that corporate social responsibility can be both - a cause and an effect of financial
outcomes. CSR contributes to the gaining of a competitive advantage through the development of
an internal and external organisational image and reputation and stimulating changes in
organisational values and processes (Vilanova et al, 2009). Reputation that is built on corporate
social responsibility is also found to be positively related to the share value in the financial market
(Orlitzky, 2005). van Beurden and Gossling’s (2008) meta-analysis of the publications on the
relationship between CSR and financial performance clearly states that “Good Ethics is Good
Business” (p.407). Research findings on the CSR impact on other organisational performance
outcomes also show that CSR leads to enhanced employer attractiveness (Turban & Greening,
1997).
As already mentioned, prior research interests have been mainly limited to the studies of the
CSR impact on financial performance. Specifically, three following three broad categories of
performance measures have been used: market-based (investor returns), accounting-based
(accounting returns), and perceptual (survey) indicators (Orlitzky et al, 2003). However, taking
financial measures as the key performance outcome is inconsistent with the multiple-stakeholder
approach to business, as it is exclusively focused on the shareholder interests. Besides, this
underlines the relevance of studying the CSR impact on multiple performance outcomes.
Which performance measures should be used to examine CSR effectiveness? Speaking of
the HRM-performance linkage, Dyer and Reeves (1995) distinguish the following categories of
performance outcomes: 1) financial/accounting outcomes; 2) organizational outcomes (e.g.
productivity, quality, and service); 3) HR-related outcomes (e.g. absenteeism, labour turnover,
individual/group performance), and 4) stock-market performance. It is believed that the sequential
order of the HRM impact on performance is as follows. First, HRM enactment leads to HRM-
related outcomes. Then the latter produce certain organisational outcomes that bring about some
positive financial outcomes (Guest, 1997).
As stated above, CSR implementation necessitates employee commitment which in turn
calls for the development of certain HRM practices. Besides, CSR enactment manifests through the
organisational engagement into responsible HRM. Therefore, following the proposition that HRM
has an impact on CSR policies and practices, it can be argued that CSR should also have an impact
on organisational performance outcomes. Therefore we raise the following hypothesis:
H2: Corporate social responsibility has a positive impact on the overall organisational
performance (HR-related, organisational and financial performance outcomes).

4. Research methodology
The study looked into the relationship between formal CSR policies, enactment of CSR-related
HRM practices and performance outcomes. Formal CSR policies included the possession of a
written or unwritten CSR statement, diversity statement, code of ethics, and corporate value
statement. The CSR-related HRM practices under this study covered the following practices:
organisational action programmes relating to responsible recruitment, training and career
progression of such groups of disadvantaged people as minority ethnics, older workers (aged 50 and
plus), people with disabilities, women, women returners, low-skilled labour, and younger workers
(aged under 25); flexible management of working time and job rotation; communication; profit
sharing and share ownership schemes; employee health and well being; practices intended to
reconcile working life and family life (improved childcare provision in particular). Performance
outcomes included absenteeism and labour turnover (HR-related outcomes), service quality, level of
productivity, rate of innovation, environmental matters (organisational outcomes), and profitability
(financial outcomes).
 The present study is based on the Lithuanian data of the Cranet 2 (Cranfield Network of
International Human Resource Management) survey. It was the first Cranet survey conducted in
Lithuania. Cranet methodology is thoroughly described by Mayrhofer and Brewster (2005). A
national internet-based survey of organisations operating in Lithuania with 100 and plus employees
was conducted at the end of 2008 and the beginning of 2009. The size of the organisation was
considered an important factor, as typically few organisations with under 100 employees have an
HRM manager/ department and HRM places merely an administrative function in them.
Respondents included HR managers and/or employees with top HR responsibility. In total there
were about two thousand organisations of the selected size in Lithuania at the time of the survey.
First, HRM managers were contacted by telephone and invited to participate in the survey. Then
organisations that consented to take part in the survey were emailed access data to the Internet
based questionnaire. In total 800 organisations agreed to participate in the survey, of which 119
submitted completely filled-in questionnaires. 104 respondents (87.4 per cent) came from private
sector companies and 15 (12.6 per cent) from public and non-profit sector organisations.

5. Research findings
CSR policies and CSR-related HRM practices. As CSR research is still at an embryonic stage in
Lithuania, we first looked into the current situation of the CSR policy formalisation and CSR-
related HRM practice development in the country.
Research findings showed that 78.1 per cent of the respondent organisations have either a
written or unwritten HR strategy (see table 1). The analysis of CSR-related policies revealed that
organisations mainly possess a code of ethics, corporate values statement and diversity statement
(respectively 65.4, 63.0 and 53.1 per cent), while only 38.8 per cent have a CSR statement.

Table 1

Possession of HRM strategy and CSR-related policies

Written Unwritten None Total

N % N % N % N %
HRM strategy 49 44.5 37 33.6 24 21.9 110 100
Corporate values statement 44 42.7 15 14.6 44 42.7 103 100
Diversity statement 21 21.4 31 31.7 46 46.9 98 100
Code of ethics 36 34.6 32 30.8 36 34.6 104 100
CSR statement 16 16.3 22 22.4 60 61.2 98 100

The analysis of the CSR-related HRM practices included the following practices: employment
of action programmes to improve the participation of disadvantageous groups in the workforce,
flexible management of working time and job rotation, offer of employee health and well-being
schemes in excess of statutory requirements, profit sharing and share ownership schemes and
communication.
Research findings on the application of responsible recruitment, training and carrier
management practices (see table 2) show that they are not widely used in organisations in Lithuania.
Organisations pay little attention to participation of the following groups in the workforce: minority
ethnics, older workers, people with disability and women. It is noteworthy however that
organisations show more interest in the recruitment and training of low skilled labour and young
workers. This to some extent could be attributed to the shortage of labour supply that existed in the
Lithuanian labour market till the year 2008.

2
We would like to express our acknowledgements to Cranfield School of Management, UK, for coordinating Cranfield
Network.
 Table 2
Employment of action programmes to improve the participation of the disadvantaged in the
workforce
Recruitment Training Career progression
Groups of people
Yes No Total Yes No Total Yes No Total
N % N % N % N % N % N % N % N % N %
Minority ethnics 3 2.5 116 97.5 119 100 2 1.7 117 98.3 119 100 0 0 119 100 119 0
Older workers 5 4.2 114 95.8 119 100 4 3.4 115 96.6 119 100 1 .2 118 99.2 119 100
(aged 50 plus)
People with 2 1.7 117 98.3 119 100 3 2.5 116 97.5 119 100 2 1.7 117 98.3 119 100
disabilities
Women 3 2.5 116 97.5 119 100 4 3.4 115 96.6 119 100 3 2.5 116 97.5 119 100
Women 2 1.7 117 98.3 119 100 6 5.0 113 95.0 119 100 1 .2 118 99.2 119 100
returners
Low skilled 6 5.0 113 95.0 119 100 14 11.8 105 88.2 119 100 3 2.5 116 97.5 119 100
labour
Younger workers 9 7.6 110 92.4 119 100 13 10.9 106 89.1 119 100 8 6.7 111 93.3 119 100
(aged under 25)

The analysis of the flexible management of working time and job rotation (see table 3)
revealed that these practices are hardly used by respondent organisations at all. Respectively 93.3
and 86.5 per cent of them do not use home-based work and tele-working. The most widely used
practices include part-time work (87.2 per cent) and flexible time management (47.6 per cent).

Table 3
Application of flexible management of working time and job rotation

Work Not used < 5% 6-10% 11-20% 21-50% >50% Total

arrangements N % N % N % N % N % N % N %
Part-time work 14 12.8 71 65.1 16 14.7 4 3.7 2 1.8 2 1.8 109 100
Job sharing 70 67.3 18 17.3 8 7.7 3 2.9 2 1.9 3 2.9 104 100
Flexi-time 55 52.4 31 29.5 7 6.7 5 4.8 4 3.8 3 2.9 105 100
Home based work 97 93.3 4 3.8 1 1.0 2 1.9 0 0 0 0 104 100
Teleworking 90 86.5 9 8.7 4 3.8 1 1.0 0 0 0 0 104 100

Another practice that is underemployed by organisations in Lithuania is the offer of various

employee health and well being schemes in excess of statutory requirements (see table 4). Research
findings show an extremely low offer of workplace childcare and childcare allowances, which are
offered by only 2.5% and 7.6 % of the companies. The most widely employed practices related to
employee health and well-being include paternity leave (31.1%), maternity leave (30.3%), private
health care schemes (26.9 %), and education/training break (24.4%).
Table 4

Offer of employee health and well being schemes in excess of statutory requirements

Work arrangements Yes No Total

N % N % N %
Workplace childcare (subsidized or not) 3 2.5 116 97.5 119 100
Childcare allowances 9 7.6 110 92.4 119 100
Career break schemes 3 2.5 116 97.5 119 100
Maternity leave 36 30.3 83 69.7 119 100
Paternity leave 37 31.1 82 68.9 119 100
Parental leave* 17 14.3 102 85.7 119 100
 Pension schemes 14 11.8 105 88.2 119 100
Education/training break 29 24.4 90 75.6 119 100
Private health care schemes 32 26.9 87 73.1 119 100
* Parental leave refers to leave given to a parent to look after a child outside of maternity/paternity leave, for instance,
to care for a sick child.

Research findings also revealed a low usage of profit sharing and share ownership schemes.
The latter are applied by less than 14 per cent of the respondent organisations. It is also noteworthy
that where used the above practices are mainly offered to employees in the managerial positions
(see table 5). For other groups of employees they are offered by only less than 3 per cent of the
respondent organisations.

Table 5
Profit sharing and share ownership schemes
Employee share schemes Profit sharing Stock options
Groups of
Yes No Total Yes No Total Yes No Total
people
N % N % N % N % N % N % N % N % N %
Management 10 8.4 109 91.6 119 100 16 13.4 103 86.6 119 100 17 14.3 102 85.7 119 100
Professional/ 3 2.5 116 97.5 119 100 2 1.7 117 98.3 119 100 4 3.4 115 96.6 119 100
Technical
Clerical/ 3 2.5 116 97.5 119 100 2 1.7 117 98.3 119 100 4 3.4 115 96.6 119 100
Administrative
Manual 3 2.5 116 97.5 119 100 2 1.7 117 98.3 119 100 4 3.4 115 96.6 119 100

Research findings on the usage of communication practices showed that to the greatest extent
the means of communication to employees comprise verbal and electronic communication. Upward
communication is done through immediate supervisors in most cases.
Table 6
Usage of communication practices
N Mean* Std.
Dev.
Communication to employees 96 2.88 1.03
Verbally, direct to employees 112 3.16 1.15
Written, direct to employees 109 2.88 1.24
Electronic communication 104 3.08 1.35
Team briefings 102 2.48 1.45
Communication from employees 91 1.93 .86
Directly to senior managers 108 1.53 .94
Through immediate superior 111 3.22 .97
Through regular workforce meetings 106 2.38 1.35
Team briefings 107 2.33 1.29
Suggestion schemes 93 .89 1.26
Attitude surveys 102 1.80 1.30
Electronic communication 100 1.89 1.49
* 0=not at all, 4=to a very great extent

Next we performed a correlation analysis between HRM development, CSR policies, CSR-
related HRM practices and performance outcomes (Appendix 1). The correlation analysis revealed
that of all the CSR-related HRM practices only communication practices are positively related to
the CSR policy possession. It is noteworthy though that such findings could have been affected by a
low number of organisations that use CSR-related HRM practices, namely responsible recruitment,
training and carrier management practices, employee health and well being, and profit sharing and
share ownership schemes.
Research findings also showed a positive relationship between certain CSR-related HRM
practices and performance outcomes. Specifically flexible work arrangement, communication about
strategy and performance outcomes to employees and the use of methods for employees to
communicate their views to management were found to be related with the service quality.
Communication about strategy and organisational performance to employees and the use of
methods for employees to communicate their views to management were positively related to the
performance outcomes of environmental matters.
Findings also showed that the possession of a CSR policy is related to the rating of the
productivity level and environmental matters. The HR strategy possession is related to the service
quality, level of productivity and environmental matters. The extent of the HR function evaluation
is related to the rating of service quality, level of productivity and rating of stock market
performance.
Hypotheses testing. To test the hypotheses, a regression analysis was performed.
Relationships were considered statistically significant with 0.95 confidence, if p≤0.05.
Hypothesis 1 stated that HRM development will have a positive impact on the CSR policy
possession. Results of the regression analysis showed that the HR strategy possession and extent to
which the HR function performance is evaluated have a positive impact on the possession of a
formal CSR-related policy (Table 7). The measurement of the CSR-related policy possession
included all CSR-related policies cumulatively (a CSR statement, code of ethics, diversity statement
and corporate value statement). However, the impact of the HR representation on the Board and the
stage at which HR is involved in the development of business/service strategy on the CSR-related
policies were found statistically insignificant. Therefore hypothesis 1 is only partially supported.
Hypothesis 2 proposed a positive impact of the CSR policy possession on organisational
performance outcomes (HR-related, organisational and financial outcomes taken cumulatively).
Research findings showed that performance outcomes are affected by the possession of diversity
statement, one of the CSR-related policies (Table 7). The impact of the CSR statement, code of
ethics and corporate value statement possession on performance outcomes was found statistically
insignificant. Therefore hypothesis 2 is supported only partially.

Table 7

Results of regression analysis

Dependent Predictors Unstandardised Standardised T Sig.
Variable Coefficients Coefficients
B Std. Beta
Error
HRM development
(Constant) .134 .142 .939 .351
Formal CSR
policies Representation of HR manager/
.046 .133 .038 .345 .731
responsibility on Board
R2 = 0.279 Possession of a personnel/HR strategy .263 .085 .330 3.095 .003
R2adj.=0.241 Stage at which HR is involved in the
ANOVA development of business/service .048 .075 .078 .635 .527
Sig. =0.000 strategy, where it is available
Extent to which the performance of the
.140 .062 .252 2.244 .028
HR function is evaluated
Formal CSR policies
Organisational
(Constant) 3.441 .178 19.322 .000
performance
Possession of corporate values statement .063 .127 .103 .498 .626
R2 = 0.554
Possession of a diversity statement .458 .156 .603 2.944 .010
R2 adj.=0.435
ANOVA Possession of a code of ethics -.262 .209 -.345 -1.256 .228
Sig.=0.012 Possession of a CSR statement .335 .162 .539 2.072 .056
6. Discussion, practical implications and limitations
The aim of this paper was to look into the current developments of CSR-related policies and
responsible CSR-related HRM practices in Lithuania and to study the HRM-CSR-performance
linkage. Research findings showed that organisations operating in this country mainly possess
written or unwritten codes of ethics, corporate values statements and diversity statements
(respectively 65.4, 63.0 and 53.1 per cent); only 38.8 per cent have a written or unwritten CSR
statement. Speaking of formalised, or written, CSR policies, the situation is even more dismal –
42.7 per cent have a written corporate value statement, 34.6 per cent – a code of ethics, 21.4 per
cent – a diversity statement, and 16.3 per cent – a CSR statement.
The above findings are congruent to studies conducted in some Western countries. For
instance, in Finland 34 per cent of companies have a formal code of ethics and about 16 per cent of
companies have a CSR statement (Vountisjarvi, 2006). Interestingly, research findings revealed just
one clear difference between the two countries - 92 per cent of the largest Finnish companies have a
formalised corporate value statement. A respective figure for Lithuania is merely 42.7 per cent. It
should be taken into account though that the Lithuanian sample included organisations with 100 and
plus employees, while the Finnish – 200 and plus. This could have had an impact on the findings as
formal policies are generally more developed in larger organisations.
Speaking of the situation of responsible, CSR-related HRM in Lithuania, it can be firstly
stated that according to our research findings three quarters of the respondent organisations have
either a written or unwritten HR strategy. As to the usage of CSR-related HRM practices in
Lithuania, it is still rather limited. Organisations hardly employ any of the following CSR-related
practices: action programmes to improve the participation of the disadvantageous groups in the
workforce, flexible management of working time and job rotation practices, profit sharing and share
ownership schemes. Employee health and well-being schemes in excess of statutory regulations are
also not widely used. The most widely employed practices in this field relate to paternity leave,
maternity leave, private health care schemes and education/training break, however, they are
offered just by a about one third of organisations in the country. This level in general is similar to
that of Finland. However, Finnish companies pay a greater attention to the provision of recruitment
and training opportunities for disadvantaged groups (Vountisjarvi, 2006).
The present research contributes to earlier works in the field of CSR and HRM in a number of
ways. First and foremost, it sought to determine a linkage between human resource management,
corporate social responsibility and organisational performance. Findings of this study showed that
the HR function development has some impact on the possession of formal CSR policies, i.e. the
possession of an HRM strategy and evaluation of the HR function performance has a positive
impact on the possession of formal CSR policies.
Research findings provided some proof of the linkage between certain CSR-related HRM
practices and performance outcomes. Namely, flexible work arrangement, communication about
strategy and performance outcomes to employees and the use of different methods for employees to
communicate their views to management are related to service quality. Communication about
strategy and performance outcomes to employees and the use of methods for employees to
communicate their views to management are related to environmental matters of organisation.
These findings contribute to prior research by offering empirical evidence in support of the
possibility of simultaneously serving capital interests and treating employees fairly and ethically,
which has been lacking in research so far (Waring & Lewer, 2004).
One of the key findings of this research is the determination of some positive impact of the
CSR policy possession on performance outcomes. Namely, performance outcomes are affected by
the possession of a diversity statement, one of the CSR-related policies. The impact of other CSR
policies – CSR statement, code of ethics and corporate value statement on performance outcomes,
however, was found statistically insignificant. These findings contribute to prior research on the
CSR-performance research, which has mainly focused on the CSR impact on financial outcomes
(Orlitzky et al, 2003; van Beurden & Gössling, 2008). In this study performance outcomes were not
limited to financial results, and three types of performance outcomes were measured cumulatively,
i.e. HR-related, organisational, and financial.
Thus this paper provides some proof of the existence of the HRM-CSR- performance linkage.
Findings showed that organisations with better developed HRM, i.e. the more strategic role it plays
and the more its performance is evaluated, have better developed CSR policies. This in turn has a
positive impact on organisational and financial performance outcomes.
Findings of this research have some practical implications too. First and foremost, the current
study contributes to the dispelling of the existing myth that economic and social goals of the
organisation are incompatible. Research findings offer empirical evidence of the linkage between
CSR and performance outcomes. Thus organisations who engage into CSR-related policies and
practices also report better performance outcomes, which among other incorporate financial ones
too.
The current research also emphasises the critical role of strategic HRM in the enhancement of
organisational performance, as findings of this paper suggest that organisational investment in the
development of HRM systems leads to higher engagement in the pursuance of social goods, which
is not limited to the organisation’s human resources and incorporates multiple stakeholder groups.
This paper also proposed that organisational engagement in CSR-related HRM practices
should result in higher labour stability due to decreased labour turnover and absenteeism. Findings
of the current research, however, failed to find any significant relationships between the CSR policy
possession, engagement in CSR-related HRM practices (with the exception for responsible training)
and employee turnover and absenteeism. However, these findings should be interpreted with
caution. On the one hand, they may have been influenced by a rather low number of organisations
engaged in CSR-related HRM practices among the surveyed respondents. On the other hand, a mere
possession of a CSR policy (written or unwritten) may not necessarily mean an organisational
involvement in CSR activities and practices.
Organisations should also take into consideration the fact that engagement in CSR
necessitates higher organisational flexibility and a more proactive managerial response to the latest
tendencies in the labour environment and social concerns, as the latter, i.e. society at large,
constitute the labour force in general.
The paper has a few limitations that should be noted here too. Firstly, the current study
employed a standardised Cranet survey questionnaire; therefore, not all CSR-related HRM practices
listed in the theoretical part of this paper were included. To be more specific, the study did not look
into the issue of equal opportunities.
Secondly, CSR has been studied in this paper on the basis of the CSR policy possession and
the usage of CSR-related HRM practices. To a certain extent, they incorporate organisational care
about social concerns (e.g. employment of action programmes to improve the participation of the
disadvantaged in the workforce). However, this does not offer a thorough overall picture of the CSR
development in the country. Thus further research in the field should focus more on CSR practices
addressed to other stakeholder groups and those driven by idealistic, or altruistic, motives.
Thirdly, as majority of CSR-related HRM practices (employee health and well being,
especially workplace childcare, career break, childcare allowances, flexible management of
working time and job rotation, specially home based work and teleworking) that were included in
this study are used to a very low extent among Lithuanian organisations, the statistical analysis
failed to determine a statistically significant relationship between the usage of those practices, CSR
policy possession and performance outcomes.
Another limitation is that the study is based on a single respondent per organisation, who was
asked to provide information on both CSR and HRM policies and practices, and organisational
performance, which may have led to some degree of subjectivity. Besides, organisational
performance was measured merely based on the respondent opinion.

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Appendix 1
Spearman’s correlation coefficients
HR involvement in business strategy

No of average days absent per employee

Personnel/HR strategy possession

Rating of environmental matters

Representation of HR manager/

Gross revenue over past 3 yrs

HR function evaluation
responsibility on Board

Annual staff turnover

Level of productivity

Rate of innovation
Service quality
development
CSR policies

Profitability

per year
Average training .237 .069 .196 .326* -.108 -.353 .004 .025 .104 .271 .212 .015 .129
days per year
Profit sharing & .199 .084 .019 -.056 -.033 -.120 .230 -.035 .073 .084 .072 .051 .001
share ownership
schemes
Employee health .049 -.026 .036 .066 .060 .125 -.008 -.128 .001 -.118 -.052 .064 .100
and well being

Responsible .049 .008 .071 -.042 .064 -.106 .013 .005 .014 -.011 .011 .048 -.007
recruitment
Responsible -.055 -.014 -.055 -.133 .065 -.087 -.060 -.196 -.125 -.296* .028 .200* .024
training
Responsible .266** .199* .067 .024 .105 -.014 .080 -.006 .056 -.094 .017 -.005 .198
career
Flexible work .094 .155 .043 .064 .132 -.243 .362** .201 -.116 .201 .214 -.034 .080
arrangements
Communication .466** .137 .346** .118 .301** .038 .281* .121 .195 .114 .066 .122 .031
to employees
Communication .529** .217** .425** .280* .419** .181 .403** .376** .337* .246 .390** -.046 -.001
from employees

CSR policies 1.000 .174 .430** .359** .405** .310 .180 .291* .318* .170 .296* -.083 -.064

Representation .174 1.000 .211* .466** .350** -.073 .151 .225 .097 .165 .099 -.079 -.073
of HR manager/
responsibility on
Board
Personnel/ HR .430** .211* 1.000 .314** .318** .201 .276* .397** .106 .130 .318* .100 -.061
strategy
possession
 HR involvement .359** .466** .314** 1.000 .464** .009 .161 .184 .109 .151 .218 -.076 -.098
in business
strategy
development
Gross revenue .310 -.073 .201 .009 .370* 1.000 .259 .488** .631** .335* .228 -.107 -.373*
rising

Rating of service .180 .151 .276* .161 .378** .259 1.000 .587** .369** .359** .405** .136 -.068
quality

Rating of level of .291* .225 .397** .184 318** .488** .587** 1.000 .591** .612** .408** .022 -.078
productivity

Rating of .318* .097 .106 .109 .224 .631** .369** .591** 1.000 .605** .439** -.125 -.205
profitability

Rate of .170 .165 .130 .151 .193 .335* .359** .612** .605** 1.000 .359** -.163 -.174
innovation

Rating of stock .302 -.054 .120 .183 .434* .429* .166 .547** .525** .546** -.033 -.205 -.448*
market
performance
Rating of .296* .099 .318* .218 .174 .228 .405** .408** .439** .359** 1.000 -.032 -.103
environmental
matters
Annual staff -.083 -.079 .100 -.076 -.008 -.107 .136 .022 -.125 -.163 -.032 1.000 .086
turnover

No. average days -.064 -.073 -.061 -.098 -.039 -.123 -.068 -.078 -.205 -.174 -.103 .086 1.000
absent per
employee per
year

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