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The purpose of Corporate social responsibility

Corporate social responsibility (CSR) covers the responsibilities corporations have to the societies within which they are based and operate. More specifically, CSR involves a business identifying its stakeholder groups and incorporating their needs and values within the strategic and day-to-day decision-making process. Therefore, a business’ ‘society’ within which it operates, which defines the number of stakeholders to which the organization has a ‘responsibility,’ may be broad or narrow depending on the industry in which the firm operates and its perspective.
There is still having other definitions for CSR. Such as, based on South China Morning Post, 2002, the notion of companies looking beyond profits to their role in society is generally termed corporate social responsibility (CSR). It refers to a company linking itself with ethical values, transparency, employee relations, compliance with legal requirements and overall respect for the communities in which they operate. It goes beyond the occasional community service action, however, as CSR is a corporate philosophy that drives strategic decision-making, partner selection, hiring practices and, ultimately, brand development. Beside, according to Archie B. Carroll, 1979, the social responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that society has of organizations at a given point in time.
On the other hand, the Institute of Directors, UK, 2002, stated that CSR is about businesses and other organizations going beyond the legal obligations to manage the impact they have on the environment and society. In particular, this could include how organizations interact with their employees, suppliers, customers and the communities in which they operate, as well as the extent they attempt to protect the environment.
CSR is a means of analyzing the inter-dependent relationships that exist between businesses and economic systems, and the communities within which they are based. CSR is a means of discussing the extent of any obligations a business has to its immediate society and also a way of proposing policy ideas on how those obligations can be met as well as a tool by which the benefits to a business for meeting those obligations can be identified.
Today, companies permanently need to implement solutions aimed at generating competitive advantage that allow them to survive and be successful in ever changing and demanding markets. Therefore, to focus on customers is a common denominator for organizations, aiming to meet their needs and satisfy their expectations.
Society has become one of the players as one of the actors that highly influence corporate behavior. Communities have expressed more mistrust of corporations’ because of various scandals. This has put business ethics in the spot light influencing companies to be good corporate citizens, respecting the law but also to create good social values and principles. Today, the level of demand goes beyond the direct impact of the organizations business to also incorporate how corporations can contribute to societal and environmental causes. For corporations, these activities are manifested through the concept of Corporate Social Responsibility (CSR). However, from a corporate perspective, it is difficult to measure if these changes can have a positive impact on a firm.
To analyse the companies’ financial performance, the profitability ratios such as profit margin, asset turnover, return on assets, return on common stockholders’ equity, earnings per share and price-earnings ratio had been used.
Net profit margin is a widely used ratio in the assessment of company performance and in comparisons with other companies. A higher margin generally suggests good performance. For the AirAsia Berhad, in year 2007, net profit margin is 20.02% but it decreased to -13.35% in year 2008 and increased to 29.13% in year 2009. ChangHuat Corporation Berhad is having net profit margin 1.81%, -11.09% in year 2008 and -3.63% in year 2009.
On the other hand, the return on capital employed is a fundamental measure of the profitability of a company. It is a popular indicator of management efficiency because it contrasts the net profit generated by the company with the total value of fixed and current assets which are presumed to be under management control. Therefore, the ROCE demonstrates how well the management has utilized total assets. The ratio for the year 2007 is 10.44% but decreased to -21.90% in year 2008 and increased to 34.82%. For the ChangHuat Corporation Berhad, the ratio for the year 2007 is 2.15%, -16.39% in year 2008 and -3.38% in year 2009.
Besides, the return on equity is a measure of how well a company used reinvested earnings to generate additional earnings, equal to a fiscal year’s after-tax income divided by book value, expressed as a percentage. It is used as a general indication of the company’s efficiency. In other words, how much profit it is able to generate given the resources provided by its stockholders. Investors usually look for companies with returns on equity that are high and growing. The ratio for the year 2007 is 20.28%, -30.93% in year 2008 and 19.32% in year 2009. But for the ChangHuat Corporation Berhad, it is having 1.16% in year 2007, -18.13% in year 2008, and -6.30% in year 2009.
The inventory turnover is a measure of how much sales are generated by the capital asset base of a company. Although the ratio can act as a good guide to company performance, it can also be misleading. If the inventory turnover increases, either the total value of sales is increasing, or the capital asset base is decreasing, or both. If it is because sales are increasing, this might signify improved performance. The ratio of inventory turnover period for the AirAsia Berhad is -57.41days for the year 2007, -31.88days for the year 2008 and -24.88days for the year 2009. On the other hand, ChangHuat Corporation Berhad is -76.33days in year 2007, -66.59days in year 2008 and -29.76days in year 2009.
Furthermore, earnings per share (EPS) indicates the amount of profit after tax, interest and dividends to preference shares has been earned for each ordinary share. AirAsia Berhad is earned RM 0.181 per share in year 2007, RM -0.211 per share in year 2008 and RM 0.206 in year 2009; ChangHuat Corporation Berhad is earned RM 0.0212 per share in year 2007, RM -0.2812 in year 2008 and RM -0.1183 in year 2009.
Price earnings ratio is calculated using the current share price and current earnings. It is a measure of market confidence in the shares of a company. However, the market price also takes into account anticipated changes in the earnings arising from their assessment of a marco events such as political factors, economic factors and the market conditions. It is also influenced by company-related events. The ratio for the AirAsia Berhad is 8.84 in year 2007 and 6.70 in year 2009 but for the ChangHuat Corporation Berhad, it is only have 3.07 in 2007.
Comparing these two companies, the financial performance of AirAsia Berhad is much better than ChangHuat Corporation Berhad. The net profit margin for AirAsia Berhad is more than 20% (but the year 2008 is having negative) but ChangHuat Corporation Berhad only have less than 10% and also having negative percentage in year 2008 and 2009.
In conclusion, having more corporate social responsibility will lead company to have better performance.

Early Theories of Motivation: Maslow

“If you want people to do a good job, give them a good job to do.”
Introduction
Employee resourcing ensures that the organisation obtains and retains the people it needs and employs them efficiently (Armstrong, 2006). Employees stay with organisations because effective HR practices provide a supportive work environment, thus, it is imperative that organisations develop effective policies that enable them to recruit, select, and retain competent employees (Mullen, 1997). One of the key questions in all organisations is how to get employees to perform well. Most writers have established that the basic foundation for retaining high performing employees is to have them motivated (Steer et al., 2004). This is because a motivated employee is likely to perform better. Robbins (1993, p. 32) defines motivation as the “willingness to exert high levels of effort toward organisational goals, conditioned by the effort’s ability to satisfy some individual need.”
Many writers on performance argued that employee motivation is widely believed to be a key factor for performance of individuals and organisations and is also a significant predictor of intention to quit the workplace (Steer et al., 2004, Tzeng, 2002). Based on this, one of Frederick Herzberg’s famous quotes is: “If you want people to do a good job, give them a good job to do.” This paper discusses this statement.
Early Theories of Motivation: Maslow and Herzberg
One important motivational theory is Maslow’s Theory, which claims that human needs are ordered in a hierarchy: physiological needs, safety needs, belongingness and love needs, esteem needs, and self-actualisation needs (Maslow, 1954). Lower order need must be at least partially satisfied before a higher order need is pursued. The only motivating need is an unfulfilled need. At the lower end, the company can use extrinsic motivation, as evidenced by their great reward power. With extrinsic motivation, it means that workers are motivated by tangible rewards such as high pay.
Herzberg’s motivation-hygiene theory is often is referred to as the two-factor theory because of the dual nature of its approach to identifying the sources of job satisfaction, and eventually job motivation (Miner, 2007). Herzberg’s research produced a list of factors that contribute to satisfaction at work, which he called motivation factors, and another separate list of factors that contribute to dissatisfaction, which he called hygiene factors. In this theory, Herzberg et al. (1959) suggested that certain intrinsic factors motivate behaviour, such as achievement, recognition, the work itself, responsibility, advancement, and growth, while extrinsic factors de-motivate workers and this means that the things that cause satisfaction are not the same things that cause dissatisfaction, such as company policies, salary, relations with co-worker, and supervisory styles. For example, the terms of assessment and promotion, the perceived fairness of the decision making process is crucial for commitment and therefore managers should clearly communicate clearly how decisions are made and why some people and not others did get promotions (Herzberg, 1987). Herzberg’s extrinsic (hygiene) factors are similar to Maslow’s physiological and safety needs and include factors such as supervision, working conditions, and salary. On the other hand, Herzberg’s intrinsic factors are similar to Maslow’s higher order needs and include factors such as recognition, achievement, and the work itself.
Overall, Herzberg argued that there are a set of features that should be built into jobs to make them satisfying and motivating. This is because that eliminating the causes of dissatisfaction (hygiene factors, which are not intrinsic to the content of the work itself) would not lead to job satisfaction, it would just eliminate job dissatisfaction (Herzberg, 1987). Workers can only be satisfied and motivated if motivation factors are used. Thus, based on this he argues that staff motivation can be increased by introducing basic changes in the nature of an employee’s job. This ‘job enrichment’ can be achieved by redesigning jobs to allow for increased challenge and responsibility, opportunities for advancement, and personal growth, and recognition.
It is important to note that Herzberg et al. (1959) argue that if the basic factors are missing (hygiene factors), such as appropriate levels of financial compensation, workers will be dissatisfied irrespective of whether other factors are present. For this reason, some people have put emphasis on financial incentives. Hicks and Adams (2003) argue that one way to motivate staff within an organisation is through the use of incentives. Incentives, they argue are a means to favour certain behaviours in order to reach defined objectives and are important because they can influence key determinants of performance and can encourage people to stay on a job. Whilst this argument may be true, incentives are in various forms and different people prefer different forms of incentives. Therefore, though an organisation may offer good incentive schemes such as payment of tuition fees for external courses, those staff who are no longer interested in further education may not find these as good incentives and may not be motivated to work.
Newer Theories of Motivation: High Performance Work Systems
In more recent times, researchers have put all these ideas about making work more motivating together and theorised what a ‘high performance work system’ would look like. It is argued that high performance work systems would involve
…recruitment practices which aim to attract and select highly committed and flexible people, internal labour markets which reward commitment and training with promotion and job security, and methods of direct communication and team-working (Wood and de Menezes, 1998, p. 488).
Pfeffer (1998) identifies seven practices of successful organisations. The first is employment security, which he argues is essential to underpin the other high-commitment HR practices, primarily because it seems unrealistic to ask employees to offer their commitment and hard work without some expectation of security on their part. The second practice is selective recruitment, which is seen as a valuable way of realising ‘human capital advantage’ by hiring exceptional individuals and “capturing a stock of exceptional human talent” (Boxall, 1996, p. 66-7) as a source of competitive advantage. Third, after recruiting outstanding talent, employers need to ensure that these people remain at the forefront of their field and so extensive training, learning, and development are necessary. Marchington and Wilkinson (2005) note that this is one of the most widely quoted and important elements of high commitment HRM.
The fourth practice is team working, which has become more ubiquitous for a variety of reasons and it is now identified by most employers as a essential building block in their organisation. Fifth, Pfeffer (1998) identifies high compensation contingent on organisational performance as an important element. This means that employers need to provide employees with (1) above average compensation and (2) performance-related reward, which both indicate to employees that they deserve to be rewarded for superior contributions.
The sixth practice is the reduction of status differentials, such as shared canteens, which signals to all workers that they are valuable assets who deserve to be treated in a similarly to more senior staff. Finally, Pfeffer (1998) states that high-commitment HRM includes information sharing and employee involvement. This is because open communication about financial performance, strategy, and operational measures conveys the message that employees are trusted. Also, for team-working to be successful and employees are to be encouraged to offer ideas, it is essential that they have information upon which to base their suggestions and know something about the financial context in which their ideas are to be reviewed.
Overall, it can be argued that this theory of high-performance work systems incorporates both motivating and de-motivating factors and provides managers with a template as to how to deal with this together. While it does not specifically talk about how the job itself is to be designed, it does seem that workers in such a system would be given increased challenge and responsibility, opportunities for advancement, and personal growth, and recognition, all things that Herzberg argued are needed to motivate workers and make them perform at a high level.
Discussion and Conclusion
According to Herzberg, those factors that lead to job satisfaction are separate and apart from those that lead to job dissatisfaction. Thus if the firm tries to tackle factors that create job dissatisfaction, such as salary, they can bring about peace but will not necessarily motivate workers (Robbins, 1993). This means that ‘if you want people to do a good job, give them a good job to do,” rather than simply trying to deal with de-motivating factors. Overall, this means that the organisation as to do more to motivate workers than just compensation, good working conditions, and similar factors. Instead, jobs have to be enriched so that workers have opportunities for achievement and recognition, stimulation, responsibility, and advancement (Herzberg, 1987).
However, while the idea that people with ‘good jobs’ would perform better is intuitively appealing, actual research support for some aspects of the theory is patchy. Furthermore, it may also be culturally specific. Hofstede (1980) points out that culture influences factors that motivate and demotivate behaviour. He reports that individualistic, productivity-oriented cultures (such as the United States) focus on socio-technical systems and new methods to improve the quality of working life. Outside the United States, Hines (1973) reported that supervision and interpersonal relationships in New Zealand seem to contribute significantly to satisfaction and not only to reducing dissatisfaction, failing to replicate findings in the United States. In general, the universality of Herzberg’s two-factor theory cannot be presumed. Each culture has some factors that act as motivators and others that act as hygiene factors. These factors and their relative importance appear particular to each culture. Managers should be aware of that, and should not suppose that their experience is transmissible.
In summary, it is clear that motivation theories in use today are Western in their origin and many have been developed in the United States or at least influenced by American theoretical work. However, concepts such as achievement and esteem may have different meanings in other societies. The American individualistic culture has led researchers to put emphasis on rational and individual thought as the primary basis of human behaviour (Boyacigiller and Adler, 1991). The theories consequently do not give universal explanations of motivation; rather, they reflect the value system of Americans (Hofstede, 1980).
References
Armstrong, M. (2006). Strategic Human Resource Management: A Guide to Action. London: Kogan Page.
Boxall, P. (1996). The strategic HRM debate and the resource-based view of the firm. Human Resource Management Journal, 6 (3): 59-75.
Boyacigiller, N. and Adler, N. (1991). The parochial dinosaur: organisational science in a global context. The Academy of Management Review, 16 (2): 262-290.
Herzberg, F. (1987). One more time: how do you motivate employees? Harvard Business Review, 65 (5): 109-120.
Herzberg, F., Mausner, B., and Snyderman, B. (1959). The Motivation to Work. New York, NY: Wiley.
Hicks, V. and Adams, O. (2003). Pay and non-pay incentives, performance, and motivation. In Ferrinho, P. and Dal Poz, M. (eds.), Towards a Global Health Workforce Strategy, Studies in Health Services Organisation and Policy, 21 (p. 247-274). Antwerp, Belgium: ITG Press.
Hines, G. (1973). Achievement motivation, occupations, and labour turnover in New Zealand. Journal of Applied Psychology, 58 (3): 313-317.
Hofstede, G. (1980). Culture’s Consequences. Beverly Hills, CA: Sage.
Marchington, M. and Wilkinson, A. (2005). Human Resource Management at Work: People Management and Development. London: CIPD.
Maslow, A. (1954). Motivation and Personality. New York, NY: Harper

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